In the wake of the 2005 hurricane season that shut-in much Gulf of Mexico oil and gas production for months, industry is considering various safety and precautionary measures to limit potential damages from future hurricanes.
Hurricanes Katrina and Rita caused the biggest disruptions ever experienced by gulf oil and gas operations, the US Department of Energy said in a final 24-page report issued early this month.
Katrina made landfall near New Orleans on Aug. 29, 2005, entering the gulf as a Category 5 storm. It destroyed 44 platforms and damaged 20 others. It also damaged at least 100 pipelines in federal water, 6 of which were 10 in. or larger, causing the shut-in of at least 8 processing plants.
Rita made landfall near the Texas-Louisiana border on Sept. 24, 2005. It was a Category 4 hurricane upon entering the gulf. Rita destroyed 69 offshore platforms and damaged 32 others. It also damaged at least 83 offshore pipelines.
DOE reported the hurricanes literally shredded the service industry’s network of workboats, crews, divers, supplies, and equipment needed to assess damages and repair platforms and pipelines.
“Docks and fleets were destroyed, electric power was lost on a wide-scale basis, and transportation fuels were not available for the boats, helicopters, and ground transportation vital to the recovery,” DOE said. “This damage to the support service hindered the natural gas industry’s ability to recover from the storms.”
The industry is considering numerous precautionary measures to reduce damage from future storms. Measures include increasing the space between a jack up hull and water to avoid damage from the waves created by a storm surge.
Offshore oil and gas producers and drilling contractors also are working with the federal government to address mooring reliability issues. This effort got under way following Hurricane Ivan in 2004, which left five rigs adrift, and intensified last year after Katrina and Rita, in which 19 mobile offshore drilling units broke away.
Companies are moving toward sturdier mooring lines, changing from a 9-point system to a 12-point system.
Industry also is studying the fatigue life of risers, saying multiple hurricanes and storms cause additional strain and stress. The American Petroleum Institute and the US Minerals Management Service plan a November conference to discuss fatigue factors, an MMS spokesman said.
Communications
BP PLC plans to spend $100 million on fiber-optic cable to improve communications with deepwater platforms.
Kenny Lang, vice-president of BP’s gulf operations, said deepwater platforms in the Gulf of Mexico currently communicate with company headquarters via satellites and microwave link, but both satellites and microwave links go down during storms.
The cable is expected to be installed off Texas to Mississippi starting in December, Lang said, adding that it will be more resistant to storm interruptions and will allow the transmission of more data.
The fiber-optic system is expected to begin operating in summer 2007, he told an Aug. 22 energy forum at Rice University’s James A. Baker Institute.
BP also rerouted a pipeline that shifted 3,000 ft on the sea bottom during the 2005 hurricane season, Lang said.
Deepwater pipelines are put in trenches with concrete pads over the top of them but are not buried. Lang said BP and other industry participants are reviewing how to better anchor these pipelines, including the use of bigger, heavier concrete pads.
“There is a snarl of pipelines...and Katrina rolled right over the top,” Lang said of the infrastructure. “Without doubt, the 2004-05 seasons were the most devastating this industry has seen.”
Wood Mackenzie
Eugene Kim, Wood Mackenzie senior analyst for North America gas research, said the hurricane-related costs of production losses and infrastructure damage have been staggering. His comment came during an Aug. 23 telecast with reporters.
“The lost oil and gas revenue from the devastating sister hurricanes can be conservatively estimated at $16 billion using annualized 2005 prices and estimated cumulative shut-in volumes to date,” Kim said.
API estimated offshore damages to rigs, platforms, and pipelines at a total of $18-31 billion. This has triggered higher insurance rates for gulf producers.
Transocean reported its insurance rates rose to $20 million/quarter from $13 million/quarter , WoodMac reported in a report entitled “Calm Before the Storms as We Enter the Peak of the 2006 Hurricane Season.”
WoodMac noted that industry has proposed several design upgrades and facilities improvements, but that little could be done before the peak 2006 hurricane season because companies are still assessing and repairing damage from the 2005 season.
Weather forecasters say the Atlantic Basin is in the midst of a heightened period of storm activity levels.
“Wood Mackenzie assumes that the record 2005 hurricane season was an outlier and will not be repeated in 2006 in terms of frequency, damage, or production losses,” Kim said. “Historically, only a small amount of Gulf of Mexico oil and gas production volumes are affected each year due to the hurricane season.”
But he expects a larger-than-average volume of shut-in oil and gas production during the 2006 hurricane season given the forecast for a heightened period of storm activity levels.
Kim said that the shift to deepwater production means that companies are developing several fields jointly using integrated and shared production facilities, such as Independence Hub.
“As multiple fields in the future are developed through a central production facility, the production effects of potential damage to offshore production facilities through hurricanes are forecast to be exacerbated,” Kim said.
Damage reports
Chris C. Oynes, MMS gulf regional director, told participants at the Rice forum that an estimated 3,050 of the 4,000 offshore platforms and 22,000 of the 33,000 miles of pipelines in the gulf were in the direct path of either Katrina or Rita.
Damage inflected by the two storms impacted 47 major gas processing plants and 17 NGL fractionation sites along the coasts of Texas, Louisiana, Mississippi, and Alabama. Those facilities had an aggregrate processing capacity of 22.8 bcfd.
In a final statistics report issued June 21, MMS estimated 9.4% of daily gas production remained shut in as of June 19.
The US Federal Energy Regulatory Commission revised its rules to better monitor and assess the physical state of the interstate gas pipeline grid and gas storage infrastructure when service is disrupted due to damage caused by a hurricane, other natural disasters, or acts of terrorism.
FERC will require jurisdictional gas companies to report damage to facilities and report service disruptions that occur when a natural disaster or other cause results in a reduction in pipeline throughput or storage deliverability.
“The rule fills a regulatory gap identified by the commission last year after Hurricanes Katrina and Rita,” said FERC Chairman Joseph T. Kelliher. “The commission lacked vital information on the physical condition of facilities that affected the operation of the pipeline grid. This rule will enhance our ability to mitigate critical gas service issues more quickly.”
Even if there is no service interruption, FERC will require companies to file electronically more specific information on the cause and the extent of damage done to gas infrastructure.
In addition, FERC will require reporting of the time of damage occurrence, emergency actions taken by the company to maintain gas service, and to report when damaged facilities are fully restored to service. Companies must continue to report serious service interruptions and restoration of service.
Also FERC is providing an additional 10 days for pipeline companies to file with the commission a copy of any incident reporting forms required to be filed within 30 days of an incident with the US Department of Transportation.
