Dutch Court Suspends Gas Production on earthquake fears; Pennsylvania Insurance Dept Issues Quake Notice: Fracking Exclusion Not Allowed, “Endorsements that attach to homeowners insurance policies in this Commonwealth should cover all earthquakes, whether believed to be ‘naturally occurring’ or caused by ‘human activity’”

Pa: Fracking Exclusion Not Allowed in Homeowners Earthquake Endorsements by Insurance Journal, April 15, 2015
The Pennsylvania Insurance Department issued a notice telling insurance companies that earthquake endorsements to homeowners insurance policies in Pennsylvania cannot exclude coverage for earthquakes that may be caused by “human activity” such as fracking.

According to the Pennsylvania Insurance Department’s notice issued on April 11, some insurers have asserted that because of an increase in natural gas extraction in Pennsylvania by means of a process commonly referred to as ”fracking,” endorsements should exclude coverage on homeowners policies for earthquakes that are not “naturally occurring.”

But Pennsylvania’s Acting Insurance Commissioner Teresa D. Miller wrote in the notice that determining with certainty that human activity caused an earthquake is very difficult. Insurance claims by homeowners should not go unpaid during a long and arduous investigative process that will likely uncover no definitive proof linking the earthquake to human activity, Miller said.

“Insurers and rating organizations are therefore instructed that earthquake endorsements that attach to homeowners insurance policies in this Commonwealth should cover all earthquakes, whether believed to be ‘naturally occurring’ or caused by ‘human activity,’” the notice stated.

The notice stated that insurers with earthquake endorsements already in the marketplace which exclude coverage for earthquakes that are not naturally occurring should not enforce these exclusions, and that new endorsements without the exclusionary language should be filed with the Insurance Department by no later than July 1, 2015.
[Emphasis added]

Dutch court limits fracking on earthquake fears Isis Almeida and Elco van Groningen, Bloomberg News, April 14, 2015, The Globe and Mail
A Dutch court suspended gas production from the Loppersum area of the Groningen natural gas field, Europe’s biggest, as earthquakes linked to production damaged homes.

Loppersum, which pumps less than 10 per cent of the field’s output, may produce “small volumes of gas” only if “extraction from other locations is no longer possible and if necessary for the security of supply,” the Administrative Jurisdiction Division of the Council of State in The Hague said Tuesday on its website. Dutch and U.K. gas prices reversed earlier gains.

The court decision was taken after two out of at least 40 claimants asked for an accelerated motion on the case before a final ruling later this year. The hearing was held on April 1 when the judge said he didn’t favour a complete halt. Production caused 196 earthquakes in the region in the past two years, according to the Ministry of Economic Affairs. Groningen accounted for 61 per cent of the nation’s output last year.

Economy minister Henk Kamp responded to the decision by saying the Nederlandse Aardolie Maatschappij, or NAM, will reduce gas production in Loppersum to a minimum level in line with the ruling, according to an e-mailed statement. “The market view is that this decision will not have an adverse effect on current production levels,” Wayne Bryan, an analyst at Alfa Energy Group in London, said Tuesday by e-mail. “Status quo maintained.”

NAM will study if operational adjustments are needed after the ruling, spokesman Ernst Moeksis said by e-mail. There will be a meeting on Wednesday between NAM, gas marketer GasTerra BV and Gasunie, GasTerra spokesman Anton Buijs said by e-mail.

“The interim relief judge saw no reason to stop gas extraction from the Groningen field in full,” the Administrative Jurisdiction Division of the Council of State in The Hague said Tuesday on its website. “If production were stopped in full, demand for gas from the Netherlands and neighbouring countries could not be met.”

The two parties are appealing against the Ministry of Economic Affairs’s decision in December to reduce output to 39.4 billion cubic meters in 2015 from a target of 42.5 billion cubic meters.

“It seems to me that the Dutch court and the Council of State are being very cautious and responsible,” Zach Allen, president of Pan Eurasian enterprises, said by e-mail Tuesday. “Gas production is important to the economy of the country,” he said, adding he expected more reductions in the future.

The ministry limited first-half output to 16.5 billion cubic meters and said it will on July 1 decide on full-year ceiling of 35 billion or 39.4 billion cubic meters.

A definitive decision will be taken in the autumn, with the next hearing in September, court spokeswoman Wendy van der Sluijs said Tuesday, adding that the temporary ruling is no indication of the final decision.

“We’re extremely happy. This ruling is historic,” Nette Kruzenga, co-founder of Groningen Centraal, one of two groups seeking an immediate halt in Groningen gas production, said Tuesday, according to the ANP newswire. “It is clear the judge said that the situation around Loppersum is dangerous.” [Emphasis added]

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