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At Time of Epic Storms, Oil Industry Thinks Anew
By Jad Mouawad
New York Times
September 15, 2005

http://www.nytimes.com/2005/09/15/business/15gulf.html

Around the world, offshore oil and gas platforms are generally built to
survive without serious damage a so-called 100-year storm -- a hurricane so
powerful that it typically occurs only once every hundred years.

Hurricane Ivan roared through the Gulf of Mexico a year ago, generating the
highest waves ever recorded there in a storm considered likely to occur only
once every 2,500 years. Given the scale of the hurricane, it was inevitable
that it would wreak havoc in the gulf, America's biggest energy-producing
region, uprooting miles of underwater pipelines, destroying platforms and
crimping production for months.

But when industry officials, engineers and oceanographers gathered at an
American Petroleum Institute conference in Houston in July to discuss ways
of improving the gulf's infrastructure, they expected to have plenty of time
to work on the problems. Then Katrina struck.

"We're seeing more 100-year events happening more often, even every few
years," said Jafar Korloo, who has designed, engineered and managed offshore
platforms for Unocal, the oil company recently acquired by Chevron. "The bar
has to be higher."

The stakes, too, are higher than before. Older production basins in Texas
and Oklahoma have been on a gradual decline for years; some potential
oil-producing regions on land elsewhere in the United States are out of
bounds.

In the meantime, more oil and gas has been gushing out of the gulf, which
was first tapped half a century ago, amounting now to nearly a third of
domestic output. And the bulk of that production is concentrated at no more
than a couple of dozen platforms, each costing $1 billion to $2 billion.

As the petroleum industry confronts the challenge of recovering as quickly
as possible from Katrina, officials are just beginning to assess the bigger,
longer-range questions. But clearly, they cannot count on nature being
predictable.

"Most definitions of a 100-year event were calculated before Ivan and
Katrina," said Bob Hamilton, a vice president at the Woods Hole Group, an
ocean engineering group in Massachusetts. "At this point, are the 100-year
criteria good enough?"

Hurricane Katrina cut deeply into oil and gas production, shut down major
refineries, sent gasoline prices to record highs and set off fears of an
energy crisis. Oil companies, just as they did after earlier devastating
gulf storms -- Betsy in 1965, Camille in 1969, Ivan in 2004 -- are
rethinking how they operate offshore. But now they are asking themselves
tougher questions.

"We've never seen anything like Katrina," said Tim Sampson, one of the July
conference organizers and the coordinator for drilling and production
operations at the petroleum institute. "We have to consider the data and
look at whether we need to update our standards."

According to the Coast Guard, Katrina destroyed, damaged or sank about 50 of
the 4,000 gulf platforms.

When it passed over the gulf's crowded waters, Katrina was at its peak, a
Category 5 storm, the most powerful on the Saffir-Simpson scale. Winds of
175 miles an hour snapped mooring lines, sending some platforms adrift.
Waves toppled steel structures, and underwater slides shifted the ground
under pipelines, probably causing widespread damage that has yet to be fully
assessed.

Four installations owned by Royal Dutch/Shell, the gulf's largest operator,
suffered extensive damage. These included the biggest offshore facility in
the region, a tension-leg platform called Mars, which is expected to be out
of commission for months after being shaved by the hurricane's winds and
waves.

Shell said its output -- which usually amounts to 450,000 barrels a day, or
nearly a third of the gulf's oil production -- would be down 40 percent
until next year.

At its peak, the hurricane caused nearly the entire gulf oil region to be
shut down. A few days before Katrina struck, oil companies closed off wells,
evacuated the platforms and stopped production as a safety precaution. From
daily output of 1.5 million barrels a day, the region is now producing an
average of 650,000 barrels a day, according to the Interior Department.

But since Aug. 26, when the platforms were shut down, 20 million barrels of
oil production has been lost, the equivalent of a day's consumption for the
United States. The loss in natural gas production, now back at 65 percent of
its level before the storm, was 99 billion cubic feet.

Despite the damage, many oil experts said that most of the offshore
infrastructure fared remarkably well. All the platforms that were destroyed
were old and antiquated structures, some built in the late 1960's and
producing little oil. The newer platforms, including Shell's, did not suffer
catastrophic structural damage. After lengthy repairs, the company expects
Mars to resume full production.

Moreover, the facilities offshore survived the storm better than those
onshore. Because of flooding in coastal Louisiana and Mississippi, it will
be months before a handful of major refineries and gas-processing facilities
are brought back online.

Offshore, though, about 30,000 workers were safely flown out. While there is
much to repair, most of the platforms and rigs that operate at sea suffered
relatively little major damage.

"That's an absolute story of success," said Dan Orange, chief executive of
AOA Geophysics, a consulting firm. "You can do the best engineering in the
world, but nature might still throw a curveball at you."

Specialists are more worried about the state of the underwater pipeline
network. Totaling 33,000 miles, the grid turned out to be the weakest link
after Hurricane Ivan, which produced mudslides that snapped pipelines,
shifted parts around and caused long delays and repairs before production
could be resumed.

So far, there is little information on the state of the pipelines. Oil
companies must test the pressure on their platforms before assessing the
state of the pipelines. But the fear is that some parts of that network have
again been disabled.

Engineers have known about the ravages caused by mudslides at the mouth of
the Mississippi Delta since at least 1969. That was the year Shell's South
Pass 70 platform was destroyed by mudslides set in motion by Hurricane
Camille. The destruction of the platform, which was brand new, shocked the
industry and led to the development of structures with foundations as deep
as 600 feet, well below the mud line.

But pipelines are a different matter, said Jim Hooper, an experienced
geotechnical engineer and senior consultant for Fugro McClelland Marine
Geosciences, who compared the seabed in some coastal areas to gelatin
stretching at depths of 300 feet.

"Eventually, the waves get big enough and the Jell-O fails," said Mr.
Hooper, a pioneer of the mudslide-resistant platforms.

Given that phenomenon, he said, pipelines cannot be easily buried. Most are
simply laid on the unstable seabed or submerged somewhat to avoid fishing
trawlers. To prevent oil spills, they are designed with breakaways and
valves that shut off automatically when the ground shifts. The trick then is
to find the parts and quickly snap them back together.

"What it comes down to is that pipelines are fragile and failures will
occur," Mr. Hooper said. "The industry has learned to repair as fast as
possible."

With larger quantities of oil coursing through some major pipelines, more
costly solutions are now being considered, including burying the largest
pipes well below mudslide-prone regions or diverting around them.

But the biggest uncertainty is in the 100-year storm criteria followed by
the industry. With more powerful storms occurring more frequently, the
question is how to update certain design standards, like the height from the
surface of the water to the lower deck of a platform. The greater the
distance, the bigger waves that can be cleared during a storm.

In the 1960's, recommended deck heights -- or the "air gap" in industry
jargon -- were 35 feet. Today, the most common recommendation is 55 feet.

But even that proved insufficient with Hurricane Ivan. Chevron's Petronius
platform was hit by a wave estimated at 90 feet from crest to trough. Its
impact caused extensive damage requiring the installation to be shut down
for six months for repairs. The industry is feeling the strain.

Hurricanes come in phases that alternate between quieter periods and more
active seasons. Since 1995, the Atlantic has been in a period of stronger
hurricanes that might last 10 or 15 years more, according to the National
Oceanic and Atmospheric Administration.

From 1995 to 2004, hurricane seasons averaged 13.6 tropical storms, 7.8
hurricanes and 3.8 major hurricanes. Six of these years were classified as
hyperactive and 2005 is shaping up as another one. By contrast, from 1970 to
1994, hurricane seasons were quieter, averaging 9 tropical storms, 5
hurricanes and 1.5 major hurricanes. None was a hyperactive season.

"The last active period was in the 1960's," said Charles Watson, president
of Kinetic Analysis, which models the impact of hurricanes on the gulf's
production. "People have been lulled by a period of inactivity."

But as with most debates over climate, there is little consensus on whether
this means that hurricanes are becoming fiercer or whether global warming
has had an effect. One thing, though, seems certain: with the global oil
industry operating flat out, there is almost no margin for error.

"Life is getting complicated in the gulf," said Joe Suhayda, a coastal
oceanographer formerly at Louisiana State University, who now works as an
oil industry consultant. "The industry has to address the environmental
risk. If I am going to build a platform, I have to look at the risk of that
facility being destroyed by nature."

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Published by David Sunfellow
NewHeavenNewEarth (NHNE)
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