Jeff Hubbard, Director of Environmental Practice at Towerstone, a wholesale insurance broker and MGA, discusses emerging environmental risks associated with drilling for oil and gas. Hydraulic fracturing (Fracking) and the risk to water supply have been concerns, but environmental risks to air quality are now complicated by government regulations at the federal and state level.

The most pressing environmental issues facing energy companies today, according to Mr. Hubbard are transportation of crude oil by rail and as well as groundwater contamination and air pollution. According to Mr. Hubbard, hydraulic fracturing is “perceived as a risk, but the science is not there to support that.”

Air pollution has become more of an issue due to legislation passed by Congress to try to reduce air emissions from the drilling process, says Mr. Hubbard. This is called “Green Completion.“ Emissions can happen when completing a well where fumes can escape, from the storage tanks holding the crude oil, or from salt water used in the hydraulic fracturing process, but “this risk can be controlled.” Companies are beginning to spend money and changing their practices in order to incorporate the “Green Completion” rules.

To manage errors and omissions (E&O) risks, Mr. Hubbard says risk managers need to work closely with their field operations people. “They know where the potential leaks are coming from.”

For more from the IRMI Energy Risk and Insurance Conference, visit the IRMI website, or the On Demand Library.

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