US Oil, Gas Industry Look to Past Storms for Future Improvements

HOUSTON May 02, 2007 (Dow Jones Newswires)

The deadly hurricanes of 2005 have forced the U.S. offshore oil and natural gas industry to reevaluate and make changes in the way they operate their rigs to protect and preserve mining the nation's largest source of oil and natural gas.

Waves from Hurricanes Katrina and Rita reduced drilling rigs into "pickup sticks" on the ocean floor, said Frank Puskar, president of Energo Engineering during a panel discussion on hurricane preparedness at the Offshore Technology Conference in Houston Tuesday.

The storms destroyed some 190 oil rigs of the existing 3,900 and cut into, at one point, 100% of U.S. oil production in the region. About 30% of U.S. oil and about 23% of the nation's gas comes from Gulf of Mexico wells.

While it will be hard to determine exactly how to keep such infrastructure out of harm's way in the event of another storm, the industry is working fast and furiously to elevate rigs higher, tie them down tighter and upgrade design standards while keeping a keen eye on exactly which parts of the Gulf are most trafficked by storms.

"There are a lot of little things that we hope will help us in the long run," said Andy Radford, manager of upstream standards for the American Petroleum Institute (API) on the sidelines of the OTC. "There's no magic bullet. Until we've tested it, we have to wait and see."

Industry executives say they're working with the American Petroleum Institute to use lessons learned from the 2005 hurricanes to establish new guidelines for securing drilling rigs and protecting equipment by next year.

Among the challenges the industry faces is protecting against hurricanes that have become more fierce and destructive in the last several years. In particular, tropical storms that make large waves that crush pipelines, drilling rigs and other manmade structures have become more frequent, experts say.

The three largest wave-making storms in history have occurred between 1995 and 2005, said James Stear, an ocean engineer with Chevron. Those were Hurricanes Opal in 1995, Ivan in 2004 and Katrina in 2005, he said.

"There's nothing like that back to 1900," Stear said.

One additional issue facing the industry is the lack of available materials to reinforce the structures, Radford and other industry insiders said.

Due to surges in steel prices and other materials as emerging economies eat into supplies, "there are limitations on the worldwide supply of the wire, chain and polyester needed to upgrade the (mobile offshore drilling unit) fleet," John J. Stiff of ABS Consulting wrote in a recent paper, as part of the proceedings of the OTC conference.

What is clear is that the industry is suggesting and testing methods to keep rigs more secure amid fierce storms, particularly in the central part of the Gulf Coast, just south of New Orleans, where Hurricane Katrina proved to be most destructive.

Ocean engineers and meteorologists have divided the Gulf into four areas (west central, central, west and east) in an attempt to carve out the areas where the most damage occurred during the storms and better prepare energy production infrastructure for future storms. The corridor that showed the most storm activity, not surprisingly, was the central region, just south of New Orleans, owing to the warm current which feeds a storm, Radford said.

The federal government may use the research to help devise guidelines for energy infrastructure design, said Alex Alvarado, chief of the pipeline section for the Minerals Management Service at the U.S. Department of the Interior.

The research results could also indicate the best, safest areas to operate during hurricane season, he said.

Copyright (c) 2007 Dow Jones & Company, Inc.


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