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Smoothing Pipeline Kinks

Posted by Adrianne Vigueras on Feb 11, 2015 8:00:05 PM


Pipelines are the arteries of the natural gas industry. The necessity to move product efficiently is paramount to a profitable industry. Having said that, pipeline debates have begun among residents as well as environmentalists across the State of PA as to the pros and cons of a pipeline in “my backyard”.

All of these debates are in the court of public opinion and pipeline companies need tools to address the concerns of the local residents whose land is being utilized. Insurance has sometimes been used to quell the fear of residents that in the event of a leak, the pipeline company will not be able to make reparation.

If the pipeline company has a General Liability policy that will cover them for third party suits for bodily injury and property damage. They can address claims that involve illness blamed on leakage, livestock becoming sick and or dying, from exposure to leaks and damage to the lessor’s property. All of these claims are third party only and do not cover the pipeline company for damage to their pipe. This does, however give them some credibility toward having a good business ethic and taking responsibility for their accidents. This helps in the court of public opinion.

In order to protect the pipeline company from the financial burden of repair or replacement of a portion of pipe, they could purchase a “Pipeline Warranty Policy”. This would cover the cost as a result of wear and tear or damage to the pipe from an outside source. Only pipelines that are less than 3 years old and carry gas, steam or water can purchase this. The policy can also include environmental risks as well as business interruption for their client if limited to one or two. In this way they can project financial risk easier. The local residents will be more comfortable with the fact that if there is a breach the company will be able to pay for the quick repair. They do not have to worry about a pipeline company not having the assets to respond quickly.

By smoothing these kinks out, pipelines will have a bit easier time convincing residents to allow them to go through their property. It will also allow them to better project financial risk.


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Topics: pipeline, Liability, For Your Business, Property Management, Energy & Environmental Risk, Insurance Coverage, Risk Management