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We can help you with more than just property and casualty risk reviews and insurance placement in our 5 specialized practice areas.

We also work in areas as diverse as trade credit, surety, political risk, and environmental risk transfer. And if you have employee benefit issues or need KEYMAN LIFE we would also be pleased to guide you in finding solutions.

If it involves risk we will help you find what is needed.

MERIDIAN- YOUR RISK RETHOUGHT

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‘Energy Issues’

What’s in the price of a gallon of gasoline?

Friday, November 19th, 2010

The national average retail price of a gallon of regular gasoline in September 2010 was $2.71. There are four main components that make up the retail price of a gallon of gasoline:

  1. Crude Oil: The cost of crude oil as a share of the retail price varies over time and among regions of the country. In September 2010, refiners paid an average of about $76 per barrel of crude oil, which accounted for about 67% of the national average retail price of a gallon of regular grade gasoline.
  2. Refining: Refining costs and profits were 7% of the retail price of gasoline in September 2010.
  3. Distribution & Marketing: Distribution, marketing, and retail dealer costs and profits made up roughly 11% of the retail price of gasoline in September 2010.
  4. Taxes: Federal, State, and local government taxes (not including county and local taxes) accounted for about 15% of the national average retail price of regular gasoline in September 2010. Federal excise taxes were 18.4 cents per gallon and State excise taxes averaged 22.44 cents per gallon.

Given the squeeze between surging economies in the East, the West’s continued heavy demand, and the obvious limits to supply growth worldwide, we will see changes to these input costs in years to come.  And pricing cycles will also continue and create periodic alternating malaise and panic further adding to the confusion. If you have questions about these changes and how to deal with the risk and risk transfer impacts on your business, please ask us.

Meridian is a highly dynamic specialized insurance consulting group with offices in Boston, MA, Newport, RI and Brookfield, CT. We specialize in risk management and risk transfer for traditional and alternative energy companies. We are members of the International Energy Credit Association and the Connecticut Maritime Association. Our Mission is simple.  We seek to help our clients make the best risk and risk transfer decisions possible.

MERIDIAN – YOUR RISK RETHOUGHT

Energy Usage at Three Cubic Miles of Oil and Growing

Thursday, October 28th, 2010

As children you may have learned to “thumbnail” some things.  Whether it was calculating a volume of liquid, a distance, how much something might cost to build, or just trying to get a sense of how much time to dedicate to a project It was a useful habit.  You may like the following for its “thumbnail” of what is happening in energy use in the world today. It helps to put it all in some perspective.  It is a sobering fact of life in the 21st century.  I hope you enjoy Jeff St. John’s news article in GreenTech Media.  It’s a reprint of something we’ve brought up before. Let us know what you think.

Meridian is a highly dynamic specialized insurance consulting group and broker with offices in Boston, MA, Newport, RI and Brookfield, CT.  We are a hard-driving group with an entrepreneurial spirit who will work tirelessly for clients.  We specialize in risk management and risk transfer issues for clients in the energy and sustainable business  arenas.  We belong to  IECA, Slow Money, the Sustainable Business Network and in the past year became a B Corp. For more on this read our blog on sustainable business practices.

Our Mission is simple.   We seek to help our clients make the best risk and risk transfer decisions possible.  We bring market-leading service to the most creative solutions in the risk management field to ensure that each Meridian client achieves their risk objectives.

SRI International’s Ripudaman Malhotra says the world’s energy usage equals burning three cubic miles of oil every year, and that will grow to nine cubic miles of oil by 2050 if current trends continue.

“Imagine the island of Manhattan covered with 150 feet of crude oil – almost enough to drown the Statue of Liberty – or 1,000 football stadiums filled to the brim with black gold.

That’s a cubic mile of oil, or the amount of oil alone the world now consumes in a year, Ripudaman Malhotra told an audience Monday at Greentech Media’s Greentech Innovations: End-to-End Electricity conference in New York.

And Malhotra, associate director of SRI International’s Chemical Science and Technology Laboratory in Menlo Park, Calif., wants people to think of all the world’s energy usage in terms of cubic miles of oil, or CMOs, because “That exercise will bring us face to face with the enormity of the challenge we are facing” in moving to a renewable energy future.

Including electricity generation, which takes up about 40 percent of the world’s energy usage, and all other forms of energy, the world uses the equivalent of three cubic miles of oil per year, he said.

But renewable energy makes up only a tiny portion of that measure of world energy supply, he said – about two-tenths of a cubic mile including large hydropower projects, and a mere 0.005 cubic miles of oil for all the solar and wind power now in place today.

It will be very difficult for renewable sources to grow to meet the world’s projected demand growth to somewhere between six to nine cubic miles of oil by 2050, he said. (see IEA Paints Dire Picture of Energy Supply and Demand).

While the sun provides an equivalent of 22,000 cubic miles of oil in energy to the earth, capturing that energy will take new technologies deployed on a scale that is hard to fathom, he said.

“If we are at .005 CMO [for solar and wind power] and want to get to 5 CMO, that’s a thousand-fold increase” over the next 40 years, Malhotra said by way of example. And current technologies are not effective enough to make up for “a big part of that gap, so I’m looking to see some new things,” he said.

The first problem is the sheer scale of the expected growth in energy demand, he said. Second is the disadvantages that solar and wind power have in terms of intermittency – not producing power consistently throughout the day and year – which will require new forms of energy storage to capture the power for use when it’s needed most, he said.

In terms of cubic miles of oil, Malhotra laid out some daunting figures for how much solar and wind would be needed to meet demand.

Getting just one CMO-equivalent of photovoltaic solar power in the next 50 years would require 4.2 billion 2-kilowatt solar rooftop systems, or 250,000 installed every single day over that timeframe, he said.

Looking at concentrated solar-thermal power, which produces power using the sun’s heat at lower cost than photovoltaic solar systems, Malhotra said it would take 7,700 solar-thermal parks of 900-megawatts capacity – or three built per week over the next 50 years – to add up to one cubic mile of oil equivalent.

As for wind power, getting to that one CMO-equivalent within 50 years would require putting up 1,200 1.6-megawatt wind turbines every week over that time, he said.

Using solar-thermal and wind power effectively will also require a massive investment in transmission to bring the power from the remote areas where it’s best produced to the cities that need it most, he said. (See NREL Hunts for Solar-Thermal Hot Spotsand National Grid: Dream or Reality?)

Biofuels – which have the advantage of being the only form of renewable energy that can be easily stored – offer other problems, such as the energy that’s required to make them and the potential environmental and greenhouse-gas emission costs of clearing land or cutting down forests to make room for planting the crops to make them, he said.

Creating one CMO-equivalent of biodiesel, for example, would require an 85-fold increase in the current amount of land now dedicated to growing soybeans around the world, he said.

As for nuclear power, which Malhotra said must be a part of the world’s energy future, getting to the equivalent of one cubic mile of oil would require the building of 2,500 nuclear plants, or one every week for the next 50 years.

And fossil fuels, which now account for the vast majority of the world’s energy supplies, will have to increase in use as well, even as the world tackles how to keep their use from increasing greenhouse-gas emissions and thus the threat of global warming, he said (see Can You Spare $45T to Curb Global Warming?).

Given these massive challenges, “The operative conjunction is ‘and,’ because it will take nuclear and solar and wind and whatever” to meet the world’s energy needs, he said.

And the solution won’t just lie in increasing energy supplies, Malhotra said. Efficiency – doing more with less energy – and conservation, or foregoing the use of energy, will play an equally important role, he said.

Efficiency has “historically never reduced net consumption,” since people tend to increase their energy use as efficiency improvements make it cheaper, he said. Still, doing things like replacing one billion incandescent light bulbs with compact fluorescent lamps, or CFLs, could save the world an equivalent of one cubic mile of oil per year, he said.

Making more energy-efficient buildings, which now account for about half the world’s use of energy, could also have a big impact – if such improvements in lighting, heating and air conditioning systems, as well as more efficient building materials, can meet the price demands of developing countries like China and India, he said.

Bringing a host of efficiencies to the United States’ roughly $500-billion-per-year building renovation market could yield a savings of about one-tenth of a CMO, he said.

Bringing the same innovations to India and China, where several trillion dollars of buildings are built and renovated each year, would raise that energy savings to as much as two CMOs, he said. But right now “we really need major innovations to produce cost-effective solutions” for those markets, he said.

“Conservation, or avoiding [energy use], is tougher,” he said. But, given the enormous challenges in increasing energy supplies and improving energy efficiency, it will have to be part of the equation, he said.

Conservation and efficiency together could reduce the world’s energy demand by three cubic miles of oil equivalent, he said.

“The question is, what about the rest? Those solutions will have to come form the supply side now – and as we’ve seen, we have absolutely nothing on the supply side to meet this right now.”

Jeff St. John for Greentech Media  Nov 17th 2008

Energy Industry 2010 and impact on Insurance Markets

Tuesday, April 27th, 2010

Ernst and Young noted this week that oil and gas industry fundamentals are improving with developing countries continuing to outpace the advanced countries in terms of growth, with positive, if vulnerable, indicators globally. With generally rising economic expectations, energy market sentiment remains relatively positive.

Analysts at Ernst went on to say that oil prices are anticipated to grow with increased demand as the economy continues to recover.  The challenge may be higher prices negatively affecting economic development.  While natural gas long term prospects for pricing and demand are strong, current prices and demand remain generally weak on continued production growth largely from unconventional gas plays.  Not surprisingly, oilfield service company bottom lines have benefited from the strong uptick in drilling assets and the growth in unconventional gas and associated boom in horizontal drilling.   Meanwhile refining margins have finally showed some strengthening though capacity remains shut in at pre 2008 levels.   Deal flow is up and deal size is growing on loosening capital markets and consolidation in oilfield services.


And in the insurance world, a quiet hurricane season and significant new capacity both upstream and downstream is stabilizing and in some cases softening pricing.  Absent more events such as the tragic loss and developing environmental problem accompanying the fire and total loss of TransOcean’s Deepwater Horizon this week, the challenge for energy accounts is to differentiate themselves within this market to take advantage of the opportunities.  But conversely with increasing capacity, insurers are feeling the pressure to differentiate as well to show their market leadership.  What is still unclear early in this process is how far this trend will go to impact retentions and other terms and conditions.  No significant changes are expected in terms and conditions but pressure could be applied on retentions in an effort to pressure competitors in an environment of improved capacity over the past 18 months.

If you have questions about the impact on your business, let us know.

Meridian is a highly dynamic specialized insurance consulting group and broker with offices in Boston, MA, Newport, RI and Brookfield, CT. We specialize in risk management and risk transfer for traditional and alternative energy companies. We are members of the International Energy Credit Association and the Connecticut Maritime Association. Our Mission is simple.  We seek to help our clients make the best risk and risk transfer decisions possible.

MERIDIAN – YOUR RISK RETHOUGHT

Financial Risk Management Instruments for Renewable Energy Projects

Wednesday, January 6th, 2010

The United Nations Environment Programme (UNEP) has identified the typical challenges project developers and investors face in the alternative energy world.  However,  financial instruments are helping these participants handle risk and as project volume and loss information increases, comfort levels are rising.   Insurance and reinsurance policies, alternative risk transfer instruments, contingent capital, and credit enhancement products are growing in availability particularly in the developed world.  We thought it might help if you had an overview of the solutions available by stage of project risk.

Meridian is a highly dynamic specialized insurance consulting group and broker with offices in Boston, MA, Newport, RI and Brookfield, CT.  We are a hard-driving group with an entrepreneurial spirit who will work tirelessly for clients. We specialize in risk management and risk transfer for alternative energy companies. We personally promote sustainable practices and are members of the Sustainable Business Network and the International Energy Credit Association.  Our Mission is simple.  We seek to help our clients make the best risk and risk transfer decisions possible. To do so we bring market-leading service to the most creative solutions in the risk management field to ensure that each Meridian client achieves their risk objectives.

Renewable Energy Project Risks (see in brackets the corresponding Financial Risk Management Instruments)

Risks associated with LARGE SCALE PROJECTS

Project Development/Pre Construction

Concept to implementation                     (Grants, Contingent Grants)

Construction Phase

Construction/Completion Risk               (Insurance =Construction All Risks CAR/EAR)

Counterparty Risk                                         (Surety bonds –Performance guarantees     //Liquidation damages)

Operating Phase

Performance Risk                                            (Insurance)

Counterparty Risk                                           (Surety bonds –Performance guarantees   //Liquidation damages)

Fuel Supply/Weather Resources  Risk    (Weather Insurance/Derivatives)

Credit Risk                                                           (Guarantees, Credit insurance/Credit derivatives)

All Phases

Financial Risk                                                      (Standard derivative products)

Political Risk                                                         (Political Risk Insurance//MFI Guarantees//Export Credit guarantees)

Force Majeure Risk                                             (Insurance/Catastrophe bonds)

Risks associated with SMALL SCALE PROJECTS

Project Developer

Development Risk                                                  (Guarantee Funds)

End User

Risks  of physical damage incl. theft                 (Insurance)

Risks associated with CARBON FINANCED PROJECTS

Market Risk                                                              (Standard derivative products to hedge price)

CER Delivery Risk (Insurance –carbon delivery guarantee, permit                                                         delivery guarantee)

Roadmap for a Sustainable Future -CERES conference 2010

Thursday, November 5th, 2009

We’re excited the Ceres guys are bringing the world to Boston in May 2010 in their annual conference “Roadmap for a Sustainable Future.” The energy and sustainability issues facing the world today have become more apparent to the average person in the past 24 months with the recent volatility but for those of you who lead private energy companies  it has not been a matter of if but a matter of when. Now that we have had a brief stable period in pricing let us know if we can help with your strategic plans for risk assessment and risk management in an everchanging world.

Meridian is a highly dynamic specialized insurance consulting group and broker  with offices in Boston, MA, Newport, RI and Brookfield, CT. We specialize in risk management and risk transfer for Energy companies. We also promote sustainable practices and are members of the Sustainable Business Network and Slow Money Alliance. Our Mission is simple.  We seek to help our clients make the best risk and risk transfer decisions possible.

We bring market-leading service to the most creative solutions in the risk management field to ensure that each Meridian client achieves their risk objectives.

Dear Colleague,SAVE THE DATE:Ceres Conference 2010
May 5-6, 2010
Renaissance Boston Waterfront Hotel
Boston, MA

We stand at a critical intersection in the race to create a more sustainable world. The recent economic crisis has revealed just how vulnerable our economic systems are to the hidden risks and uncalculated costs of doing ‘business as usual.’ But each challenge also brings opportunities for innovation.

For 20 years, Ceres has been bringing together companies, investors, environmentalists and other stakeholders to integrate sustainable solutions into business strategies and build long-term shareholder value. Next May, at theCeres Conference 2010: Roadmap for a Sustainable Future, we will again bring these partners together to examine and define the key issues and solutions for achieving a sustainable future.

Please mark your calendars and plan to join us May 5-6, 2010 in Boston as we create a road map for a sustainable future.

We’ll send updates and details as the program develops. These will also be posted on our website atwww.ceres.org/conference. Online registration will begin in December.

If you have questions, please contact Marilyn Castriotta, Conference and Event Manager atcastriotta@ceres.org

We look forward to seeing you at next year’s conference!

Sincerely,
The Ceres Team

Ceres

99 Chauncy Street, Boston, MA 02111
Tel:  617-247-0700  | Fax: 617-267-5400

Energy Companies Slash Insurance Levels: WSJ

Thursday, September 17th, 2009

The Wall Street Journal noted on August 24th, that more energy companies are uninsured or underinsured as prices for coverage rise and as  infrastructure improves .

http://www.foxbusiness.com/story/markets/industries/energy/energy-companies-slash-insurance-levels-wsj/The focus of the article was primarily on offshore companies and their windstorm coverage decisions this year.

Brokers seemed to think these decisions are due to stiff rate increases while the energy companies attributed the changes to improved technology and more regulation reducing the likelihood of damage.

Particular approaches ranged from total wind self insurance to dropping cover on less valuable structures.

While we certainly have seen significant increases in offshore wind pricing post  Ivan, the risk transfer decisions made by these companies at this point are not just a factor of insurance product availability and pricing.  The 08-09 crash of prices and growth in inventories and its impact on company bottomlines in many cases threatened even company survival.   Those in the offshore world with the most stable contracts and utilization levels have weathered things well thus far thanks to the rebound that is occurring. By nature offshore exploration is more of a commitment in time and less vulnerable to the impacts felt in the land rig world.

In this context that companies are choosing to take on risk is not surprising. Tragically some of them may find themselves in a catastrophic loss at some point  for which they are totally unprepared.

Others may opt to go into captives or make some other arrangements as an alternative to traditional insurance products.

In many ways it is a tough loss for those of us who like to work with this industry to provide appropriate solutions.  But this takes  little creativity and unfortunately it’s not consistently present in the staid insurance industry.

We believe we can help with that.

Meridian is a highly dynamic specialized insurance consulting group and broker  with offices in Boston, MA, Newport, RI and Brookfield, CT.  We are a hard-driving group with an entrepreneurial spirit who will work tirelessly for clients. Our Mission is simple.  We seek to help our clients make the best risk and risk transfer decisions possible.
We bring market-leading service to the most creative solutions in the risk management field to ensure that each Meridian client achieves their risk objectives.

Energy Usage at Three Cubic Miles of Oil and Growing

Friday, August 21st, 2009

As a boy I learned to “thumbnail” some things.  Whether it was calculating a volume of liquid, a distance, how much something might cost to build, or just trying to get a sense of how much time to dedicate to a project I found it a useful habit.  I like the following for it’s “thumbnail” of what is happening in energy use in the world today. It helps to put it all in some perspective.  It is a sobering fact of life in the 21st century.  I hope you enjoy Jeff St. John’s news article in GreenTech Media.  Let me know what you think.

Tom Bryant is a partner in Meridian Consulting . His 35 year work career began in a farming community in Alberta and encompasses years in the onshore/offshore oilfield industry, penitentiary and parole supervision of violent offenders in the Correctional Service of Canada, and more recently risk management for corporate clientele primarily in the energy industry.

Energy Usage at Three Cubic Miles of Oil and Growing

SRI International’s Ripudaman Malhotra says the world’s energy usage equals burning three cubic miles of oil every year, and that will grow to nine cubic miles of oil by 2050 if current trends continue.

Imagine the island of Manhattan covered with 150 feet of crude oil – almost enough to drown the Statue of Liberty – or 1,000 football stadiums filled to the brim with black gold.

That’s a cubic mile of oil, or the amount of oil alone the world now consumes in a year, Ripudaman Malhotra told an audience Monday at Greentech Media’s Greentech Innovations: End-to-End Electricity conference in New York.

And Malhotra, associate director of SRI International’s Chemical Science and Technology Laboratory in Menlo Park, Calif., wants people to think of all the world’s energy usage in terms of cubic miles of oil, or CMOs, because “That exercise will bring us face to face with the enormity of the challenge we are facing” in moving to a renewable energy future.

Including electricity generation, which takes up about 40 percent of the world’s energy usage, and all other forms of energy, the world uses the equivalent of three cubic miles of oil per year, he said.

But renewable energy makes up only a tiny portion of that measure of world energy supply, he said – about two-tenths of a cubic mile including large hydropower projects, and a mere 0.005 cubic miles of oil for all the solar and wind power now in place today.

It will be very difficult for renewable sources to grow to meet the world’s projected demand growth to somewhere between six to nine cubic miles of oil by 2050, he said. (see IEA Paints Dire Picture of Energy Supply and Demand).

While the sun provides an equivalent of 22,000 cubic miles of oil in energy to the earth, capturing that energy will take new technologies deployed on a scale that is hard to fathom, he said.

“If we are at .005 CMO [for solar and wind power] and want to get to 5 CMO, that’s a thousand-fold increase” over the next 40 years, Malhotra said by way of example. And current technologies are not effective enough to make up for “a big part of that gap, so I’m looking to see some new things,” he said.

The first problem is the sheer scale of the expected growth in energy demand, he said. Second is the disadvantages that solar and wind power have in terms of intermittency – not producing power consistently throughout the day and year – which will require new forms of energy storage to capture the power for use when it’s needed most, he said.

In terms of cubic miles of oil, Malhotra laid out some daunting figures for how much solar and wind would be needed to meet demand.

Getting just one CMO-equivalent of photovoltaic solar power in the next 50 years would require 4.2 billion 2-kilowatt solar rooftop systems, or 250,000 installed every single day over that timeframe, he said.

Looking at concentrated solar-thermal power, which produces power using the sun’s heat at lower cost than photovoltaic solar systems, Malhotra said it would take 7,700 solar-thermal parks of 900-megawatts capacity – or three built per week over the next 50 years – to add up to one cubic mile of oil equivalent.

As for wind power, getting to that one CMO-equivalent within 50 years would require putting up 1,200 1.6-megawatt wind turbines every week over that time, he said.

Using solar-thermal and wind power effectively will also require a massive investment in transmission to bring the power from the remote areas where it’s best produced to the cities that need it most, he said. (See NREL Hunts for Solar-Thermal Hot Spots and National Grid: Dream or Reality?)

Biofuels – which have the advantage of being the only form of renewable energy that can be easily stored – offer other problems, such as the energy that’s required to make them and the potential environmental and greenhouse-gas emission costs of clearing land or cutting down forests to make room for planting the crops to make them, he said.

Creating one CMO-equivalent of biodiesel, for example, would require an 85-fold increase in the current amount of land now dedicated to growing soybeans around the world, he said.

As for nuclear power, which Malhotra said must be a part of the world’s energy future, getting to the equivalent of one cubic mile of oil would require the building of 2,500 nuclear plants, or one every week for the next 50 years.

And fossil fuels, which now account for the vast majority of the world’s energy supplies, will have to increase in use as well, even as the world tackles how to keep their use from increasing greenhouse-gas emissions and thus the threat of global warming, he said (see Can You Spare $45T to Curb Global Warming?).

Given these massive challenges, “The operative conjunction is ‘and,’ because it will take nuclear and solar and wind and whatever” to meet the world’s energy needs, he said.

And the solution won’t just lie in increasing energy supplies, Malhotra said. Efficiency – doing more with less energy – and conservation, or foregoing the use of energy, will play an equally important role, he said.

Efficiency has “historically never reduced net consumption,” since people tend to increase their energy use as efficiency improvements make it cheaper, he said. Still, doing things like replacing one billion incandescent light bulbs with compact fluorescent lamps, or CFLs, could save the world an equivalent of one cubic mile of oil per year, he said.

Making more energy-efficient buildings, which now account for about half the world’s use of energy, could also have a big impact – if such improvements in lighting, heating and air conditioning systems, as well as more efficient building materials, can meet the price demands of developing countries like China and India, he said.

Bringing a host of efficiencies to the United States’ roughly $500-billion-per-year building renovation market could yield a savings of about one-tenth of a CMO, he said.

Bringing the same innovations to India and China, where several trillion dollars of buildings are built and renovated each year, would raise that energy savings to as much as two CMOs, he said. But right now “we really need major innovations to produce cost-effective solutions” for those markets, he said.

“Conservation, or avoiding [energy use], is tougher,” he said. But, given the enormous challenges in increasing energy supplies and improving energy efficiency, it will have to be part of the equation, he said.

Conservation and efficiency together could reduce the world’s energy demand by three cubic miles of oil equivalent, he said.

“The question is, what about the rest? Those solutions will have to come form the supply side now – and as we’ve seen, we have absolutely nothing on the supply side to meet this right now.”

Jeff St. John for Greentech Media  Nov 17th 2008