Chubb conditions oil insurance on methane plans

Global insurer Chubb has set first-of-its-kind underwriting criteria requiring oil and gas producers to have "evidence-based plans" to restrict methane emissions and venting.

The Swiss-based insurance company said its new requirements strike a balance between energy security and the need to move to a low-carbon economy. The oil and gas sector is responsible for about a quarter of global emissions of methane, a greenhouse gas that scientists say has driven about 30pc of the current rise in world temperatures.

"Implementing these underwriting criteria encourages oil and gas producers to adopt technologies to reduce [greenhouse gas] emissions in extraction," Chubb's chief executive Evan Greenberg said on Wednesday.

Chubb said oil and gas producers will now need to have leak detection and repair (LDAR) programs in place to qualify for insurance. Another requirement will be to eliminate non-emergency venting of methane into the atmosphere. Chubb said the new criteria will apply immediately but companies will have a set amount of time to prepare an action plan based on their specific "risk characteristics."

Chubb is a top insurer for the oil and gas industry. The underwriting criteria could support a "global methane pledge" by countries around the world to cut methane emissions by at least 30pc by 2030 from 2020 levels, particularly if other insurers pursue similar requirements.

The US since 2015 has required newly constructed oil and gas facilities to have LDAR programs as a way to reduce methane, and it plans to finalize a rule later this year that would extend the requirement to most existing oil and gas facilities. Some large operators have already prepared robust LDAR programs.

Chubb also said it would immediately stop underwriting oil and gas production in areas protected by state, provincial and national governments. The policy will apply to most conservation areas covered by the International Union for the Conservation of Nature, it said.

By Chris Knight