Hurricane Series: Impact on Oil and Gas

As witnessed in 2005, a hurricane doesn't have to make landfall in the Houston area to have a major impact on oil and gas prices. Business Reporter Ed Mayberry has today's segment of Houston Public Radio's special series on hurricane preparedness.

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Trucks arrive and exit at Shell's Deer Park refinery on Highway 225 around the clock. There's the steady background sound of steam and generators, as almost 15 million gallons of gasoline and other fuels are produced 24 hours a day. When Hurricane Rita appeared to be headed to Houston in 2005, the refinery suspended production, and things got strangely quiet.

"We had probably 100 employees here that rode it out. The noise of a refinery/chemical plant running--I take it for granted. When all the units are shut down and there's absolutely no sound except birds, it's rather eerie."

Shell's Dave McKinney says refineries along the Gulf Coast track a storm's progress.

"We've got pretty good at watching weather reports and checking in with the National Weather Service. We've got people here that are tracking it by the hour to try to determine if any action is required by our facility." Ed: "Can you shut down in stages?" "Some people think that we can, you know, flip a switch and the refinery or chemical plant (will) shut down, but it's really a pretty complicated process. It takes a couple days."

But Alan Lammey with Energy Intelligence Group says refineries can do only so much preparation.

"When we're talking about refiners, though, that are actually sitting on land but right at coastal level, that's a completely different story. You can only be prepared to a certain degree, and then you're really just kind of at the discretion of what Mother Nature is going to want to kind of inflict."

Lammey says the 2005 season prompted a re-examination of how drilling rigs and production platforms in the Gulf prepare for storms.

"You know, we're talking about revamped clamps that basically kind of strengthen the grip of the structure's platforms. We have increased strength and numbers of mooring lines."

But the presence of a hurricane in the Gulf doesn't necessarily mean the production platforms will stop running, even with crew evacuations.

"With the advancements in technology and in wind speed monitoring, the large percentage of the production can still remain on and working even though there's nobody out there. But at certain wind speeds, the facilities actually shut themselves down."

The Deer Park refinery goes through a sequence of slowing down its units as a hurricane approaches, according to Shell's Dave McKinney.

"Let's say today that we get a word that there's a storm brewing in the Gulf and it looks like it's going to turn into a hurricane. We'll set up an emergency control center here at work, and we'll have people full time watching not only what's happening with the storm, but also get out their checklist and beginning to go through the sequence of slowing down our units or possibly shutting them down, and we'll make some tough decisions about letting people go home, or requiring folks to stay if they've got critical needs that we have to use to make sure that we continue to run and take care of our facility. But we'll never totally abandon it. We'll always have folks here."

Ed Mayberry, Houston Public Radio News.

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