Operator's extra expense (OEE)

A drilling operator loses control of a well in the North Sea on a Sunday in November. Before the rig is saved or lost, money starts going out: response vessels, blowout specialists, a relief well, evacuation of the crew, then redrilling and clean-up. The operator's extra expense policy, OEE, pays that spend. It does not pay for the rig, which sits under the hull or property policy, nor for liability to third parties, but for the cash the operator must find to regain control of its own well. It is placed well by well or per drilling program, with a per-event limit that runs to tens of millions of dollars, a dollar deductible set for each well and often separate sublimits for clean-up and for redrilling. The market places it in London on specialist forms and backs it with facultative reinsurance, because the typical loss is rare and enormous. Deepwater Horizon in 2010 showed that an OEE limit is used up in days when the well is deep. Not to be confused with well control insurance in the broad sense, of which OEE is the core: OEE names the policy, well control names the peril.