Special Report: Hurricane Preparedness - Oil and gas interests warned of active 2007 hurricane season

Drilling equipment lies unused in the wake of Hurricane Katrina in Port Fourchon, La. Photo by Radhika Chalasani/Getty Images

Interestingly, the season’s first named storm - Andrea - formed in the Atlantic about 140 miles east of the Florida coast on May 9, more than three weeks ahead of the official start of hurricane season. Dubbed a “subtropical storm” because it did not form in tropical latitudes, Andrea petered out a few days later without making landfall. Forecasters cannot say for certain whether this is a precursor to an especially dangerous year for storms or not.

Several hurricane experts have said they expect as many as 17 tropical storms and hurricanes this year. Speaking at the second annual AccuWeather Hurricane Summit in Houston last month, Philip J. Klotzbach, a research associate at Colorado State University, and Joe Bastardi, chief hurricane forecaster for AccuWeather Inc. acknowledged their predictions for an active hurricane season last year were wrong, but they still believe 2007 will be especially active.

Klotzbach and his mentor at the Department of Atmospheric Science at Colorado State, William M. Gray, have admitted their forecast for 2006 was off due to the unexpected influence of an El Nino warming pattern in the Pacific Ocean, which affects weather over much of the globe. This year, the El Nino influence will have diminished, they say, and the “very active” hurricane pattern we are currently in will resume.

According to the National Oceanic & Atmospheric Administration (NOAA), it is believed that El Nino contributes to a smaller chance of hurricanes in the North Atlantic, which spares Atlantic and Gulf Coast states from the associated storm damage. However, NOAA cautions that not al El Nino and La Nina episodes have been the same, nor does the atmosphere always react in the same exact way from one event to the next.

The Atlantic hurricane season averages 9.6 named storms, with 5.9 of them developing into hurricanes and 2.3 major hurricanes. Last year, there were 10 named storms in the Atlantic and 5 became hurricanes. None of them made landfall in the United States, the first time since 2001 that has happened. Last year was also the first year since 1992 that no storms developed in the Gulf of Mexico.

This year, Klotzbach said there is a 74% chance of a major hurricane striking the US coast, with a 49% probability it will make landfall along the Gulf Coast between the Florida panhandle and Brownsville, Tex. - the heart of the US offshore oil and gas industry.

AccuWeather’s Joe Bastardi said he expects “13 or 14” named storms, 6 or 7 of which will strike the US. He explained that the Florida peninsula, because of its geographic location, is much more likely to be hit as any other place in the US but that the Texas coast has been experiencing frequent hurricane and tropical storm strikes as well.

“We are living in a time of climatic hardship,” said Bastardi. “We’re in a cycle where weather extremes are more the norm and not the exception.” Because the waters of the Gulf of Mexico are extremely warm during late summer, especially during August and September, storms that enter the Gulf frequently draw strength from the heat and intensify as they get closer to land.

The 2005 hurricane season set a record with 28 named storms, 15 of which developed into hurricanes, including Hurricanes Katrina and Rita.

Last year’s forecasts overpredicted storm activity

Founded in 2000, London-based Tropical Storm Risk (TSR) also admitted that its forecasts for 2006 were “unsuccessful.” The forecast venture at University College London has developed computer models that they claim significantly improve the ability to predict the strength of hurricane activity in the Atlantic Ocean and elsewhere in the world.

A spokesman for TSR said the poor forecasts for last year “appear to be due to the suppressing effect of dry air and Saharan dust in August and to the unexpected and rapid onset of El Nino conditions in September.”

All of TSR’s forecasts greatly overpredicted the total number of storms and US landfalls in particular, he said.

No storms developed in October or November, the final two months of hurricane season. The last time this occurred was 2002. Since 1950, only 11 years of the past 56 have seen no named storm form after Sept. 30.

However, TSR is not backing off its predictions for an active hurricane season in 2007. Researchers at the organization have calculated an 84% probability that the coming hurricane season will be “above average,” while adding that there is a 13% likelihood it will be “near-normal” and only a 3% chance it will be “below-normal.” Numbers are based in part on the 57-year period 1950 to 2006.

Key predictors behind TSR’s 2007 hurricane forecast are the anticipated moderate enhancing effect of July-September forecast trade winds at 925mb height over the Caribbean Sea and tropical North Atlantic region, and of August-September forecast sea surface temperatures for key locations in the Atlantic Basin.

The TSR scientific grouping brings together climate physicists, meteorologists, and statisticians in an effort to provide improved forecasts. These forecasts provide separate predictions for tropical storms, hurricanes, intense hurricanes, and the ACF (Accumulated Cyclone Energy) index for each of the following regions: North Atlantic Basin, tropical North Atlantic, US landfalling and Caribbean Lesser Antilles landfalling.

Mark Saunders, lead scientist and project manager for TSR, said we are now 12 years into an active hurricane cycle that began in 1995. He expects the cycle to last another 15 to 20 years.

“Because of higher ocean temperatures, the active cycles will be more intense - and even less-active periods will not be as low as they formerly were,” he said. “Ocean temperatures are expected to rise another two to three degrees in the next 100 years.”

Insurance companies transferring risk

Bill Martin of Benfield Corporate Risk, a co-sponsor of TSR, commented that the tremendous losses experienced by the insurance industry as a result of Hurricanes Katrina and Rita will mean there will be greater risk transfer.

“Oil and gas executives shouldn’t be surprised when they learn their premiums may be increasing [as a result of the hurricane losses],” said Martin. He added that the insurance industry has to offset its losses and that oil and gas companies in affected areas can expect to pay different amounts for their coverage depending on the degree of their exposure to weather-related risk.

“When it comes to insurance coverage, there is no longer any one-size-fits-all model for offshore operators,” Martin added.

When Hurricane Katrina came ashore along the Mississippi River delta southeast of New Orleans on Aug. 29, 2005, and Hurricane Rita followed suit, striking the border of southeast Texas and southwestern Louisiana about a month later, the two storms struck at the heart of the petroleum infrastructure in the Gulf. Nearly every link in the energy chain was damaged by the hurricanes - upstream, processing, pipelines, and support infrastructure required to maintain these links.

About 30% of US oil and 23% of the nation’s gas comes from wells in the Gulf of Mexico. The region is second only to the onshore Gulf Coast as a gas-producing region, so the storms were major energy and macroeconomic events. Katrina and Rita combined to destroy approximately 190 offshore rigs of the estimated 3,900 in operation. For a time, 100% of Gulf oil and gas production was shut-in.

The catastrophic damage wrought by Katrina also severely impacted processing plant operations. Several plants were rendered inoperable for a while because of wind and water damage, and even those that weren’t severely damaged were offline for a time due to localized flooding, lack of electricity, and personnel who were unable to get to their jobs. Rita affected many smaller processing plants in the area it struck.

Both hurricanes damaged pipelines, and there was concern over gas quality in many that remained operational. Gas from downstream pipelines had to be used to blend-down wet gas received from hard-hit areas.

The onshore support infrastructure for offshore activity may have taken a hardest hit by Katrina and Rita. While the platforms may have survived, the people onshore who operate them and the facilities and supply boats necessary to get production going again took an even bigger pounding.

Many onshore plants and refineries had to find new housing for their employees, in some cases temporarily putting them in boats, recreational vehicles, and FEMA trailers while trying to line up day care for their children.

In short, the extensive damage caused by the two 2005 hurricanes crippled Gulf of Mexico production for months. Shut-ins exceeded 1 bcfd for an extended period of time, and future storms of the same magnitude could cause similar problems throughout the supply chain.

During a panel discussion at the April 30 - May 3 Offshore Technology Conference in Houston, Frank Puskar of Energo Engineering commented that Katrina and Rita reduced drilling rigs to “pickup sticks” on the ocean floor. While it is difficult for the industry to determine how to protect its vital infrastructure in the event of another hurricane of similar magnitude, the industry is working hard to figure out how to elevate rigs higher, secure them better, and upgrade design standards while keeping an eye on maps of the Gulf to learn which parts are most susceptible to high waves and other damaging conditions wrought by the storms.

Large waves, in particular, have been devastating to Gulf pipelines, rigs, and other manmade structures, said James Stear, a Chevron engineer. The three largest wave-producing storms in recorded history have occurred since 1995 - Opal in 1995, Ivan in 2004, and Katrina in 2005.

Industry executives are working with the American Petroleum Institute to apply lessons learned from Rita and Katrina to set new guidelines for securing offshore rigs and protecting people and equipment. These new standards should be established by 2008 at the latest, said an API spokesman.

With the probability of even more damaging hurricanes before the current cycle of severe storms plays out, the industry is doing everything it can to minimize losses and protect its investment.