insights

Hurricane Ida Slams Into the Energy Sector

Hurricane Ida Slams Into the Energy Sector 600 532 adapt ready

When Hurricane Ida became the fifth strongest hurricane ever to hit mainland US on the 16th anniversary of Hurricane Katrina (with windspeeds reaching 150mph), it struck the energy sector first as always.

The effects were initially obvious with power outages across the entire city of New Orleans as the city’s power supplier, Entergy reported a city-wide loss of power to over 1 million people.

The potential issues only begin at the initial damage caused by the storm to the sector. Business Interruption is already becoming a factor and then the supply chain impacts will be felt as the storm subsides.

You can see from the infographic showing the impact of the storm as of today that 1,610 active offshore oil & gas wells were in the direct path and 549 offshore platforms, with Cox Operating LLC owning/operating 23% of these platforms and 28% of the wells!

Most affected companies:

  • Offshore Assets:
    • Cox Operating LLC: 125 active platforms and 451 active wells exposed to heavy winds
  • Onshore Assets:
    • Hilcorp Energy Company operating a quarter of all onshore wells that are in high-impact zone
  • Offshore & Onshore Assets Combination:
    • Whitney Oil & Gas LLC

As always, the age of the facilities is incredibly important because it was Hurricane Katrina itself in 2005 which altered the design of platforms — requiring increased height to protect them from major storm swells.

In this regard too, Cox Operating LLC leads the pack with 77 of its active platforms that were of fixed type, having been built before 2006 (pre-Katrina) and thus stand lower than the required height of 97 ft, in the path of peak wind speed.

In terms of refineries, we anticipate significant reduction in production capacities, both due to damages/electricity outages and the preemptive closures:

  • ~428 MMcfd natural gas refining capacity potentially at risk
  • 5M barrels petroleum refining capacity at risk
  • Dow Chemicals, Shell Chemicals, ExxonMobil are some of the well-known companies that will have significant reductions in their daily production capacities

The impact to these facilities is going to be felt long into the year, specifically by the immediate consuming industries such as chemical, plastics & rubber. More on this is available in our BI/CBI impacts infographic.

Supply chain and business interruption issues predicted across Louisiana

Supply chain and business interruption issues predicted across Louisiana 600 532 adapt ready

Press Release

For Immediate Release

New York, NY, USA. 31st August 2021.

On the 16th anniversary of Hurricane Katrina causing devastation to the state of New Orleans, Hurricane Ida made landfall. With windspeeds reaching 150mph the Cat 4 storm slammed into Louisiana as the fifth strongest hurricane ever to hit mainland U.S, reversing the flow of the Mississippi river and taking the roof off a hospital in the process.

When Katrina made landfall sixteen years ago on the 29th of August 2005 it was Cat 3 storm and caused massive disruption along the coast of Louisiana, one of the US’s most important industrial corridors, and highlighted the areas vulnerability to flooding. Ida, making landfall just 45 miles west of Katrina’s entry point, has only emphasized this further causing power outages for the entire city of New Orleans as confirmed by Entergy, the city’s power supplier. On top of this, storm surges reaching up to 12 feet (3.65 m) have been reported in the region causing damage and disruption to the energy sector.

Using Adapt Ready’s risk intelligence platform the impacts to business and industry can be seen already as well as the potential costly supply chain and business interruption issues yet to come.

Hurricane Ida has now been downgraded to a tropical storm, but the issues are only just beginning with initial predictions showing the most affected industries currently to be:

  • Chemicals
  • Energy (Offshore & Onshore)
  • Metal Products

Major companies like Westlake Chemicals and Occidental Petrochemicals have been shut down, and these are companies that were already battered by multiple challenges in the past year: declaration of force majeures on their key products like PVC after last year’s record-breaking hurricanes, and Occidental’s Texas facility declaring force majeure earlier this year during Texas’ severe winter storm. Shell’s chemical and refining operations at Narco, Louisiana were shut down during the winter storm and these facilities are again in Ida’s path.

The chemical sector is set to experience some of the biggest impacts to its supply chains, especially the Plastics & Rubber industry that relies on chemicals from the impacted regions, like polymeric MDI (for foams), polyethylene (for packaging materials), butadiene (for tires), PVC and chlorine.

Business interruption and supply chain issues are expected to follow after the initial damage caused by Ida. Our predictions show that in addition to Energy and Chemicals industries, we also foresee impact to the Plastics & Rubber industries, because of the sheer length of time it takes for refineries to get back to full production capacity. More details are available on our infographic below.

If you would like more information as to your specific portfolio requirements in the affected area or just want to be kept up to date with real time hurricane impacts this season, then please contact riskmonitor@adaptready.com.

About Adapt Ready:

Adapt Ready’s ground-breaking risk intelligence platform delivers new data insights and fills in key gaps with external data, enabling our customers to better manage operational and financial risks, and to enhance their growth and profitability. With our platform, organizations can gain insights from external data tailored to specific situations before, during and after a crisis:

  • Before: Plan for risks by uncovering as many hidden risks as possible
  • During: Mitigate the impact – as events unfold, new data emerges and can inform decisions to reduce the event’s impact
  • After: Adapt to new conditions and refine future business direction

Hurricane Ida: Impact Report

Hurricane Ida: Impact Report 1919 1587 adapt ready

Hurricane Zeta: Impact Report

Hurricane Zeta: Impact Report 1043 710 adapt ready

Hurricane Zeta, a Category 2 storm, made landfall near Cocodrie, Louisiana on Wednesday October 29th causing massive power outages across the Gulf Coast leaving 556,000 customers in Louisiana without power. As of this update, the storm is currently in Mississippi with max windspeeds of 176 km/h and storm surge levels up to 6ft, posing a major threat to the oil & gas assets, both offshore and onshore.

Zeta is a record 9th storm to hit the Gulf Coast this year: a devastating blow to a region already battered by Hurricane Laura (the fifth strongest hurricane on record in the US) in late August, Hurricane Sally (Category 3) in September and Hurricane Delta (Category 4) this month, causing extensive property damage and loss of life.

This continues the pattern of an increasing number of storms in the Atlantic season. In 2018 there were 15 named storms of which 8 became hurricanes and 2 were major events (Cat 3 and above). In 2019 there were 18 named storms, of which 6 became hurricanes and 3 were major events. This season we now have 27 named storms, a staggering 12 hurricanes and 4 major events making it the heaviest storm season for some time (the last time we had more than 12 hurricanes in the Atlantic season was back in 2005).

As the heart of energy production in the US it is no surprise to see the main companies and industries expected to be affected by the red zone (area with the highest predicted windspeeds) of Hurricane Zeta:

Top 5 companies operating and leasing platforms:

1. Fieldwood Energy with 123 active platforms
2. Cox Operating LLC with 113 active platforms
3. Talos LLC with 74 active platforms
4. Arena Offshore with 53 active platforms
5. W&T Offshore with 41 active platforms

Top 5 companies with offshore wells in the red zone:

1. Fieldwood Energy – 354
2. Cox Operating – 293
3. Arena Offshore LP – 183
4. GOM Shelf – 86
5. Cantium LLC – 78

With the energy sector again taking the biggest hit due to the location of predicted landfall, you might have seen in the last two reports, that both Cox and Fieldwood Energy are expected to be the most effected. This is because of the sheer number of wells and platforms they have in this region. As the two largest platform and well operators in the affected zones they will always feature heavily in such reports as Fieldwood Energy operates 23% and Cox Operating LLC 21% of all active platforms in the region.

Top 5 companies with Onshore Wells

  1. Hilcorp Energy Company – 202
  2. FDL Operating, LLC – 139
  3. Texas Petroleum Investment Co. – 122
  4. Denbury Onshore, LLC – 88
  5. S2 Energy Operating LLC – 85

Due to the nature of risk assessment and underwriting being driven by who the lease holders of properties are, it is important to address the current leaseholders of potentially affected assets.

CompanyLeases
Fieldwood49
W&T23
Talos22
Arena Energy21
EPL Oil & Gas12
Leaseholders predicted to be most at risk of damage

Manufacturing facilities in Ship Building, Fabricated Metal Products, Chemicals & Petrochemicals and Mining Support are in the regions of potential storm surge flooding of up to 4ft above the ground. These businesses could well be under threat from some physical damage, but we do not think there will be significant damage or losses to these and their connected industries.

If you would like more information as to your specific portfolio requirements in the affected area or just want to be kept up to date with real time hurricane impacts this season, then please contact riskmonitor@adaptready.com.

About Adapt Ready:

Adapt Ready’s ground-breaking risk intelligence platform delivers new data insights and fills in key gaps with external data, enabling our customers to better manage operational and financial risks, and to enhance their growth and profitability. With our platform, organizations can gain insights from external data tailored to specific situations before, during and after a crisis:

  • Before: Plan for risks by uncovering as many hidden risks as possible
  • During: Mitigate the impact – as events unfold, new data emerges and can inform decisions to reduce the event’s impact
  • After: Adapt to new conditions and refine future business direction

Hurricane Delta: Impact Report

Hurricane Delta: Impact Report 800 440 adapt ready

Tracking Hurricane Sally

Tracking Hurricane Sally 719 557 adapt ready

Over 14 hours ago, Tropical Storm Sally turned into Hurricane Sally and changed its course as it made progress towards Louisiana. It is now expected to turn and make its way to the Mississippi-Alabama state line.

The hurricane is likely to further impact the battered oil & gas industry with over 170 offshore platforms and 1,000 offshore wells in the path of the hurricane. Over 500 manufacturing facilities in Mississippi could also bear the brunt of the hurricane and its predicted life-threatening storm surge.

The Chemicals manufacturing industry could see significant impact from Hurricane Sally.

The following is a small subset of the companies that could experience property damage and business interruption.

Offshore Wells
Fieldwood Energy368
Cantium LLC220
Cox Operating LLC92
Onshore Oil Wells
Texas Petroleum Investment Company100
Cox Operating LLC26
Lobo Operating Inc11
Onshore Gas Wells
Texas Petroleum Investment Company10
Lobo Operating Inc9
Fieldwood and Cox had the most exposure during Hurricane Laura as well.