Earthquake Preparedness for Energy Industry
Owners and operators in the Energy Industry, specifically in Electricity industry, Dam Sector, Nuclear Sector, Petroleum industry, Natural Gas, Natural Gas Liquids (NGL), Propane, and other liquid fuels, Transportation System Sector, Chemical Sector can exploit this solution to transfer short-term earthquake risks before it getting too late.
Earthquake Risk Transfer in the Energy Sector
There are many of the energy infrastructure hub facilities are located in an area with significant seismic hazard. Significant liquid fuel, natural gas and electrical infrastructure and facilities are situated in a relatively small area.
- Major liquid fuel port terminals
- Liquid fuel transmission pipelines and transfer stations
- Natural gas transmission pipelines
- Liquefied natural gas storage facility
- High voltage electric substations and transmission lines
- Electrical substations for local distribution
Critical Energy Infrastructure Hub
A major earthquake would impact the Critical Energy Infrastructure Hub with:
- Ground shaking
- Liquefaction (soil behavior phenomenon in which a saturated sand softens and loses strength during strong earthquake ground shaking)
- Lateral spreading (where surficial soil permanently moves laterally due to earthquake shaking)
- Co-seismic settlement (where the ground surface is permanently lowered due to seismic shaking)
- Bearing capacity failures (when the foundation soil cannot support the structure it is intended to support)
In addition, secondary seismic hazards could be initiated and include:
- Seiches (waves that oscillate in water bodies often initiated by ground shaking)
- Hazardous material releases, including by sloshing of liquid agitated by ground shaking
Liquid fuel pipeline: The CEI Hub petroleum facilities mostly receive liquid fuel via two methods:
- Liquid fuel transmission pipeline
- Marine vessels
The transportation method and amounts vary due to product need, transportation costs, weather and other conditions. Most of the liquid fuel pipeline was largely constructed, when the regional seismic hazards were unknown and state-of-practice construction techniques at that time did not include any reference to seismic standards. The regional seismic hazards are now known to be significant and the soil crossings are susceptible to liquefaction and lateral spreading. The vintage pipeline design did not consider ground movements from the stresses to the pipelines induced by earthquakes that may cause pipe damage and multiple breaks. A pipe break would have a significant impact on all of the petrochemical facilities in CEI Hubs and could result in a statewide fuel shortage.
Shipping channel: Shipping channels which use marine vessel to transport fuel are expected to have tsunami damage and such channels are expected to experience slope failure, which would close the channel to traffic. It is possible that bridges and other river crossings, such as buried gas pipelines and electrical crossings, would be damaged and temporarily block the waterway. Closure of the shipping channel would prevent marine vessels from delivering liquid fuel as well as emergency response and recovery equipment from being delivered.
Marine terminals: All of the port facilities in the CEI Hub have significant seismic risks due to liquefaction, lateral spreading, and seiches. Some older piers were constructed without any seismic protection, have deteriorated, and are likely to fail in even a moderate earthquake. If oil products are released and contaminant the navigable waterway, the waterway may be closed to river traffic thus impeding emergency response activities as well as the supply chain. The local capacity to fight fires and clean hazardous material spills is limited.
Fuel supply: Tanks are known to have liquefaction vulnerabilities. If daily supply chain is disrupted by pipe breaks of the CEI Hubs and closure of the shipping channel fuel would quickly become scarce. Options to transport fuel from the other channels including by air are very limited.
Natural gas: The largest natural gas service provider receives the majority of their natural gas from pipelines. As soils are subject to liquefaction and lateral spreading, the pipes that are constructed without seismic design provisions can and the consequences of potential pipe failures could be major for natural gas service. The natural gas company’s storage capacity is limited and pipe breaks could lead to a natural gas shortfall as well as explosions or fires.
Electrical facilities: Electrical facilities and systems have significant seismic risk due to ground shaking and ground failure, including liquefaction and lateral spreading. Seismically vulnerable facilities include substations and transmission in CEI Hubs as well as facilities outside of the CEI Hubs, including power plants, substations and transmission lines, all which are important for distribution. Major vulnerabilities in the CEI Hub include the control buildings, transformers and other electrical equipment in yards at the substations, and transmission towers. Damage is likely to occur to both the transmission system and the distribution system in CEI Hubs. Damages to the electrical grid will likely result in a blackout in CEI Hubs and elsewhere.
Affordable Risk Transfer
Once a loss occurs, it is too late to revise an insurance policy. Consequently, the policyholder must be extremely diligent during policy purchase and renewal. Understanding specific insurance requirements, carefully calculating the property and business interruption values, outlining contingency plans, and anticipating the potential losses at each location are all key steps in maximizing future insurance recoveries. In sum, paying close attention to the potential impact of a loss at the insurance procurement stage will help to minimize issues and maximize recovery when a loss does occur.
Now that revising insurance policies once a loss occurs is too late, Earling helps to know the best time to transfer risk through new policies or extending the current coverage for a limited period of time for example only for 10 days and not for 365 days of year.
Maximizing insurance coverage after a catastrophic loss is difficult for any company but Earling Earthquake Preparedness Alerts assists to do it before a catastrophe occur.
Well Known Risk Takers
Tackle your risks with our solutions to the big players. We propose enterprise companies as well as SMEs and individualizes the best time to purchase a new earthquake policy or extending the current coverage to make it inexpensive.
Currently, Japan, New Zealand, Greece, Turkey, Caribbean, Chile, Ecuador, Taiwan, Romania, Indonesia, California are the regions, which Munich Re accepts their risks. In addition, South Africa, Oklahoma and Utah are subject to further work. Also, between the regions that Earling issues Earthquake Preparedness Alerts, Japan, New Zealand, Caribbean, Chile, Ecuador, Taiwan, Indonesia and US (California, Utah) are undercover by Swiss Re to take the risks.
How we can help?
In general, Earling has a global seismic monitoring network and specialists that are subject matter experts. Regarding the challenges mentioned above, Earling is been able to deliver support.
- In the pressure on profitability, performance management and key performance indicator settings.
- In the entrance of parametric insurance markets and issuing alternative products, Earling can deliver independent advice by our global resources.
- To keep control on the impact of catastrophic events, Earling can assist in optimizing, validating on Cat and reinsurance programs modelling.