An analysis of Gulf of Mexico (GOM) oil and natural gas production data spanning 45 years determined that the average annual impact from hurricanes is “relatively modest,” and the impact on supply is “typically short-lived,” according to energy consultant IHS.
“While Hurricanes Katrina and Rita were an exception, historically, our data shows the overall impact to be much less than most people might expect,” said IHS senior product manager Steve Trammel. “IHS production data from 1960 through 2005, which includes the record levels of damage from Katrina and Rita in 2005 and significant hurricane impact from four other hurricanes in the last decade, shows that an average Gulf of Mexico hurricane season disrupts only 1.4% of the annual oil production and 1.3% of the annual gas production.”
The historically low impact on production is primarily attributable to industry planning, said Trammel. “The oil and gas companies are very focused on the safety of their personnel. Operators make the decision to pull crews off rigs well before a storm moves into the Gulf, so most disruptions to production are caused by suspension of operations as a safety precaution in the event that an approaching hurricane does threaten offshore production. As a result, average hurricane disruptions are short-lived with full production reestablished within a month.”
Historic average hurricane damage and production curtailment have been relatively modest, but actions to mitigate impacts from future hurricanes are warranted, according to IHS. GOM production and infrastructure “are more widespread than in the past so the risk is greater that hurricanes that enter the Gulf will damage and curtail the critical exploration and production activities. Also, meteorological forecasts predict a pattern of extreme storms for years to come.”
When hurricanes Katrina and Rita struck the Gulf Coast in 2005, they combined to impart record damage to offshore GOM oil and gas production and facilities, which helped push oil and gas prices to record levels by January 2006 and increased fears about oil and gas supply shortages. Following the two storms in 2005, the U.S. Minerals Management Service (MMS) reported that 3,050, or 75% of the platforms; 22,000 miles, or 67% of the pipelines; and about two-thirds of the region’s refineries were in the path of at least one of the storms.
By mid-December 2005, IHS data showed that cumulative shut-in oil was 101.7 million bbl, or 18.5% of yearly GOM oil production. Shut-in natural gas production totaled 526.2 Bcf, or 14.4% of annual output.
According to Trammel, the last decade recorded six major hurricanes, including Katrina and Rita, which caused significant production curtailments in the GOM. Most of the production from hurricanes Opal (1995), Georges (1998) and Lili (2002) was restored within a month. Hurricane Ivan (2004) disrupted 47.1 million bbl and 140 Bcf of gas production.
The petroleum industry has improved evacuation plans and its shut-in and restart procedures to ensure safety and to mitigate leaks and production loss, he said.
“Within economic limits, offshore structures are being engineered to withstand Category 5 hurricanes. In addition, MMS has mandated new design specs for offshore facilities and has issued a series of Notices to Lessees and Operators, called NTLs, for rig fitness requirements, platform tie-downs and ocean current monitoring, which are all tied to hurricane season.”
In 2006, IHS production data indicated that the GOM produced 130 million bbl, or 7% of the U.S. total, and 1.8 Tcf of gas, representing 8% of the U.S. total. Moreover, the deepwater continues to yield world-class oil and gas discoveries. IHS said data showed that discoveries yielded 6.2 billion boe from 2000 through 2005. As a result, the U.S. GOM was the seventh leading source/country in the world for discoveries during this period. According to IHS data, there are 2,332 producing oil wells and 2,765 gas wells in the U.S. GOM.
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