Hurricane Gustav, Energy Infrastructure & Production Impacts/Models (Updated!--Thread 2)
Posted by Nate Hagens on August 29, 2008 - 9:36am
Topic: Supply/Production
Tags: chuck watson, energy infrastructure, gulf of mexico, hurricane gustav, hurricanes, methaz, original, shut-in production [list all tags]
(Welcome: we are now on a later and more updated thread, which can be found here: http://www.theoildrum.com/node/4478 NB: you may want to just go the front page (it will be post #1 or #2) to get to the most recent thread: http://theoildrum.com ...)
Hurricane Gustav is on its way. Damage to oil and gas infrastructure from this event is looking more and more likely on current track. Here are the latest damage graphs and updates from KAC/UCF. Update from Chuck Watson 9:24 EST (Next update Saturday 8/30)
Continuing westward shift: this based on the BAMD model, which is doing as well as the more sophisticated runs and is a lot faster (this run based the 8pm position and intensity estimates, so it's almost real time as opposed to waiting 3-4 hrs for GFDL or HWRF).
(Welcome: we are now on a later and more updated thread, which can be found here: http://www.theoildrum.com/node/4478 NB: you may want to just go the front page (it will be post #1 or #2) to get to the most recent thread: http://theoildrum.com ...)

Latest damage run based on BAMD
Chuck Watson update 3:44 pm 8/29:
"This from the latest damage run based on the HWRF model. Note how the storm stalls out after landfall as a tropical storm. Bad news for recovery, especially if wet. This scenarios results in a loss of nearly 50% of the GOM production/processing capacity for the rest of the year. Ouch." (Note: this analysis on oil/gas damage is based on HWRF run verifying)

Rig damage run based on latest HWRF
From KAC/UCF google earth link

Port damage run based on latest HWRF

Refinery damage run based on latest HWRF
Though the Methaz runs based on HWRF model are among the most eastward of the ensemble models,(Chuck has been east of consensus since storm begain) the damage using the current official 5 pm NHC path is just as bad. It shows a bit more production loss (about 60% of the rest of the year), plus about a month down time for the LOOP and inland pipeline damage.

Damage run based on latest official forecast
Click to go to WUnderground
Latest updates from Chuck Watson:
(3:34 pm 8/29)
Unfortunately it seems the favorable options for this storm are dropping off one by one. I think we're seeing a trend in the dynamic models towards the central LA coast and into a "target rich" environment with respect to oil production, as a strong enough storm to cause significant damage. Our in-house models are now showing a 50% chance of long term (more than 10% production loss for more than 30 days) damage from this storm. The GFDL scenario, for example, whacks the LOOP pretty hard.
Keep in mind that this storm is still not a hurricane (although it may well be any time now)(*Ed note, it is now a hurricane), and while the track models have been fairly consistent, intensity forecasts are a very tricky business. There are still some big unknowns with respect to shear the day or so before landfall. A small change in wind speed (10 knots) can make a big difference in damage since damage is proportional to the cube of the wind speed. So a 110 knot storm might cause 10% damage, but a 120 knots storm would cause 15% to the same structure.
(8:35 am 8/29)
Gustav is a bit better organized this morning, and continuing to slowly drift westward, but there are signs the turn to the northwest has started. But the track across the GOM oil/gas lease sites and potential impact on refineries is still very much an open question. We're pretty
sure it will turn north-northwest, and move across western Cuba or the Yucatan straits. The key question is the timing of the interaction with a high pressure system that could cause a sharp left (west) turn is unknown. That will also increase shear and weaken the storm, so it could well be the difference between this being a major disruption and a no-big-deal event depending on when the shear and turn kick in. To repeat myself, we'll know more when Gustav clears the Yucatan straits, which is looking like tomorrow evening.
Chuck has put together a dynamically updating page that will reflect the latest damage models/forecasts at this link: KAC/UCF models.
On current track, which the weather geeks (and I use the term "geek" in kinship...) at http://easternuswx.com and Jeff Masters at WU say is too early to say for sure, but this could do a lot of damage.
Very high SSTs in Caribbean:
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UPDATED
PRODUCTION/INFRASTRUCTURE MAPS AND REFINERY INFORMATION
Here's a link to a really good map of oil refining/SPR storage facilities in respect to the path of Katrina (NB: OLD TRACK MAP!) and here is a listing of production and refining capability for the state of LA.

Just to give you a rough idea of where things are, the map above is a probability swath for Katrina (OLD TRACK MAP!) with the Thunder Horse platform as the red dot, and the other purple dot represents the Mad Dog development (100,000 bd); the Holstein development that produces at peak, around 100,000 bd of oil; and the Atlantis field that may have ramped up to around 200,000 bd in all. Put together these projects have the potential of around 650,000 bd, but as can be seen, they were sitting in an uncomfortable spot relative to the track of the Katrina.The white dot is where Port Fourchon is. This is where the Louisiana Offshore Oil Port, or LOOP, is located. Rigzone pointed out that this is where the foreign tankers offload, Google and Terraserve maps you can see that the area is very low-lying. One of the big concerns is that there will be sub-sea landslides or other ground movement that might affect the LOOP. Were this to be disrupted, then foreign tankers would need to be diverted elsewhere, with the likely port being Houston.
We have accumulated resources from previous hurricans below, but we'd like to find updated materials if you know of them. Recent refinery maps, recent rig maps in the gulf, recent gas fields, SPR facilities, the Intercoastal Canal, pipeline stations and transfer points, etc., etc. Leave links in the comments please.
Also, here's the EIA's Alabama, Louisiana, Mississippi, and Texas Resources pages. They will also likely come in handy. Also, here's a link to the national page.
Here's another good resource for infrastructure maps and such. (scroll down a bit)
Here's a map from CNN with large and small refineries laid out. (though it is an old storm track)
Very detailed piece by RIGZONE on rigs and other infrastructure in the area. (thanks mw)
Here's a flash graphic of the oil refineries and rig maps from Hurricane Rita, it emphasizes Beaumont and Galveston's importance. Click on oil production in the tab. Note the many rigs on the east side of the storm that will get the brunt of the damage from the NE quad of the storm...hence the high long-term GOMEX oil production damage estimates below.
You want a detailed map? Well here's the probably the best MMS map I could find. Very detailed and lots of interesting stuff. (VERY big .pdf warning)
Also, Scott Wilmoth at Simmons & Co was kind enough to send us this map. The map below captures only deepwater infrastructure. For a complete list of deepwater development systems (includes operator, depth, location): http://www.gomr.mms.gov/homepg/offshore/deepwatr/dpstruct.html

(Please deposit new relevant links, graphs, and comments in this new thread...we have updated the resources part of this post with new maps and some more old maps and articles from Katrina on the LOOP and Port Fourchon--important parts of the infrastructure, as we learned about three years ago. We will start a third thread when we get new info or Sat am)



If I were bowling, this looks to be a perfect stike in the making.
Water temperatures in the gulf are favorable for this storm to intensify. I don't know how to post the map but here's a link.
http://marine.rutgers.edu/mrs/show/?file=../regions/gulfmexico/sst/noaa/...
There is a 5% chance of hurricane force winds in New Orleans, according to NHC.
I was referring to oil infrastructure.
As far as New Orleans, due to the counterclockwise rotation of the storm, as the storm approaches land, (under the current model) the wind will come from the east, straight into the mouth of the river.
It's not the wind, it's the rain.
Gustav will impact oil infrastructure and production levels.
For the 2008 hurricane season, the EIA estimates that mean shut in production will be 20 million barrels. However, the EIA believes that the median shut in production of 11 million barrels is a better representation.
http://tonto.eia.doe.gov/FTPROOT/forecasting/2008_sp_03.pdf
Below is an updated oil production forecast for the USA Gulf of Mexico showing recent hurricane outages.
click to enlarge
Excellent
Today, it looks like cooler air will keep Gustav away from the New Orleans area. I wouldn't be surprised if Gustav winds up in Mexico.
The real question mark is Hanna. It is hard to see Hanna avoiding Florida.
Remember, it is 26.5C that is the important temp.
Above 26.5C and hurricanes grow. Below, and they decrease in size.
From that SST picture, the temperature seems to be between 29C and 32C.
I think this is the key:
http://www.weather.gov/sat_loop.php?image=ir&hours=24
If the cooler air (which is north and west of the big T-storms in the midwest) gets to the gulf coast before Gustav (which is off the map @ the lower right-hand corner), then that hurricane will likely drift to the west. The gulf energy platforms will be in Gustav's powerful North-East quadrant, but the shear would limit Gustav's intensity.
Hanna could turn more directly westward toward Florida. If there is an infill of cooler air, then the storm tracks would diverge, with Gustav tracking toward Texas then turning north over the plains and Hanna tracking west then turning north, perhaps moving out to sea without making landfall.
Official NHC has this:
http://www.nhc.noaa.gov/gtwo_atl.shtml
http://www.nhc.noaa.gov/refresh/graphics_at2+shtml/144513.shtml?5day#con...
http://www.nhc.noaa.gov/refresh/graphics_at3+shtml/144212.shtml?5day#con...
If the cooler air doesn't fill in, then Gustav will steer more towards New Orleans/Mississippi but will create shear that will limit Hanna's intensity.
Florida could get hit by Hanna, or it could get hit by Gustav. If Florida manages to avoid a hurricane hit within the next 5-7 days, they will have "dodged a bullet."
TD8 is TS HANNA.
This is getting interesting fast.
Quoting SavannahStorm:
"I've just realized that Hanna Montana is gonna be a BIG storm. All that convection right now is just half of the system. The whole western half of Hanna is being sheared off by that ULL. By determining her circulation on visible sat, once the ULL dissipates, we could be looking at a storm that spans 9 degrees of longitude. That's over 520 miles across! Not Tip-sized huge, but still a big girl."
Tip was as big as Brazil.
Check this out:
http://www.ecmwf.int/products/forecasts/d/animate/catalog/products/forecasts/medium/deterministic/msl_uv850_z500!Wind%20850%20and%20mslp!72!North%20America!pop!od!oper!public_plots!2008082712!!!relative_archive_date!step/
Cool, look at all those slashes, %'s, _'s and !'s.
:-)
Marco---
Point well taken )
Try http://tinyurl.com
http://tinyurl.com/6c7seb
Watch out, its Java.
But it shows Gustav hitting LA, then Hanna sweeping in right behind him even bigger!
If that ends up being the case.. Oh man. :(
Gustav 'Likely to Explode into Major Hurricane,' Target GOM
I don't remember such a 1-2 punch as this combo-Hanna is quite a big bigger size wise.
Currently, the NOAA track has most likely landfall (am I stating that correctly?) just west of Port Fourchon. Bad news for them, and us? How much crude comes through there?
Answered my own question: 15-18%
http://www.cnbc.com/id/26437866
"We play a critical role in 15 to 18 percent of the entire nation's oil supply," Falgout said. "If the Lafourche corridor takes a severe hit, everyone in this country will feel the impact."
ooooooh no 3. brewing:
http://www.nhc.noaa.gov/gtwo_atl.shtml
best hopes for nutter surf dudes.
IEA Ready to Release Oil Stocks if Gustav Hits GOM
Shell Evacuates 400 Personnel in GOM, Plans to Remove Over 800 More
ConocoPhillips Removes Personnel from Magnolia Platform
The IEA doesn't own any oil inventory itself. It's just an advisor to nations that do have such. All the IEA can do is advise, not actually release.
This is incorrect. IEA is an implementing arm of a treaty to which the US is a signatory. Every member nation pledged their Strategic Petroleum Reserve to IEA management of 7-12% shortfall. Measured by Net Oil Exports, we current have a 5.3% shortfall from the 2005 peak.
When Gustav hits we are likely to see an inventory crisis that exceeds the trigger (watch the TWIP report). The IEA committed treaty resources in response to Katrina. Following is a graphic shows what will happen if a Katrina level inventory event happens to current depressed Gulf imports.
Thanks Bill.
That graph is good, but not exactly accurate, because this week should fall exactly under the 2005 drop from Katrina. So what this says is that refineries were out and we couldn't process the crude AND prices went up and met with demand destruction? If we receive IEA 'oil', would that count as an import?
I agree it is not accurate, just an approximate illustration. I have no idea what will actually happen. But an inventory shortfall of a million barrels a day will drop inventories below historical operating levels (blue band).
If inventories drop very far then, my guess is pricing will increase substantially and there will be outages. I believe IEA will help. But shipments of oil from the US Gulf takes a great deal less time and ships than shipments directed by the IEA.
IEA commitments will help. More and more events are adding stress to the system. Russians in Georgia, hurricanes, field depletions, etc... are mounting. Systems under enough stress shred.
I also did not mean to imply that the IEA 'owns' oil. It does command the national reserve of members by force of treaty. I have been doing a lot of studying about contingency plans and will send you a summary soon. As examples Utah's, California's and Ireland's plans were written to be in compliance with the IEA treaty obligations.
Yes
please send that - it might be a good guest post
If i recall, the US opted out of the IEA shortfall contract, saying that our economy was 'too sensitive' and that our SPR had double what most countries do. But the other member countries, in case of a 5% shortfall (IIRC), have mandatory 10pm curfews, odd even liscence plate driving days, etc....(guess my next vehicle should have an 'even' end number...;-)
cheers bill
I will send it. The web site www.EconomicLifeboat.com is being tailored to contingency plans.
Everyone is welcome to come make changes to the site. It is still just roughed in.
Also, please make a guest post for Chris Martenson and his very clear thinking Crash Course. The Peak Oil section is excellent.
IEA still does not own any oil. It can only advise signatories to the treaty to release. But treaty members may or may not choose to abide.
New Zealand does not have any reserve, AFAIK our commitment to the IEA is met via insurance. The contracts require release of reserves in Japan and the UK, of course if defaulting is more profitable than honoring contracts we are screwed
Neven
And with all this potential damage to the oil & gas sector in the GOM, Crude Oil and Natural Gas go... DOWN. The risk is to the upside. Who's selling at a time like this?
I'd guess that revised GDP numbers seem more important to investors in the medium term than Oil. Optimism moving out of hedges. Don't see wide swings either way until after the election. Volitility yes.
Amazing, at 11:45 ET in 1 minute CLV08 dropped $2.16.
It's the IEA announcement, but I don't think most of the market was much surprised by that. Open interest has been steadily falling--meaning people have been getting out of positions both ways. In other words, nobody's been going long because of this hurricane--shorts have been closing out positions, but longs have been using the price rise to get out of longs as well.
What the market is really doing is slowly assessing the chances of long-term effects on supply.
It's interesting that natural gas is tanking, down nearly 10%. IEA doesn't have any strategic reserve of natural gas, does it?
U.S. natural-gas supply up 102 bln cubic feet: Energy Dept.
By Myra P. Saefong
Last update: 10:39 a.m. EDT Aug. 28, 2008
10:30 am natural gas weekly injection number VERY bearish (meaning lots of gas)
It seems that the news of the IEA ready to release strategic oil stocks brought the price of oil down.
http://uk.news.yahoo.com/rtrs/20080828/tbs-uk-markets-oil-9c49c44.html
Truly amazing over the last 45 minutes. Mass psychology in action. Lemmings however aren't very effective at long range planning. :-)
It's also probably a reaction to the coming long holiday weekend in the States. Most of Wall Street is heading to the beaches today (if they aren't already there). The next two days will probably have very low volume (which can lead to large swings in prices).
As someone else stated, many traders have probably exited their positions for the weekend.