BRIGGS: Hurricane Season Threatens Oil & Gas Industry

Each year, Mother Nature sends a fury of storms into the Gulf of Mexico region. June 1st through November 30th is the technical span of hurricane season. For strong winds to be labeled an actual hurricane, 74 mph sustained winds must be present.

Louisiana has been the unfortunate beneficiary of numerous disastrous hurricanes over the last few decades. Just in this decade alone, Louisiana has experienced Katrina, Rita, Ike and Gustav, just to name the notables. Each of the aforementioned storms caused hundreds of millions of dollars in damage to our state.

This year, the Gulf region has only seen two named hurricanes at this point, Humberto and Ingrid, but this does not mean more will not develop. Alex Sosnowski, the senior meteorologist with, said, “While the perception of the season thus far by the public and some of the media is that the season is a dud in terms of intensity and direct impact to land, it is far from over.”

How do these potential storms affect the oil and gas industry? Each tropical depression, storm or hurricane, places the entire Gulf of Mexico on high alert. While the industry has a tendency to work in conditions of rain, sleet or snow, hurricanes and massive storms in the gulf is a different story.

With lives at risk due to an oncoming storm, each company has to surmise the situation of the storm. What is the storm’s exact location with regards to the particular company’s rig? What is the projected path of the storm? What is the projected intensity of the storm? While many of these questions can be estimated, storms, due to being a natural occurrence of nature, can change paths within an instant. This fact requires the management teams to constantly stay abreast of the situation.

If indeed a storm does approach the gulf, the non-essential personnel are the first to be evacuated. Depending on the direction and intensity of the storm, the essential personnel would be the next group evacuated, followed by the production of the well being shut in until conditions are safe to resume operations.

What are the other factors surrounding storms that can affect the oil and gas industry as well as the entire nation? Refineries along the Gulf Coast can be shut down or damaged by these storms. Louisiana alone utilizes 17 refineries producing over 3 million barrels of crude oil a day. When this amount of crude oil is not apart of the supply chain for a period of time, the entire supply and demand chain for the nation is disrupted.

As planned and unplanned refinery shutdowns occur, the gasoline supply chain is naturally affected. As less gasoline is available for consumption due to these shutdowns, the price at the pump can rise.

While storms are completely unpredictable, the oil and gas industry has safety and evacuation plans in place that can be executed within a moments notice. Thankfully, this hurricane season has been quiet for the Gulf of Mexico. However, due to the massive economic impact that the oil and gas industry has on Louisiana and the United States, it is vital that the industry keeps these plans in place in the event of unpredictable circumstances such as a tropical storm or hurricane.

Don Briggs is the president of the Louisiana Oil & Gas Association.

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