VERTEX was retained to evaluate estimated and claimed costs relevant to the general liability and business interruption portions of a multi-million dollar environmental loss in Louisiana. The Insured operates a brine mining business within the Napoleonville salt dome, a natural salt formation several thousand feet below the surface in Assumption Parish of southern Louisiana.
In August 2012, one side of a 19-million barrel (approximately 106.7 million cubic feet) cavern failed, approximately one mile below the land surface. As adjacent rock and sediment collapsed into the breached cavern, a massive sinkhole formed at the surface. Along with formation of the sinkhole, natural gas and crude oil were discovered at the surface, and natural gas was detected in a shallow aquifer. Three pipelines that crossed the location of the new sinkhole were damaged and had to be re-located. All residents of the nearby community of Bayou Corne were evacuated due to fear of further collapse and potential dangers from natural gas migrating to the surface.
In response to the cavern collapse and surface effects, the Insured was required by the State of Louisiana to drill an investigation well into the failed cavern, to install a series of seismic monitors at the surface and in wells ranging from 600 to 3,000 feet in depth, to conduct seismic imaging to investigate subsurface conditions, to conduct continuous monitoring of pressures in other caverns, to investigate, monitor, and reduce natural gas pressure in shallow formations, to monitor gas levels at residences, to compensate evacuated homeowners, and other actions.
VERTEX’s role included evaluating damage and business interruption claims from affected pipelines and analyzing costs incurred by the Insured to fulfill the State’s requirements to investigate subsurface conditions.
VERTEX project managers with expertise in business, chemical engineering, and oil & gas operations were invaluable to our client bringing understanding of the issues and potential solutions. To date, VERTEX has made recommendations on the reasonableness and necessity of over $23 Million in claimed costs related to subsurface investigations alone.