Effect of Hurricane Isaac on Oil and Gas Activities

Professor Keith B. Hall, B.S. in Chemical Engineering, Louisiana State University; J.D., Loyola University School of Law. Professor Hall was a member of the firm Stone Pigman Walther Wittmann before joining the LSU Law Faculty as Assistant Professor and Director of the Mineral Law Institute.

Hurricane Isaac hit Louisiana a few months ago, after having traveled through the Gulf of Mexico.  Each of us who lives in Southeastern Louisiana knows how the storm affected us and our neighbors, but how did the storm affect oil and gas activity in the Gulf of Mexico and in the Gulf states?  And where can a person find that information?

Where can a person find information on how Hurricane Isaac affected the oil and gas industry?

One of the most convenient sources of this information are daily reports that were issued by the U.S. Bureau of Safety and Environment enforcement (BSEE) and the Department of Energy’s Office of Electricity Delivery and Energy Reliability (OEDER) tracking the effects of the storm.

How did Hurricane Isaac affect oil and gas activity in the Gulf of Mexico?

Companies that operate in the Gulf typically respond to hurricanes by evacuating their personnel from production platforms and drilling rigs, and by shutting in production (closing subsurface vales to stop the flow of oil or gas from the well).[1]  BSEE reports that prior to Hurricane Isaac, companies were producing oil and gas from 596 manned platforms in the Gulf and were using 76 drilling rigs to drill new wells in the Gulf.[2]

As of August 25, companies had evacuated only a few of the production platforms and drilling rigs, and they had shut-in only a small portion of oil and gas production.[3] By August 27, however, they had evacuated more than half of all platforms and rigs, and they had shut-in an estimated 78.0% of all oil production in the Gulf and 48.1% of all natural gas production.[4]

As of August 30, at the peak of disruption, about 85.4% of production platforms and 65.8% of drilling rigs had been evacuated.[5]  Also, an estimated 95.0% of oil production and 72.5% of natural gas production from the Gulf was shut-in.  Not much had changed by the next day, August 31,[6] but after that, companies began to re-staff operations relatively quickly.  As of September 1, only 36.8% of production platforms and 25.0% of rigs remained evacuated.[7]  By September 4, only 3.5% of production platforms and 2.6% of drilling rigs remained evacuated.[8]

The resumption of production went a little more slowly than the re-staffing of platforms because companies needed to inspect their facilities for potential damage before restarting production.  The amount of shut-in oil production dropped from 93.5% on September 1[9] to 71.5% on September 2,[10] approximately 51.5% on September 4,[11] and 13.5% on September 9.[12]  The amount of shut-in natural gas production fell from 63.5% on September 1[13]to 56.6% on September 2,[14] then to 38.6% on September 3,[15] and 8.8% on September 9.[16]

BSEE reports that companies found relatively little damage to production facilities, but that the damage that did occur has delayed a return to one hundred percent of pre-storm rates.[17]

A table that provides additional statistics on evacuations and shut-ins appears at the end of this post.

What was the effect on petroleum refineries?

Several Louisiana refineries shut-down completely, and several other refineries in Louisiana and nearby states reduced their rates of operations.  As of August 29, five refineries had shut-down and another six were operating at reduced rates.[18]  By September 7, all refineries that had been shut-down because of the storm had restarted, though several were still operating at reduced rates.[19]

How was LOOP affected?

The Louisiana Offshore Oil Port is an offshore port used for the importation of crude oil by supertanker.  In addition to its marine offshore facility, LOOP operates storage facilities and pipelines.  On August 27, LOOP shut-down its marine operations, such as tanker off-loading.[20]  By August 28, it had shut-down some of its land-based operations,[21] and by the morning of August 29, it had shut-down all of its operations.[22]  LOOP restarted some of its pipeline operations late on August 29,[23] and by September 1 had resumed virtually all operations, including off-loading at its marine facilities.[24]

How were pipelines affected?

OEDER reports that several pipelines were shut-in, including LOOP’s LOCAP pipeline and Shell’s Houma-to-Houston or “HO-HO” Pipeline.[25]  LOOP restarted its LOCAP pipeline late on August 29.[26]  By September 1, Shell had re-started the HO-HO.[27]  Many other pipelines that had been shut-in because of Hurricane Isaac also resumed operations around that time.[28]

Table Showing Effect of Hurricane Isaac On Oil & Gas Activity on the Gulf of Mexico[29]

Preferred citation: Professor Keith B. Hall, Effect of Hurricane Isaac on Oil and Gas Activities, LSU J. Energy L. & Res. Currents (November 7, 2012), http://sites.law.lsu.edu/jelrblog/?p=170.

[1] Press Release, Bureau of Safety and Environmental Enforcement, BSEE Hurricane Response Team Continues to Monitor Offshore Oil and Gas Operators’ Activities (Sept. 9, 2012), available at http://www.bsee.gov/BSEE-Newsroom/Press-Releases/2012/Press09092012.aspx.

[2] Press Release, Bureau of Safety and Environmental Enforcement, Gulf of Mexico Oil and Gas Activities are being Monitored by Hurricane Response Team (Aug. 25, 2012), available at http://www.bsee.gov/BSEE-Newsroom/Press-Releases/2012/Press08252012.aspx.

[3] Id.

[4] Press Release, Bureau of Safety and Environmental Enforcement, Gulf of Mexico Oil and Gas Activities are being Monitored by Hurricane Response Team (Aug. 27, 2012), available at http://www.bsee.gov/BSEE-Newsroom/Press-Releases/2012/Press08272012.aspx.

[5] Press Release, Bureau of Safety and Environmental Enforcement, U.S. Gulf of Mexico Mobile Offshore Drilling Units are keeping station. Dynamically positioned drilling rigs moved off-location prior to store and are accounted for by BSEE District staff (Aug. 30, 2012), available at http://www.bsee.gov/BSEE-Newsroom/Press-Releases/2012/Press08302012.aspx.

[6] Press Release, Bureau of Safety and Environmental Enforcement, U.S. Gulf of Mexico Mobile Offshore Drilling Units are keeping station. Dynamically positioned drilling rigs moved off-location prior to storm and are accounted for by BSEE District staff (Aug. 31, 2012), available at http://www.bsee.gov/BSEE-Newsroom/Press-Releases/2012/Press08312012.aspx.

[7]Press Release, Bureau of Safety and Environmental Enforcement,  BSEE Hurricane Response Team Continues to Monitor Offshore Oil and Gas Operators’ Activities (Sept. 1, 2012), available at http://www.bsee.gov/BSEE-Newsroom/Press-Releases/2012/Press09012012.aspx.

[8]Press Release, Bureau of Safety and Environmental Enforcement,  BSEE Hurricane Response Team Continues to Monitor Offshore Oil and Gas Operators’ Activities (Sept. 4, 2012), available at http://www.bsee.gov/BSEE-Newsroom/Press-Releases/2012/Press09042012.aspx.

[9] Press Release, Bureau of Safety and Environmental Enforcement, BSEE Hurricane Response Team Continues to Monitor Offshore Oil and Gas Operators’ Activities, supra note 7.

[10]  Press Release, Bureau of Safety and Environmental Enforcement, BSEE Hurricane Response Team Continues to Monitor Offshore Oil and Gas Operators’ Activities (Sept. 2, 2012), available at http://www.bsee.gov/BSEE-Newsroom/Press-Releases/2012/Press09022012.aspx.

[11] Press Release, Bureau of Safety and Environmental Enforcement, BSEE Hurricane Response Team Continues to Monitor Offshore Oil and Gas Operators’ Activities, supra note 8.

[12] Press Release, Bureau of Safety and Environmental Enforcement, BSEE Hurricane Response Team Continues to Monitor Offshore Oil and Gas Operators’ Activities, supra note 9.

[13] Press Release, Bureau of Safety and Environmental Enforcement, BSEE Hurricane Response Team Continues to Monitor Offshore Oil and Gas Operators’ Activities, supra note 7.

[14] Press Release, Bureau of Safety and Environmental Enforcement, BSEE Hurricane Response Team Continues to Monitor Offshore Oil and Gas Operators’ Activities, supra note 10.

[15] Press Release, Bureau of Safety and Environmental Enforcement, BSEE Hurricane Response Team Continues to Monitor Offshore Oil and Gas Operators’ Activities (Sept. 3, 2012), available at http://www.bsee.gov/BSEE-Newsroom/Press-Releases/2012/Press09032012.aspx

[16] Press Release, Bureau of Safety and Environmental Enforcement, BSEE Hurricane Response Team Continues to Monitor Offshore Oil and Gas Operators’ Activities, supra note 1.

[17] Id.

[18] U.S. Dept. of Energy, Office of Electricity Delivery & Energy Reliability, Hurricane Isaac Situation Report #4, 3 (Aug. 21, 2012), available at http://www.oe.netl.doe.gov/docs/2012_SitRep4_Isaac_08292012_300PM_v_1.pdf.

[19] U.S. Dept. of Energy, Office of Electricity Delivery & Energy Reliability, Hurricane Isaac Situation Report #15, 2 (Sept. 7, 2012), available at http://www.oe.netl.doe.gov/docs/2012_SitRep15_Isaac_09072012_300PM.pdf.

[20] U.S. Dept. of Energy, Office of Electricity Delivery & Energy Reliability, Tropical Storm Isaac Situation Report #1, 3 (Aug. 28, 2012), available athttp://www.oe.netl.doe.gov/docs/2012_SitRep1_Isaac_08272012_300PM_v_2.pdf.

[21] U.S. Dept. of Energy, Office of Electricity Delivery & Energy Reliability, Hurricane Isaac Situation Report #3, 3 (Aug. 29, 2012), available athttp://www.oe.netl.doe.gov/docs/2012_SitRep3_Isaac_08292012_1000AM.pdf.

[22] U.S. Dept. of Energy, Office of Electricity Delivery & Energy Reliability, supra note 18, at 3.

[23]  U.S. Dept. of Energy, Office of Electricity Delivery & Energy Reliability, Hurricane Isaac Situation Report #9, 3 (Sept. 1, 2012), available athttp://www.oe.netl.doe.gov/docs/2012_SitRep9_Isaac_09012012_1000AM.pdf.

[24] Id.

[25] U.S. Dept. of Energy, Office of Electricity Delivery & Energy Reliability, supra note 18, at 3.

[26] See U.S. Dept. of Energy, Office of Electricity Delivery & Energy Reliability, Hurricane Isaac Situation Report #6, 3 (Aug. 31, 2012), available at  http://www.oe.netl.doe.gov/docs/2012_SitRep6_Isaac_08302012_300PM_v_1.pdf.

[27] U.S. Dept. of Energy, Office of Electricity Delivery & Energy Reliability, supra note 23, at 3.

[28] Id.

[29] The data in the table comes from BSEE reports that can be found at the following sources for the particular dates noted:

August 25:    Press Release, Bureau of Safety and Environmental Enforcement, Gulf of Mexico Oil and Gas Activities are being Monitored by Hurricane Response Team, supranote 2.

August 26:   Press Release, Bureau of Safety and Environmental Enforcement, BSEE Hurricane Response Team Continues to Monitor Offshore Oil and Gas Operators’ Activities (Aug. 26, 2012), available at http://www.bsee.gov/BSEE-Newsroom/Press-Releases/2012/Press08262012.aspx.

August 27:   Press Release, Bureau of Safety and Environmental Enforcement, Gulf of Mexico Oil and Gas Activities are Being Monitored by Hurricane Response Team, supranote 4.

August 28:    Press Release, Bureau of Safety and Environmental Enforcement, Gulf of Mexico Oil and Gas Activities are Being Monitored by Hurricane Response Team (Aug. 28, 2012), available at http://www.bsee.gov/BSEE-Newsroom/Press-Releases/2012/Press08282012.aspx.

August 29:     Press Release, Bureau of Safety and Environmental Enforcement, U.S. Gulf of Mexico Mobile Offshore Drilling Units are keeping station. Dynamically positioned drilling rigs moved off-location prior to storm and are accounted for by BSEE District staff (Aug. 29, 2012), available at http://www.bsee.gov/BSEE-Newsroom/Press-Releases/2012/Press08292012.aspx.

August 30:     Press Release, Bureau of Safety and Environmental Enforcement, U.S. Gulf of Mexico Mobile Offshore Drilling Units are keeping station. Dynamically positioned drilling rigs moved off-location prior to storm and are accounted for by BSEE District staff, supra note 5.

August 31:     Press Release, Bureau of Safety and Environmental Enforcement, U.S. Gulf of Mexico Mobile Offshore Drilling Units are keeping station. Dynamically positioned drilling rigs moved off-location prior to store and are accounted for by BSEE District staff, supra note 6.

Sept. 1:           Press Release, Bureau of Safety and Environmental Enforcement, Gulf of Mexico Oil and Gas Activities are Being Monitored by Hurricane Response Team, supranote 7.

Sept. 2:           Press Release, Bureau of Safety and Environmental Enforcement, Gulf of Mexico Oil and Gas Activities are Being Monitored by Hurricane Response Team, supra note 10.

Sept. 3:           Press Release, Bureau of Safety and Environmental Enforcement, Gulf of Mexico Oil and Gas Activities are Being Monitored by Hurricane Response Team, supranote 15.

Sept. 4:           Press Release, Bureau of Safety and Environmental Enforcement, Gulf of Mexico Oil and Gas Activities are Being Monitored by Hurricane Response Team, supranote 8.

Sept. 5:           Press Release, Bureau of Safety and Environmental Enforcement, Gulf of Mexico Oil and Gas Activities are Being Monitored by Hurricane Response Team (Sept. 5, 2012), available at http://www.bsee.gov/BSEE-Newsroom/Press-Releases/2012/Press09052012.aspx.

Sept. 6:           Press Release, Bureau of Safety and Environmental Enforcement, Gulf of Mexico Oil and Gas Activities are Being Monitored by Hurricane Response Team (Sept. 6, 2012), available at http://www.bsee.gov/BSEE-Newsroom/Press-Releases/2012/Press09062012.aspx.

Sept. 7:           Press Release, Bureau of Safety and Environmental Enforcement, Gulf of Mexico Oil and Gas Activities are Being Monitored by Hurricane Response Team (Sept. 7, 2012), available at http://www.bsee.gov/BSEE-Newsroom/Press-Releases/2012/Press09072012.aspx.

Sept. 8:           Press Release, Bureau of Safety and Environmental Enforcement, Gulf of Mexico Oil and Gas Activities are Being Monitored by Hurricane Response Team (Sept. 8, 2012), available at http://www.bsee.gov/BSEE-Newsroom/Press-Releases/2012/Press09082012.aspx.

Sept. 9:           Press Release, Bureau of Safety and Environmental Enforcement, Gulf of Mexico Oil and Gas Activities are Being Monitored by Hurricane Response Team, supranote 1.

Sept. 10:         Press Release, Bureau of Safety and Environmental Enforcement, Gulf of Mexico Oil and Gas Activities are Being Monitored by Hurricane Response Team (Sept. 10, 2012), available at http://www.bsee.gov/BSEE-Newsroom/Press-Releases/2012/Press09102012.aspx.

Sept. 11:         Press Release, Bureau of Safety and Environmental Enforcement, Gulf of Mexico Oil and Gas Activities are Being Monitored by Hurricane Response Team (Sept. 11, 2012), available at http://www.bsee.gov/BSEE-Newsroom/Press-Releases/2012/Press09112012.aspx.


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