Oil Businesses Recall Ivan as Storm Season Begins
USA: June 1, 2005


HOUSTON - Domestic oil production will grow more vulnerable to major hurricanes as it depends on fewer pipelines connecting the US Gulf of Mexico deepwater to the mainland, observers said on Tuesday, the eve of the 2005 Atlantic basin storm season.

 


"The transportation network is not nearly as redundant for the prolific deepwater fields as it is on the shelf," said Allen Verret, executive director of the Offshore Operators Committee.

"With the shelf we may have recourse to route to other pipelines. In a deepwater field, when that line is down, that field is shut in."

Damage from Hurricane Ivan cut 45 million barrels of US oil production, about 7 percent of the annual production from the Gulf of Mexico -- making it the most devastating storm to the nation's oil industry on record, according to the US Minerals Management Service (MMS).

Ivan-triggered mudslides were especially tough on pipelines, and the storm blasted at least four drilling rigs loose from their moorings. In all, 102 pipelines needed repair work after the storm, the MMS said.

With the deep water accounting for a growing share of US Gulf production -- about 25 percent of all domestic oil output -- the pipeline assault pinched supplies and helped propel oil prices.

Verret noted that Hurricane Andrew, which powered into Louisiana in 1992 after devastating South Florida, destroyed far more platforms and pipelines than Ivan.

"But the one metric where Ivan was head-and-shoulders worse is the disruption of production over a longer period of time," he said. "Ivan hit transportation systems and very prolific platforms."

The question for the industry is how much can be done to hurricane-proof its assets in a fiscally viable manner.

"It gets down to a risk management issue," said Richard Mercier, director of the Offshore Technology Research Center at Texas A&M University. "It's all going to be investigated."

Mercier is about to begin a year-long study of undersea mudslides, which along with rogue drilling rigs caused massive pipeline damage in the storm zone last September. The research, backed by the MMS, should be ready by next summer.

Mercier noted that most equipment built to comply with the latest standards performed well through Ivan's 130 mph winds and wave heights of 60 feet or more.

"On the deepwater side of things, it was very much a victory (for current technology)," Mercier said.

As for the pipelines, Mercier wondered how much more can be done to gird against anchors and mudslides.

"Our study will try to gather as much information about what happened as possible and address those very questions," he said. "However, let's be realistic. It's probably pretty difficult to build pipelines to withstand those kinds of forces with those kinds of sea floor movements."

Crews have fixed most of the damage in the nine months since Ivan, and Verret said some proactive response already has been taken.

"We've learned we need to be more robust with new designs," Verret said. "Nobody likes these things floating around without being properly moored."

One debate is how rare Ivan exactly was. Mercier said he believes Ivan was unique in many respects, but oil analyst BradBeago of Calyon Securities USA says it could have been worse.

"Any hurricane season we have a the potential of seeing a storm come through a major production area," he said. "The reality is that (Ivan) missed us to a certain degree. It missed the heart of shallow production."

Hurricane forecaster William Gray on Tuesday predicted a 44 percent likelihood of a major storm hitting the Gulf Coast, compared to a long-term average of 30 percent.

 


Story by Mark Babineck

 


REUTERS NEWS SERVICE