Cleanup costs vary widely for hydrocarbon spills (500-litre spill could cost between $3,000 and $200,000)

The typical cost of cleaning up a 500-litre hydrocarbon spill can range from $3,000 to $200,000, depending on a number of different factors, with the average running about $120,000, according to Mark Samis, vice president of operations with Environmental Remediation Services.
Samis said for hydrocarbon spills generally, insurers typically reserve for costs anywhere in the range of between $30,000 to $900,000.
Samis was speaking at the Canadian Independent Adjusters’ Association Ontario Chapter seminar at the Albany Club in Toronto on May 7.
Samis noted 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 (are there wires or piping underground?)
• 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 (is the leak moving from one property to another?);
• seasonal conditions, which might make the impact of a spill better or worse — i.e. rainwater could wash the contaminant away, or it could widen the scope of the damage by washing the contaminants down a storm sewer, for example.
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% of the costs are related to disposal of contaminants and another 40% goes to subcontractors. These two areas are the most likely to get out of control if not management properly, he said.
Another 15% of the costs go to project management consulting, sampling and reporting.
In total, 95% of the costs are indemnity costs. The other 5% are expenses such as consulting, sampling and reporting.