Hurricane Season Less Likely to Wind Up O&G Industry

Already off to a quiet start, June 1 marks the beginning of the Atlantic Hurricane Season, which spans five months and ends, to the relief of operators braving the storms in the Gulf of Mexico, on Nov. 30.

Contrary to forecasts made in December 2008, the oil and gas industry can expect a reduction in the number of tropical storms and hurricanes this year. Both the Department of Atmospheric Science at Colorado State University (CSU) and the National Oceanic and Atmospheric Administration (NOAA) cite a chance of up to 12 to 14 named storms, respectively, compared to the 16 named storms in 2008 -- five of which developed into major hurricanes. 

Specifically, weather experts at CSU are projecting an average season with the possibility of six hurricanes, with two intense ones developing from an average of 12 storms. This projection is in line with NOAA's 70% chance of nine to 14 storms, spawning up to seven hurricanes, one to three of which will have sustained winds above 111 miles per hour.

According to Gerry Bell, NOAA's lead Atlantic hurricane forecaster, the development of El Nino conditions, or unusual warming of the temperatures in the equatorial Pacific Ocean, as well as cooler water temperatures in the tropical Atlantic Ocean, could alter these predictions by further suppressing storm activity, reports Dow Jones.

Operators Take Heed

Although this year's hurricane season seems less likely to wreak as much havoc on offshore infrastructure in the Gulf than past seasons, operators must take heed of potential disruptions in drilling and production activities in the Gulf of Mexico should they find themselves in the path of an intense hurricane in the category of 2008's infamous Hurricane Ike and, to a lesser extent in terms of damage, Hurricane Gustav.

In a back-to-back run across the Gulf of Mexico, hurricanes Gustav and Ike tore through the region's oil and gas infrastructure and damaged numerous production facilities, bottlenecking output in the Gulf of Mexico --estimated in June 2008 at 1.3 million barrels of oil per day and 7 billion cubic feet of gas per day -- for months.

In fact, based on operators' reports compiled by the Minerals Management Service (MMS) in a final assessment issued Feb. 11, approximately 9.2% of oil production and 12.8% of gas production was still shut-in, compared to Sept. 7 shut-in figures of 79.8% and 70%, respectively.

"The Gulf of Mexico is one of the single largest suppliers of oil and gas to the U.S. market," said GOM Regional Director, Lars Herbst, underscoring the significant impact production outages can have on the nation.

One of the largest producers in the Gulf of Mexico, Shell this year increased the number of helicopters in its fleet from 17 to 19 for evacuation purposes in case a hurricane zeroes in on its GOM facilities. Shell's vice president of production Americas, Frank Glaviano, told Dow Jones that more helicopters were needed since the company boosted its regional employment to 1,800 employees and contractors, an increase of 200 compared to 2008 levels.

"This gives us a great deal of flexibility and allows us to maintain production as long as we can and still keep everybody out of harm," Glaviano said.

Lessons Learned

In response to lessons learned each year from inclement weather, the U.S. oil and gas industry is undertaking greater efforts to increase the safety of regional offshore personnel during the season, as well as utilizing web-based technology for more effective dissemination of company news.

Riding the current wave of social-networking in cyberspace, major oil companies Shell and Chevron are planning to keep personnel and company followers updated throughout this year's cycle of storms by tapping a new networking resource called Twitter. Issued via an online account, the Twitter updates are yet another fast-track method to disseminate information found on the companies' official websites.

In addition to communication, hurricane preparedness continues to increase with improved industry standards in the wake of Hurricanes Katrina and Rita in 2005, as well as the wreckage amassed from 2008's hurricanes, all of which were detrimental to oil and gas operations in the Gulf of Mexico. According to the MMS, Katrina and Rita destroyed 115 platforms and damaged another 52; on a similar course of destruction, Gustav and Ike destroyed 61 platforms, which produced 13,657 barrels of oil and more than 96 million cubic feet of gas daily, and moderately damaged 93 others.

As for gearing up offshore during the hurricane season, MMS has endorsed the American Petroleum Institute's improved safety guidelines for tie-downs on production platforms and improved safety specifications for jackups operating on the Outer Continental Shelf. A new generation of oil platforms, for example, were constructed to withstand adverse weather conditions, and the implementation of subsea equipment on offshore structures assist in preventing exteme damage from severe storms.




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