One of the most eye-catching examples of the size of some of the so-called offshore energy "mega" projects is Royal Dutch Shell's proposed floating liquified natural gas (LNG) carrier off Western Australia, which is estimated to cost some $12bn. The floating LNG carrier will allow the oil giant to access major gas deposits stranded hundreds of kilometres from the coast. The revolutionary project will mark the first time a floating LNG vessel has been deployed to produce gas and liquefy it on board by cooling.

The floating facility will be 488m long, which in perspective is seven times the length of a Boeing 747. It will be the largest floating structure ever built and will be permanently moored about 200km from the coast during its 25 years of production. The vessel, to be built by South Korea's Samsung Heavy Industries, will be six times heavier than the world's biggest aircraft carrier. It is anticipated to begin production in 2016.

However, Shell's project is far from alone. In total more than $200bn worth of LNG projects are on the drawing board in Australia, which is expected to become the world's second-biggest global exporter of the cleaner-burning fuel by 2020.

There is a genuine problem for the energy market faced with the rise of mega projects. As mentioned previously in this mini-series of Marine and Energy blogs, the industry does not properly capture underlying data in a granular format and there are no adequate models which support an integrated approach to accumulation control and risk pricing. 

The insurance community needs to get much better at capturing and monitoring underlying exposure, and establish a model-driven approach to establish premium and exposure accumulation calculation. Only that way can sustainable service levels can be maintained into the future. We hope you have enjoyed our Marine and Energy mini-series.