Texas Oil Company Challenges $250 Million Insurance Collateral Demand for Pipeline, Offshore Operations
HOUSTON — W&T Offshore, a Texas-based oil and gas producer, is pushing back against a group of insurance companies demanding an additional $250 million in collateral, beyond what the company has already arranged for its production bonds.
The company filed a lawsuit seeking a federal court ruling that the insurers have colluded to harm W&T by demanding higher premiums and collateral.
The dispute centers on regulations from the Bureau of Ocean Energy Management (BOEM), which requires companies operating on the Outer Continental Shelf to provide a bond for the cleanup of wells, platforms, pipelines, and facilities in case the operator fails to perform the necessary work. In recent years, the federal agency has imposed requirements for small and mid-sized operators, like W&T, to provide additional bonds.
Despite having operated for over 70 years in the Gulf of Mexico without the government ever needing to cover abandonment cleanup, W&T's insurers, including Endurance Assurance Corp., have demanded more collateral. In July, one insurer asked W&T to immediately pay an additional $89 million, later raising the demand to $93.5 million in November, despite the company never missing a payment. Other insurers followed with similar demands.
“These insurance companies and their unreasonable demands for increased collateral pose an existential threat to independent operators like W&T,” said CEO Tracy W. Krohn. “We cannot afford to keep paying for insurance we’ve already paid for in the course of our operations. This is no different than your auto insurance carrier all of a sudden demanding you put up 100 percent of your car’s cash value in addition to doubling or tripling your existing premium."
W&T’s lawsuit, filed in August and amended this week, accuses five insurers of conspiracy, claiming they met at least once in 2024 to coordinate higher premiums and collateral. The lawsuit includes allegations of price-fixing, antitrust violations, and tortious interference with existing contracts. W&T is asking the court to block the insurers’ demands and award damages.
The company maintains that it holds valid bonds to cover any potential cleanup costs for its offshore operations. Meanwhile, several states, including Texas, are challenging BOEM’s rule, citing W&T as an example of how the regulation could harm energy producers.
The case, W&T Offshore, Inc. et al. v. Endurance Assurance Corporation, et al., is being heard in the U.S. District Court for the Southern District of Texas.
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