When the Big Bad Wolf Howls, It Is Time to Review the Insurance Claims

Insurance Claim, North America

A hurricane wreaked extensive damage and delayed a pipeline construction project. Baker & O’Brien was asked to review the damage and prepare an estimate for the reparation and restoration costs of the large-diameter gas pipeline. Our expert report included the assessment for the costs of the i) pig launcher site, ii) interconnect site, iii) mainline block valve replacement, and iv) access roads.

Hurricanes pose three primary damage-producing forces: a coastal storm surge, wind, and inland flooding. It is unusual to think of pipelines being damaged by a hurricane, as most are buried underground or are otherwise not prone to wind or water damage.

However, in the summer of 2020, a big bad wolf in the form of a hurricane huffed and puffed until it damaged a large-diameter gas pipeline. When the Cat-4 hurricane struck, pipeline construction activities were nearing completion, and commissioning activities would otherwise have been ramping up, with final site dress-up activities underway.

In this case, the pipeline and associated facilities were damaged primarily by the storm surge, which reached approximately 17 feet above ground level. The widespread storm surge buckled a pipeline segment, overturned shipping containers that struck the pipeline, flooded piping excavations and undermined foundations, displaced heavy construction equipment mats, and damaged access roads to the pipeline right-of-way (ROW).

All work fronts, including laydown yards and support infrastructure, were adversely affected. Baker & O’Brien was asked to review the damage and prepare an estimate for the reparation and restoration costs of the pipeline. We reviewed the documentation and developed a “bottoms-up” estimate that included damages to the pipeline and associated appurtenances, such as the metering and regulation station, the pig launcher site, the receiver site, an interconnect site, the main line block valve site, and access roads.

For our analysis, we conducted site visits to observe the original damage and the ongoing work to repair and restore the pipeline to the “as-was/where-was” conditions. We were provided with documentation, including aerial photography taken before and after the storm, which we used to gauge the level of damage to the associated pipeline ROW access roads. In addition to direct costs, our cost estimate also included allowances for overhead costs, indirect labor, consumables, and inline inspection (pigging).

Our expert report was submitted as part of the insurance claim process.

Thomas L. Holtzclaw

Senior Consultant

Transportation and Storage
Accident / Incident Investigation / Pipeline / Operations and Maintenance / Physical Asset Appraisal / Business Interruption & Property Damage Insurance Claims
North America