Control of Well Insurance (OEE): Coverage, Limits, and Cost for Operators

An oilfield service contractor typically needs $1M/$2M general liability, $1M commercial auto, statutory workers comp with $1M employers liability, and a $5M umbrella before an operator will let a crew on the pad, because that is what the standard master service agreement requires. For a five-person crew, that package usually runs $25,000 to $75,000 a year.

Control of well insurance, written as operators extra expense (OEE), pays three things after a well control event: regaining control of the well, redrilling the lost hole, and the seepage and pollution that follow. Limits are written as one combined single limit per occurrence, commonly $1M to $10M onshore. Every owner of a working interest needs it, operator or not.

What an OEE policy covers: the three sections

The market standard wording descends from the London form EED 8/86, and nearly every OEE policy keeps its three-section structure.

Source: EED 8/86 structure as used in current London and domestic energy markets.

Section C is well-bore pollution only; tank batteries, flowlines, and disposal facilities sit on a site pollution liability policy, which is a different form with different triggers.

The three sections share a combined single limit per occurrence. A $5M CSL policy does not pay $5M per section; it pays $5M total for the event, which is why limit selection starts with the worst credible well on your schedule, not the average one.

Who needs control of well coverage

Operators, obviously: you cannot prudently drill or operate without it, and joint operating agreements typically require the operator to carry OEE with the non-operators named or protected.

Non-operated working interest owners are the buyers who miss it. A JOA passes well costs to every working interest owner in proportion to their share, and that includes blowout costs. If you hold 12.5% of a well someone else operates, you hold 12.5% of the uninsured portion of its worst day. Uncovered non-operated interests are the most common gap we find in operator reviews. Confirm you are protected under the operator’s policy for your interest, or buy your own non-operated OEE.

Drilling contractors generally do not buy OEE; the operator’s policy covers the well, and the contractor’s exposure to rig, crew, and downhole tools sits on its own program, covered on the drilling contractor insurance page. What the contract does allocate to contractors shows up in the MSA’s indemnity structure instead; service companies should read the knock-for-knock language against their own oilfield contractor program.

Per-well or blanket, and the underwriting that sets your rate

Small operators buy OEE two ways: scheduled per-well (each well declared with depth, location, and status) or blanket over the well schedule with reporting provisions. Underwriters rate on depth, pressure regime and any H2S, geography, drilling vs producing status, and your interest percentage. Drilling wells rate several times higher than producing wells, and premium is often quoted as cents per foot drilled for the drilling term, converting to an annual rate once the well is producing. 

Extensions worth asking for by name: underground control of well (events with no surface flow), making wells safe, evacuation expense, and care, custody and control for equipment in hole. Each is cheap relative to the base premium and expensive to want after the event.

How much does control of well insurance cost?

For a small onshore operator, OEE typically runs $15,000 to $75,000 a year across a modest producing schedule, with drilling wells adding premium per foot while the bit is turning. 

The premium is small next to the exposure it closes. A single well control event routinely runs seven figures across the three sections, and none of it is covered by GL, property, or your broader oil and gas program unless OEE is on the schedule.

Frequently asked questions

Coverage for the costs of a well out of control: regaining control (Section A), redrilling the lost hole (Section B), and seepage and pollution from the well (Section C). It is written as operators extra expense on wordings descended from EED 8/86, with one combined single limit per occurrence.

Operators extra expense, the market name for the control of well policy. The two terms are used interchangeably: control of well describes the peril, OEE describes the form. Quotes and MSAs may use either.

The policy pays; the service companies do the work of killing the well. Section A of an OEE policy reimburses the cost of those specialists, relief wells, and materials. Buying the coverage does not retain the responders, and having responders under contract does not fund them.

As a combined single limit per occurrence shared across all three sections, commonly $1M to $10M onshore. Pick the limit off your deepest, highest-pressure well, since one event draws control costs, redrill, and pollution from the same limit at once.

Section C covers seepage, pollution, and cleanup emanating from the insured well as part of the covered event. It does not cover facility pollution: tank batteries, flowlines, and disposal sites need site pollution coverage, which is a different policy on a different form.

The well must meet the policy’s definition of out of control, typically unintended flow that cannot be stopped with the equipment and pressure control on site. Underground blowouts are covered only if the underground control of well extension is included, which is worth requiring in every quote.

The well must meet the policy’s definition of out of control, typically unintended flow that cannot be stopped with the equipment and pressure control on site. Underground blowouts are covered only if the underground control of well extension is included, which is worth requiring in every quote.

Section B pays restoration or redrilling expenses to reach the equivalent depth or condition reached before the event, and forms commonly cap it at a stated percentage of actual drilling costs. Check the percentage and whether restoration of a producing well, not just a drilling well, is included.

Drilling wells rate materially higher and are often charged per foot drilled for the drilling period; producing wells carry an annual rate by depth and pressure. An active drilling program is quoted as a program, and the underwriter will want the AFE and well plan.

The well is the operator’s to insure; the rig and crew are the contractor’s. The MSA’s knock-for-knock indemnities allocate the rest. Contractors do not typically buy OEE, but they do need the indemnity they signed to be insurable under their own liability program.

A well schedule with depths, location, producing or drilling status, pressure and H2S notes, your working interest percentages, and loss history. For drilling programs, the AFE and casing design. Thin schedules get quoted; vague ones get declined or loaded.

No statute requires it, but joint operating agreements, lenders, and many state plugging-bond reviews expect it, and no prudent operator drills bare. The requirement is contractual and financial rather than regulatory, which is exactly why it gets skipped by the buyers who can least absorb the loss.

Get your well schedule quoted by Alliance Risk

Control of Well is the purest operator coverage there is: one policy, three sections, and a limit that has to be picked against the worst well you own rather than the average one. The failures are structural: a non-operated interest with no OEE behind it, a $1M CSL under a well that needs a relief well, an underground blowout with no underground extension. The premium is a rounding error against any of those outcomes.

Coverage is half of it. The other half is what underwriters price: your well schedule’s accuracy, pressure and H2S disclosure, casing programs, and the JOA language that says who insures what. Insurance pays for the event. Your schedule decides the rate.

We place OEE through energy E&S markets and can tell you which underwriters want your well profile, how per-foot drilling rates convert at first production, and whether your JOA leaves your non-operators exposed. If your current program has it right, we will say so.

Send us your well schedule, your working interest list, and your JOA’s insurance article. We will come back with the structure, the limit logic, and the number.