El Paso Takes New Precautions in Preparation for Active Hurricane Season
El Paso Corp., the gas pipeline company that suffered the most under the wrath of Hurricanes Katrina and Rita last year, is taking a number of new precautions in preparation for what may be another active hurricane season, said Dan Martin, senior vice president of operations for El Paso's five major regulated pipelines.
With $457 million in damage to El Paso's Gulf Coast pipeline infrastructure from hurricanes Katrina and Rita, the company was forced to sell off assets, issue debt and enter into new credit facilities to maintain liquidity while paying for repairs, about $241 million of which weren't covered by insurance, according to El Paso's 10-K filing in March. A total of 13 pipeline segments on three of El Paso's interstate pipelines (ANR Pipeline, Tennessee Gas Pipeline and Southern Natural Gas), 31 risers, four platforms, 406 meters and eight compressor stations were damaged by the hurricanes.
The company is taking numerous actions to avoid some of those damages and costs in the event of another bad hurricane season this year. El Paso has ordered more infrastructure reserves, signed new contracts with repair crews, improved the way it prioritizes its repairs and significantly beefed up its communication systems and procedures among many other changes.
In his 28 years with the company, Martin said 2005 presented by far the biggest crisis-management challenges. It was a learning experience, he said in an interview with NGI, but "I really don't know that we could have gotten more [infrastructure back online any quicker]."
"Communications are the key," said Martin. "We're looking at multiple avenues to enhance our communications activities, including more satellite phones... For our helicopters, we are also installing additional radio facilities as well some satellite phones. We have restocked our emergency [pipeline] repair fitting supplies... We are putting into place some contracts with rights of first refusal with offshore contractors that [will allow us to call on repair companies] earlier than we might otherwise do when a hurricane is coming," he said.
"We are even going to back things up a couple of days" as far as evacuations and preparations for a hurricane are concerned. "We are going to do our pre-planning even earlier than we had in the past."
He said extra generators, additional measurement equipment and other infrastructure have been ordered. Breakaway joints have been installed on pipelines in the Mississippi Delta area that are susceptible to mudslides. "They minimize the damage to pipelines but also allow us to shut in the pipelines should pipelines separate."
Martin noted that Tennessee Gas Pipeline has made a series of new interconnections with other pipelines, including Discovery Gas Transmission, that allow producers to reroute gas to operational processing plants or markets.
"As far as repairs, what we've learned is that some of the...marsh facilities were installed at grade, six to eight feet above sea level, and we've made the decision to put some of those facilities up on platforms, which would enable us to go through some of these hurricanes with the tidal and wave action and come through that without the damage that we saw last year," said Martin. "Those are just some of the items that we are working on."
Repairs are finally nearing completion eight months after the hurricanes impacted the entire Gulf of Mexico, and about 85% of pre-hurricane natural gas volumes are currently back online throughout the entire Gulf.
"We are trying to have the vast majority of our repairs completed in the second or third quarter of this year," Martin said. "Some of those are going to be tied in with decisions made by producers...and the availability of contractors... We do have some work on our onshore facilities -- the decision to move them up onto platforms -- that is going to go into early 2007. That will not impact throughput," he said.
About 300,000 Dth/d of supply remains shut in upstream of Tennessee Gas Pipeline and of that total about 100,000 Dth/d is shut in due to pipeline damage. Repairs to Tennessee's Blue Water System are expected to be finished in mid-May and repairs to the South Timbalier/Bay Marchand Area are expected to be completed later this month, allowing 70,000 Dth/d of production to resume flow. Supply upstream of Southern Natural Gas is now near pre Katrina levels, El Paso said. On Tuesday, Southern lifted a force majeure on facilities upstream of the Toca compressor station and accepted nominations from more than a dozen upstream meters.
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