Early start for hurricane season

The 2012 tropical storm and hurricane season officially began June 1 and extends to Nov. 30, but it got off to an early start when Tropical Storm Alberto formed off the South Carolina coast and quickly weakened into a tropical depression in late May. At presstime last week, another possible tropical storm was brewing off the east coast of Florida.

Earth Networks predicts a “near-normal” hurricane season this year for the Atlantic Basin, which includes the Caribbean and the Gulf of Mexico. It forecasts 11-13 named storms compared with a 30-year average of 12. Of these, 6-7 could become hurricanes including 2-4 major hurricanes with winds in excess of 111 mph. The long-term average is 6 hurricanes including 3 major blows. Earth Networks said US landfall will be near normal.

The National Oceanic and Atmospheric Administration also expects a near-normal season, with 9-15 named storms and 4-8 hurricanes, of which 1-3 should be major. However, the Colorado State University forecast team earlier predicted a below-normal season with 10 named tropical storms, 4 hurricanes, and 2 major hurricanes.

Weather predictions are a crap shoot, of course, with no guarantees. Last year was supposed to be a more-active-than-usual storm season. It did produce more tropical storms than usual and a near-normal number of major hurricanes. But Irene was the only hurricane to make US landfall last year, coming ashore in New Jersey—the first to hit that state since 1903. Irene was one of the 10 most destructive and deadly hurricanes to hit the US, but the 2011 hurricane season produced virtually no damage to the Gulf Coast or offshore operations.

The 2005 season was the worst in recent memory, brewing 15 hurricanes including 7 of Category 3 or higher. Category 5 Hurricanes Katrina and Rita hit the US Gulf Coast in rapid succession late in the season, destroying 115 offshore installations in the gulf and shutting in 95% of gulf oil production and almost 30% of refining capacity.

That prompted alarmist claims that hurricanes were becoming stronger and more frequent because of global warming. As recently as March, one study forecast future hurricanes will be stronger because of global warming, although the number should not increase and may even decline. There have been damaging storms in recent years, including Hurricanes Gustav that hit Louisiana and Ike that hit Galveston, Tex., in 2008. However, there is no convincing evidence of an era of super-storms that alarmists predicted.

If a hurricane hits the US Gulf Coast this year, Olivier Jakob at Petromatrix in Zug, Switzerland, said, “One thing that we can be sure is that the US government will not hesitate one second in calling for a Strategic Petroleum Reserve release.” Many industry and political analysts say President Barack Obama is almost certain to tap the SPR to push oil prices lower prior to the November presidential election.

However, Jakob said, “It is also interesting to note that even the Republicans are starting to support the release of the SPR in case of supply disruptions due to the sanctions against Iran. We are starting to think that policymakers are waiting for the official start of the European sanctions on July 1 to trigger the SPR bullet, as legally it would become a formal event only on that date.”

Euro-zone factor

Barclays Capital Commodities Research analysts report rising economic uncertainty in Europe and lack of government policy response are affecting all risk assets. Stock markets have faltered, peripheral spreads relative to bunds have widened, and the euro has fallen sharply relative to the dollar. A “sequence of downbeat European debt headlines, particularly concerning Greece,” over an extended period has forced the oil market to adapt to “darker conditions,” they said.

“However, neither the macro environment nor the oil demand data itself are actually that apocalyptic,” they said. “Economic data from the US have been largely robust, while not all of the European figures have been dire.” Oil demand seems to be growing. With the exception of China, they said, global oil demand growth has been better than expected. They noted time spreads and physical differentials have held up despite the recent sell-off in flat price.

Still, they said, “Continuation of economic gloom and an over-concentration on European economic prospects are likely to create significant headwinds for prices in the coming months, much like last year when concerns about the health of the US economy were rife.”

(Online May 28, 2012; author's e-mail: samf@ogjonline.com)

Related Articles

Antitrust gambit shows why biofuel mandates must end

08/26/2013 With a ludicrous antitrust initiative, US senators from Iowa and Minnesota show why the federal Renewable Fuels Standard (RFS) needs repeal instead...

Energy consumption to escalate

07/30/2013 World energy consumption will jump 56% in the next 30 years, driven by growing demand in developing countries, the US Energy Information Administra...

US, Mexico energy trade in flux

05/28/2013 Energy trade between the US and Mexico is in flux with rising crude production in the US, falling production in Mexico, and rising Mexican demand f...

Foreign crude supply concentrated

04/29/2013 It’s no secret the jump in US oil production in recent years has dropped imports of foreign crude to the lowest It’s levels since 1997—down 1.3 mil...

Corn, ethanol prices squeeze profit

03/25/2013 Last summer, US prices for ethanol and corn reached such an imbalance that production costs exceeded revenue at relatively simple ethanol plants, t...

Working on the railroads

02/26/2013 The rapid increase of North American crude production has resulted in pipeline bottlenecks in some areas, forcing more reliance on rail transportat...

War, weather issues affect energy

01/28/2013 The fatal 4-day siege at the In Amenas gas production plant in eastern Algeria near the Libyan border that left 81 people dead “heightens concerns ...

Historic mistakes should guide US on LNG exports

01/11/2013

Political opposition to LNG exports by the US brings to mind monumental energy mistakes of the past.

2013 looks a lot like 2012

12/31/2012 New Year 2013 looks as though it will be much like the old one. There’s rioting in Egypt, confrontation with Iran, continued crisis in the Euro-zon...
White Papers

Solutions to Financial Distress Resulting from a Weak Oil and Gas Price Environment

The oil and gas industry is in the midst of a prolonged worldwide downturn in commodity prices. While ...
Sponsored by

2015 Global Engineering Information Management Solutions Competitive Strategy Innovation and Leadership Award

The Frost & Sullivan Best Practices Awards recognise companies in a variety of regional and global...
Sponsored by

Three Tips to Improve Safety in the Oil Field

Working oil fields will always be tough work with inherent risks. There’s no getting around that. Ther...
Sponsored by

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by

Squeezing the Green: How to Cut Petroleum Downstream Costs and Optimize Processing Efficiencies with Enterprise Project Portfolio Management Solutions

As the downstream petroleum industry grapples with change in every sector and at every level, includin...
Sponsored by
Available Webcasts


The Resilient Oilfield in the Internet of Things World

When Tue, Sep 22, 2015

As we hear about the hype surrounding the Internet of Things, the oil and gas industry is questioning what is different than what is already being done. What is new?  Using sensors and connecting devices is nothing new to our mode of business and in many ways the industry exemplifies many principles of an industrial internet of things. How does the Internet of Things impact the oil and gas industry?

Prolific instrumentation and automation digitized the industry and has changed the approach to business models calling for a systems led approach.  Resilient Systems have the ability to adapt to changing circumstances while maintaining their central purpose.  A resilient system, such as Maximo, allows an asset intensive organization to leverage connected devices by merging real-time asset information with other critical asset information and using that information to create a more agile organization.  

Join this webcast, sponsored by IBM, to learn how about Internet of Things capabilities and resilient systems are impacting the landscape of the oil and gas industry.

register:WEBCAST



On Demand

Taking the Headache out of Fuel License and Exemption Certificates: How to Ensure Compliance

Tue, Aug 25, 2015

This webinar, brought to you by Avalara, will detail the challenges of tax document management, as well as recommend solutions for fuel suppliers. You will learn:

-    Why it’s critical to track business partner licenses and exemption documents
-    The four key business challenges of ensuring tax compliance through document management
-    Best practice business processes to minimize exposure to tax errors

register:WEBCAST


Driving Growth and Efficiency with Deep Insights into Operational Data

Wed, Aug 19, 2015

Capitalizing on today’s momentum in Oil & Gas requires operational excellence based on a clear view of what your business data is telling you. Which is why nearly half* of oil and gas companies have deployed SAP HANA or have it on their roadmap.

Join SAP and Red Hat to learn more about using data to drive process improvements and identify new opportunities with the SAP HANA platform running on Red Hat Enterprise Linux. This webinar will also show how your choice of infrastructure impacts the performance of core business applications and your ability to achieve data-driven insights quickly and reliably.

*48% use SAP, http://go.sap.com/solution/industry/oil-gas.html

register:WEBCAST


OGJ's Midyear Forecast 2015

Fri, Jul 10, 2015

This webcast is to be presented by OGJ Editor Bob Tippee and Senior Economic Editor Conglin Xu.  They will summarize the Midyear Forecast projections in key categories, note important changes from January’s forecasts, and examine reasons for the adjustments.

register:WEBCAST


Emerson Micro Motion Videos

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected