What insurance issues are specific to oilfield work around Kermit and Wink?

Kermit is in central Winkler County and has been the county seat since the county organized in 1910. The Handbook of Texas puts Kermit 40 miles west of Odessa and lists State Highways 18, 302 and 115 through town. Wink is seven miles southwest.

Winkler County is adjacent to the southeastern corner of New Mexico.

• RRC oil and gas district: District 08, handled from the Midland district office.
• TxDOT district: Odessa.
• Basin: The Wink Sinks study places this area on the eastern edge of the Delaware Basin.

Oil was discovered in central Winkler County on July 16, 1926, with the Hendrick No. 1. The Handbook of Texas says the boom built the town of Wink and drove Kermit's growth.

The same field is tied to the area's best-known geologic hazard. Wink Sink No. 1 opened in 1980 and Wink Sink No. 2 in 2002, between Wink and Kermit. A peer-reviewed study by Kim, Lu and Kaufmann says the sinks sit on the Salado Formation on the eastern edge of the Delaware Basin, and links the collapses to intense drilling and production in the Hendrick oilfield, with salt dissolution from freshwater intrusion as the proposed mechanism.

Southern Methodist University's 2016 research found:

• Sink No. 1 about 361 feet across and Sink No. 2 from 670 to 900 feet across.
• Ground about 0.7 miles northeast of Sink No. 2 subsiding more than 5 inches a year.
• A road used by oilfield vehicles about a quarter mile north of Sink No. 2 sinking about 1.2 inches a year.

Both sinkholes are fenced. A 2018 SMU follow-up also found about 2.1 inches of uplift near wastewater injection wells west of Wink and Kermit.

The sinkholes themselves are fenced, but ground movement near old fields is a real working condition in this area. Insurance questions it raises:

• Equipment floater. Ask whether your contractors equipment coverage excludes or sublimits earth movement, collapse or subsidence, and whether overturn is covered. A rig or truck that goes over on soft or settling ground is a floater claim for your own equipment.
• Auto. Physical damage to a truck that drops into a washout or sinking road is covered under collision or comprehensive, if you carry it on that unit.
• Third-party damage. If your equipment damages an operator's pipeline or facility on unstable ground, that is a GL question, and the MSA's knock-for-knock language decides whose insurance responds. See knock-for-knock indemnity.
• Underground damage. Work on old Hendrick-area wells can involve casing and wellbores that are decades old. Check who takes loss of hole and underground damage. See underground resources and equipment coverage.

Winkler County sits against New Mexico, so Kermit crews often have New Mexico work in reach.

Workers' comp. New Mexico requires coverage for an employer with three or more workers, and for any business licensed under the Construction Industries Licensing Act regardless of size. Texas does not force most private employers to carry it. List New Mexico on your WC policy's information page before sending crews, and make sure your certificate shows it. See do oilfield contractors need workers' comp in Texas.

Indemnity. NMSA 56-7-2 voids indemnity tied to an oil, gas or water well to the extent it covers the indemnitee's own negligence, and the 1999 amendment also voids additional insured and waiver of subrogation requirements that would get around that ban. A Texas MSA may not work the same way on a New Mexico lease. The attorney reviews the contract and we make the insurance match it. See Texas oilfield anti-indemnity act.

Under Statewide Rule 36, where gas contains hydrogen sulfide at 100 ppm or more, operators must use trained service company personnel and get written certification from the service company. Operators file a Form H-9 with the RRC reporting H2S concentration, and the H-9 query can be searched by county, so you can see which Winkler County leases have filed certificates. Keep your training certificates current and ready to upload to ISNetworld or Avetta.

To review a Kermit-area program, send us:

• The insurance exhibit and indemnity sections of each MSA.
• Current certificates, and any rejection notice.
• Your equipment schedule, with values, so we can check the floater terms.
• Whether any crews work in New Mexico.

Coverage is placed through a licensed Texas insurance agency. Contact an expert.