Cleanup costs vary widely for hydrocarbon spills

The cost of domestic fuel oil losses can range greatly, from $30,000 on the low end to $900,000 for a really bad spill trapped under a large home; the result of a 900-litre tank that has either let go or been leaking for a while, according to Mark Samis, vice president of operations with Environmental Remediation Services.

Samis was speaking at the Canadian Independent Adjusters’ Association Ontario Chapter seminar at the Albany Club in Toronto on May 7.

The cost of a hydrocarbon spill cleanup varies widely, depending upon a range of factors, such as:

• size of the release/damage;

• how quickly the cleanup begins can affect how much the damage spreads;

• remediation criteria, meaning the condition to which the affected site is to be returned (i. e. to its original background condition, to pristine condition, etc.);

• geology and hydro-geology of the site (sand, clay, limestone, water, bedrock, etc.);

• how far away is the site and how much travel is involved;

• the need for and extent of site assessment;

• land use;

• infrastructure

• whether or not there are competing jurisdictions (for example, having to wait for a police investigation to be concluded before gaining access to the site to be cleaned up;

• third parties (if the leak moves from one property to another);

• seasonal conditions, which might make the impact of a spill better or worse — i.e. a rainstorm could wash the contaminant into a storm sewer and then it’s gone or a major snowstorm could impede cleanup if the access roads to the site are closed.

Adjusters should keep in mind that if contractors are not provided clear direction from the beginning, or if a clean-up project manager is not independent (i. e. he or she has a vested interest in a particular solution), the costs of the cleanup can increase significantly.

Samis said in a typical transportation cleanup, 40 per cent of the costs are related to disposal of contaminants and another 40 per cent goes to subcontractors. These two areas are the most likely to get out of control if not management properly, he said.

Another 15 per cent of the costs go to project management consulting, sampling and reporting.

In total, 95 per cent of the costs are indemnity costs. The other five per cent are expenses such as consulting, sampling and reporting.