Hurricanes and tropical storms can significantly affect U.S. oil and natural gas operations, especially in the Gulf of Mexico, which contains more than 3,000 oil and gas platforms, coastal refineries and processing centers. During Hurricane Isaac, 24% of daily oil production and 8% of natural gas production was shut off. A decrease in production can cause gas prices to go up and in extreme cases, can even cause supply shock.
In order to keep up with consumer demand, the oil and gas industry has developed procedures that allow them to resume operations as quickly as possible after a hurricane. More importantly, these procedures also keep personnel in oil and gas jobs safe before and during a hurricane.
(Hurricane Isaac path through the Gulf of Mexico (GOM))
Oil and gas companies prepare for potential hurricanes on a yearly basis. Preparation usually includes evacuation drills for personnel; updates to a company’s hurricane response plan; and testing of batteries, generators, and equipment. Equipment must also meet certain standards. For example, offshore platforms must meet standards set by the American Petroleum Institute and Bureau of Safety and Environmental Enforcement. Offshore facilities since 1988 must be able to withstand “100 – year Storms”, a designation that includes everything up to Category 5 events. Platform decks must exceed the average height of hurricane-driven swells, generally estimated to reach 80 feet. Drilling rigs are also equipped with GPS tracking systems to aid in recovery after a storm.
Hurricane Safety Protocol
Before a hurricane, companies evacuate all non-essential personnel and begin the process of shutting down production, refining operations, and pipelines. Evacuation procedures often include closing sub-surface safety valves to avoid water pollution in case a rig or platform is damaged. Additionally, drillships may be relocated to a safer area out of the path of the hurricane.
After a hurricane has passed, operators use helicopters to evaluate any overall damage from the air. Once “flyovers” are completed, assessment crews go to offshore facilities to check for physical damage. If facilities and infrastructure are determined to be undamaged or minimally effected, but still within federal safety guidelines, operators will begin procedures to commence production again.
Operations cannot always resume immediately, even if there is no damage to equipment or infrastructure. Restarting a refinery is complicated and may take several days. This delay can cause a drop in production across the entire country. Half the gasoline on the East Coast and half of the crude oil run in refineries in the Midwest are shipped from the Gulf Coast through pipelines, barges, and tankers. Pipelines need electricity to move these commodities, so a power outage in a storm area can also hinder production.
When a hurricane disrupts operations, there is an immediate loss of gasoline, but consumer demand remains relatively the same. The lower gas supply often results in a higher price at the gas pump. Hurricane Isaac was no exception – gas prices spiked immediately after the storm, but began to fall again as refineries resumed operations.
As shown by the chart below, the spike was especially bad in the Midwest because the storm forced a pipeline that delivers crude from Louisiana to close.
While the industry recognizes the importance of avoiding a huge drop in production, safety is the first priority in a hurricane. Oil and gas companies have hurricane plans and safety protocols to protect personnel in offshore drilling jobs and oil rig jobs. Protecting equipment is also important – not only because of cost, but to keep from accidental pollution of the environment.
Clover specializes in placing professionals in the oil and gas industry. If you are an Operator seeking to augment Project Teams, contact Jeff.W@clovergs.com
If you are an experienced professional looking for opportunities in the Upstream Industry (Alaska, Eagle Ford Shale Play, Bakken Formation, Deepwater Gulf of Mexico), send your resume in complete confidence to Chris.S@clovergs.com