How Hurricanes Affect the Oil Industry (& Its Workers)

We’re coming up on one year post-Hurricane Harvey and Irma, and communities are still reeling from the damage caused by the massive winds and rain. While the news was rightfully focused on the homes and businesses that were devastated on land, there was a quieter, more indirect type of damage inflicted on Texas’ economy: disruption to the oil industry.

2005’s Harsh Lesson for the Oil Industry

Over a decade ago, the US oil and gas industry suffered massive damage from Hurricane Katrina and Hurricane Rita, which followed shortly after. In the end, both storms wiped out 115 platforms and damaged 52 more—forcing the US to take a hard look at the industry’s hurricane preparations.

As a result, in 2008 the American Petroleum Institute issued new standards for offshore platform construction, including a new recommended height. According to Professor Robert Bea, a leading civil engineering profession at the University of California, Berkeley, the height of a platform is vital to its stability during a hurricane.

When waves crest during a hurricane, the base of a platform is subjected to thousands of pounds per square inch of pressure. If a platform wants to remain standing in a storm, it needs a reinforced base and a greater distance from the sea. In the 1940s, most platforms were 20-40 feet high. By the 1990s, they were often 70 feet high.

Since 2008, the recommended height for a platform is 91 feet.

Investment in Safety Paid Off, but Barely

Thanks to the API’s new standards and better hurricane protocols, very few platforms suffered major damage during last year’s Hurricane Harvey. However, another kind of issue arose: disruption to the national supply of oil (both crude and refined).

Because so much of the nation’s oil is collected, imported, or refined in the Gulf Coast, hurricanes can cause incredible short-term damage to the local economy. For instance, 20 percent of oil platforms and 25 percent of natural gas platforms shut down during Harvey, and 14 manned platforms were evacuated. The ones that weren’t evacuated shrank their production down for safety reasons.

In addition, 11 major ports were closed during the storm, and railroads throughout Houston were shut down due to flooding. Refineries were battered the worst: Harvey caused the shutdown of 3.6 million barrels-per-day in capacity. The massive loss of industrial momentum had consequences for the rest of the US.

Platforms Didn’t Suffer Damage, but People Did

The oil industry, for all its equipment and infrastructure, relies on people to make it work. While platforms were ready to start up again days after Harvey passed through, production remained sluggish for weeks. Why? Because rig workers were still at home picking up the pieces with their families. Shell alone employs 10,000 people affected by Hurricane Harvey.

With the loss of oil collection and oil refining capacity, northern states had to rely on their petroleum reserves, and gas prices reached a 2-year high. General uncertainty about the industry also led to increased prices for fuel—but decreased the value of crude oil. Industry insiders noted that the damage only lasted a few weeks; things had returned to normal by September.

Experts believe the quick recovery was due to the following:

• The US being less reliant on oil for power
• Platforms that are built to be more stable
• Strategic petroleum reserves

However, those same strategic petroleum reserves that limited Harvey’s impact on the nation’s economy may soon be sold off, meaning that “safety net” may not be here for the next hurricane season.

The Problem with US Safety Preparation

Professor Bea believes that US regulations are still too weak, despite relatively little damage suffered during Hurricane Harvey. He cites the US safety approach as the main issue, contrasting it with the UK oil industry’s approach to weather safety. See, the UK utilizes a “safety case” system that prepares a facility for every known risk it's facing.

The US, on the other hand, tends to only prepare for problems that it has already faced. That sort of reactive approach may help keep costs low, but it ultimately leaves us all vulnerable to an unprecedented disaster. Part of the problem is that the Gulf Coast is largely calm throughout the year—except, of course, when it’s not.

Arnold & Itkin continues to advocate for the safety and economic stability of offshore workers (and Gulf Coast communities as a whole). If poor safety protocols or lack of preparation hurt you, reach out to us to learn how you can get your life back to normal.