Category: Energy insurance · Reviewed by Mark Fox, Broker · Renewals · Last reviewed 2026-06-05
Operators Extra Expense (OEE) is the dedicated insurance cover purchased by an oil and gas E&P operator to fund the costs of regaining control of an out-of-control well, redrilling and reworking the well, and (depending on coverage extensions) responding to seepage and pollution arising from a blowout event.
Category: Energy insurance Also known as: OEE, OEE cover, operators’ extra expense insurance, control of well insurance (in some markets) First codified: Lloyd’s wordings from 1970s; market-standard OEE forms developed by Joint Energy Committee Related legislation: Petroleum Act 1998 [1]; Offshore Installations (Safety Case) Regulations 2015 [2]; Borehole Sites and Operations Regulations 1995 [3]
OEE is one of the cornerstone products of upstream energy insurance. It addresses the very large costs that an E&P operator can incur when a well goes out of control — most dramatically in a blowout event in which formation fluids escape uncontrolled to surface. The costs of regaining control can run to tens or hundreds of millions of dollars per well, and historically operators have either had to bear the cost from balance sheet or purchase dedicated cover [4][5].
The standard cover has three principal sections:
Section A — Control of Well: the costs of regaining control of the well, including specialist well control contractor charges, mobilisation of well control vessels and equipment, blowout preventer replacement, and (in some wordings) the costs of evacuating personnel and securing the wellhead area.
Section B — Redrilling and Extra Expense: the costs of redrilling the well to the same depth and (depending on wording) the costs of reaching the original target formation if the redrill follows a different trajectory.
Section C — Seepage, Pollution and Contamination: the costs of cleanup and remediation of seepage and pollution arising from the well control event, normally with sub-limits and specific exclusions for certain types of pollution.
Additional extensions are commonly added: care, custody and control cover for the well as a whole; underground blowout cover (for fluid migration below the surface where there is no surface release); evacuation expense; and (in some markets) loss of equipment in hole [4][5].
OEE is a contract of insurance falling within the general regulatory regime for non-marine and marine insurance in the UK, depending on whether the well is offshore (marine) or onshore (non-marine). For offshore wells in the UK Continental Shelf, the Marine Insurance Act 1906 applies; for onshore wells, the general law of insurance contract applies, modified by the Insurance Act 2015 for non-consumer business [6][7].
The Petroleum Act 1998 vests UK oil and gas resources in the Crown and provides for the licensing regime. The PEDL (Petroleum Exploration and Development Licence) for onshore wells and the Production Licence for offshore wells impose extensive operational and environmental obligations on the licensee, including duties to prevent and respond to well control events [1][8].
The Offshore Installations (Safety Case) Regulations 2015 require offshore operators to demonstrate that risks have been reduced to ALARP, and the Safety Case must address well control among other major hazards. The HSE’s Offshore Division reviews safety cases and may take enforcement action where well control management is found wanting [2][9].
Financial responsibility for well control events is governed by a combination of regulatory requirements (notably the offshore safety case regime) and contractual arrangements (between the licensee, the operator and the drilling contractor). The Offshore Pollution Liability Association (OPOL) provides additional financial security for UK Continental Shelf operators in respect of pollution from offshore facilities, complementing OEE pollution cover [10].
A major E&P operator purchases OEE cover on a per-well or programme basis. Per-well cover is typically used for high-risk individual wells (high pressure high temperature wells, deepwater wells, frontier exploration); programme cover is used for ongoing drilling campaigns where the exposure is more routine. Limits per well per event for offshore wells range from US$100m for simple shallow wells to US$1bn or more for high-risk deepwater wells; onshore limits are typically US$25m–US$100m [4][5].
Underwriters require detailed disclosure of the well design (depth, pressure, temperature, formation characteristics, drilling fluid programme, blowout preventer specification), the operator’s well control management system, the well control contractor selected for primary intervention support, and the operator’s safety record. Premium is typically a function of the limit purchased, the risk profile of the well, and (importantly) the location and accessibility of well control intervention resources. The well control contractor market is concentrated among a small number of specialist firms (Wild Well Control, Boots & Coots, Cudd Energy Services and others), and the availability of intervention crews and equipment is a key consideration [4][5].
OEE claims are well-defined and the claims handling process is typically efficient. Where a well control event occurs, the operator notifies the OEE underwriter promptly, mobilises the chosen well control contractor, and submits claims for the qualifying costs as they are incurred. Major claims include the costs of the well control contractor’s services (often in the order of US$50m–US$200m for a serious offshore blowout), the costs of mobilising support vessels and ancillary services, and the costs of subsequent redrilling. The 2010 Macondo (Deepwater Horizon) blowout illustrated the extreme upper end of OEE-relevant costs, with well control intervention alone estimated to have exceeded US$1bn [4][5].
Per-well OEE: cover for a specific named well, usually with the highest limits and most bespoke terms. Used for high-risk wells where the exposure justifies dedicated underwriting.
Programme or fleet OEE: cover for a portfolio of wells operated by the same operator, usually at lower per-well limits than per-well cover but with annual aggregate limits and lower per-well premium.
Control of well is functionally identical to OEE in most modern wordings; the terminology varies by market and historical practice, with ‘control of well’ more common in US markets and ‘OEE’ more common in London market documentation.
Underground blowout cover: a specific extension for fluid migration below the surface where there is no surface release. Important for sour gas wells, deepwater wells and certain geological settings.
Workover and well intervention OEE: cover for well control events arising during workover or intervention rather than during drilling. Coverage scope and pricing differ from drilling OEE reflecting the different exposure profile.
A UK independent E&P operator drilling a single exploration well in the West Africa frontier purchases per-well OEE cover for US$500m per event on a market wording with sections A, B and C. Premium for the per-well cover is approximately US$1.8m for the planned 120-day drilling programme, with extensions available for programme overrun. The well is drilled to 4,500m TVDSS in 1,200m water depth and encounters a high-pressure formation requiring careful well control. The well is successfully drilled and completed; no claim arises. Had a well control event occurred, the OEE cover would have responded for the costs of intervention up to the US$500m limit. Figures in this example are illustrative.
This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-05. Next review: 2026-12-05.
Apex Insurance Brokers Limited. Authorised and regulated by the Financial Conduct Authority, FRN 724952. Registered in England and Wales, Companies House 07014570. This entry provides general information about UK insurance concepts and is not regulated advice. Consult your insurance broker on your specific position.
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