Understanding the Impacts of Katrina and Rita on Gulf Coast … · 2017-04-11 · Understanding the Impacts of Katrina and Rita on Gulf Coast Energy Infrastructure David E. Dismukes

Center for Energy Studies

American Chemical Society National MeetingNew Orleans, LouisianaApril 7, 2008

Understanding the Impacts of Katrina and Rita on Gulf Coast Energy Infrastructure

David E. DismukesCenter for Energy StudiesLouisiana State University


Summary on Impacts of Hurricanes

Hurricanes were incredibly destructive to energy business – effects felt for some time. Was a shining moment for all in the industry.

Hurricanes clearly showed the interrelationship of all types of energy infrastructure in the Gulf – the “4 Ps” –production, processing, pipes, and power.

Hurricanes impacts were felt nationally and internationally – drives home importance of Gulf coast and critical energy infrastructure.

© LSU Center for Energy Studies

Center for Energy StudiesPlatforms/Structures Impacted by 2005 Hurricanes



0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Landfall 20 40 60 80 100 120 140 160 180 200 220 240 260 280

Katrina/Rita - Crude OilKatrina/Rita - Natural GasPermanent Shut-in Potential - OilPermanent Shut-in Potential - Gas

Estimated Return of Existing Crude Oiland Natural Gas Production

As of June 2006, there was 936 MMcf/d and 179 MBBl/d of shut in gas and oil production.


Note: Shut-in statistics for Ivan were no longer reported after 150 days. The last shut-in statistics for Katrina and Rita were published on June 21, 2006 (the 296th day after Katrina made landfall). Total pre-hurricane crude production of 1.5 MMBBls/d and gas of 10 Bcf/d.Source: Minerals Management Service, US Department of the Interior

Lost

Pro

duct

ion

(per

cent

of t

otal

GO

M)

Total Oil Losses: 165 MMBbls

Total Gas Losses: 800 Bcf


Total Immediate Refinery Impact

LA/MS/AL Gulf Coast Refiners(reduced runs and shutdowns)

2,528 mbbl/day15% of US operating capacity

Port Arthur/Lake Charles(reduced runs and

supply loss)775 mbbl/day

5% of US operatingcapacity

Total Refinery Impact4,931 mbbl/day

30% of US operating capacity

Remaining US Operating Capacity


Source: Energy Information Administration, Department of Energy

Midwest(reduced runs –

supplied by Capline Pipeline)1,628 mbbl/day


Port Arthur/Lake Charles(shutdowns and damaged facilities)

1,715 mbbl/day10% of US operating capacity Houston/Texas City

(shutdowns and damaged facilities)

2,292 mbbl/d13.5% of US

operating capacity

Corpus Christi(shutdown andreduced runs)706 mbbl/day


Midwest(reduced runs from

supply loss)338 mbbl/day

2% of USoperating capacity

Remaining US Operating Capacity


Total Refinery Impact5,052 mbbl/day


Hurricane Katrina Hurricane Rita



Source: American Petroleum Institute

Gasoline Price IncreasesAugust 30, 2005 to September 6, 2005

20

25

20

18

45

35

38

33

32

42

38

40

45

20

52

45

4935

49

50

3536

36 42 40

4246

5666

58

58 6161

61 60

56

5855

42

5254

< 25

25-50

> 50Colonial / Plantation Pipeline Systems

60.154.9

5146.9

39.5 38.5

25.3

44.7

0

10

20

30

40

50

60

70

Mid

-Atla

ntic

Nor

thea

st

Sout

h A

tlant

ic

Mid

wes

t

Sout

h

Mou

ntai

n

Wes

t

US

Regional Changes in Gasoline Prices(cents per gallon)

35

4244

44

24

24



Number of Natural Gas Processing Facilities Out

Source: Oil and Gas Journal; Energy Information Administration, Department of Energy

Outages at gas processing facilities throughout all of south Louisiana was one of the more unique aspects of the combined hurricanes.


GasState/Company Facility Capacity

(MMcf/d)Alabama

Duke Energy Field Services Mobile Bay 600.0 Shell Western E P Inc Yellowhammer 200.0

LouisianaEast Louisiana PlantsVenice Energy Services Co LLC Venice 1,300.0 Enterprise Products Operating LP Toca 1,100.0 Dynegy Midstream Services LP Yscloskey 1,850.0

West Louisiana PlantsDynegy Midstream Services LP Barracuda 225.0 Dynegy Midstream Services LP Stingray 305.0 BP PLC Grand Chenier 600.0 Williams Cos Johnson Bayou 425.0 Gulf Terra Energy Partners LP Sabine Pass 300.0

Central Louisiana PlantsAmerada Hess Corp Sea Robin 900.0 Duke Energy Field Services Patterson II Gas Plant 500.0 Dynegy Midstream Services LP Lowry 300.0 Enterprise Products Operating LP Calumet 1,600.0 Enterprise Products Operating LP Neptune 650.0 Gulf Terra Energy Partners LP Cow Island 500.0 Gulf Terra Energy Partners LP Pelican 325.0 Marathon Oil Co Burns Point 200.0 Norcen Explorer Patterson 600.0

MississippiBP PLC Pascagoula 1,000.0

TOTAL 13,480.0TOTAL GOM CAPACITY 20,285.0PERCENT OF TOTAL GOM 66.5%


Power Outages From Hurricanes

Source: Entergy Corp.

Damage to power infrastructure (transmission) extensive. Restoration was monumental and impressive, but still created “nervous” moments for other energy infrastructure.


0

200

400

600

800

1,000

1,200

LF 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46

Katrina LandfallRita Landfall

85% Restored*

Day 14 Day 38

Return to Service CustomersExtended Outage Customers

Day 47

Landfall

Oct. 15


Estimated Decrease in Refining Productionfrom both Katrina and Rita– First 120 Days

0

1,000

2,000

3,000

4,000

5,000

6,000

Landfall 10 20 30 40 50 60 70 80 90 100 110 120

thou

sand

bbl

s pe

r day

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

perc

ent o

f US

cap

acity

Total Lost ProductionLost Production as a Percent of US Total Capacity

Refining capacity restoration closely follows power system restoration, which in turn have direct impacts on refined product markets.

Source: Assumes 95 percent capacity factor; assumes 4 week recovery for facilities damaged by Rita.


Examples of Energy Infrastructure Damage



Shell Mars Tension Leg Platform

Source: Shell.com© LSU Center for Energy Studies


Shell Mars Tension Leg Platform

Source: Shell.com© LSU Center for Energy Studies


Ocean WarwickDauphin Island, AL


Source: Rigzone.com


Semi-Sub Stuck Under BridgeNorth Mobile Bay


Source: Rigzone.com


Venice Port, Supply & Crew Bases


Source: LIOGA


Chevron RefineryPascagoula, MS


Source: Chevron


Air Products Facility – Normal DayNew Orleans, Louisiana (Intracoastal Drive)


Source: Air Products


Air Products Facility –During Hurricane KatrinaNew Orleans, Louisiana




Air Products Facility –Post Hurricane Katrina

New Orleans, Louisiana




Power OutagesGenerating Stations – Entergy Patterson

Source: Entergy


Power OutagesSubstation Damage

Source: Entergy


Then,Along Comes Rita



Henry Hub, September 25, 2005

Source: LIOGA© LSU Center for Energy Studies


Entergy Transmission

Source: Entergy.com© LSU Center for Energy Studies


Citgo Refinery – Storage TankLake Charles, Louisiana

Post-Rita

© LSU Center for Energy StudiesSource: Citgo


Citgo Refinery – Onsite DockLake Charles, Louisiana

Post-Rita


Source: Citgo


Citgo Refinery – Cooling TowerLake Charles, Louisiana

Post-Rita


Source: Citgo


Citgo Refinery – Tent CityLake Charles, Louisiana

Post-Rita


Source: Citgo

Facility rental of $3.5 million for 3 weeks – for 250 employees – roughly $156 per day per person


Natural Gas Pipeline Leak

Source: MMS© LSU Center for Energy Studies


Chevron Typhoon TLP


Source: Chevron, Rigzone.com


Energy Capacity Offline:Current and Forecast


0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Q3 2005 Q4 2005 Q1 2006 Q2 2006 Q3 2006 Q4 2006

MB

bls

per d

ay

EIA Short-Term Outlook in September 2005Current CES OutlookEIA Actual (Q3 & Q4 2005)EIA Short-Term Outlook in April 2006CES Outlook from 9/28/05

Forecast versus New ForecastCrude Oil

Note: Assuming recovery of 4.7 bcf per day after April 5, 2006.

838 MBbls366 MBbls 179 MBbls


million percentbarrels of total

2005 106.4 69.5%2006 46.7 30.5%Total 153.1 100.0%

Shut-in Oil ProductionCumulative GOM crude oil production shut-ins equal to the processing capacity of one major U.S. refinery (419,000 Bbls/d)


0

1,000

2,000

3,000

4,000

5,000

6,000

Q3 2005 Q4 2005 Q1 2006 Q2 2006 Q3 2006 Q4 2006

bcf

EIA Short-Term Outlook in September 2005Current CES OutlookEIA Actual (Q3 & Q4 2005)EIA Short-Term Outlook in April 2006CES Outlook from 9/28/05

Note: Assuming recovery of 32 bcf per day after April 5, 2006.

Forecast versus New ForecastNatural Gas

528 Bcf 141 Bcf


35 Bcf

percentbcf of total

2005 553.9 75.9%2006 176.3 24.1%Total 730.2 100.0%

Shut-in Gas ProductionCumulative GOM natural gas production shut-ins equal to Florida’s total annual gas usage (704 Bcf).


Henry Hub and Houston Ship Channel Differential

Estimated energy expenditures increased dramatically for industry and utility customers in aftermath of hurricanes due to limited local supplies.

-$0.5

$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

$3.0

$3.5

$4.0D

ec-0

4

Jan-

05

Feb-

05

Mar

-05

Apr

-05

May

-05

Jun-

05

Jul-0

5

Aug

-05

Sep

-05

Oct

-05

Nov

-05

Dec

-05

Jan-

06

Feb-

06

Mar

-06

Pric

e D

iffer

entia

l ($/

Mcf

)

Sector Million $

Feedstock Increase 53.1$ Power Gen Increase 398.7$ Total Power and Industry 580.0$

Increased Energy Expenditures

Note: CES estimated energy expenditures based upon daily 2005 average usage. For illustrative purposes only since usage is unadjusted for hurricane-related interruptions.


Cumulative Refining Production

Source: Assumes 95 percent capacity factor

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

Jun-05 Jul-05 Aug-05 Sep-05 Oct-05 Nov-05 Dec-05 Jan-06 Feb-06 Mar-06

milli

on b

bls

Cumulative Production - Business as UsualCumulative Production - After KatrinaCumulative Production - After Katrina and Rita

Loss of 310 million barrels of productive capabilities (7 percent of total).

This is equivalent to shutting down all US refineries for over 18 days.



Conclusions

GOM region has played an important historic role in the development of energy infrastructure. Not likely to change despite hurricane activity.

Hurricanes proved that the region, its workforce, and the underlying assets are resilient and can be restored quickly, even in the face of two natural disasters.

Some concerns about “diversifying” energy infrastructure in the region. Given current economic challenges concern is that diversity in some infrastructure areas could “diversify” to other parts of the world, which actually increase US vulnerability, not decrease it.

Man-made incidents and catastrophic incidents should not be taken lightly -- but the “stochastic” nature of these events requires a more probabilistic approach to mitigation – more than likely a resiliency as opposed to “hardening” solution.


Questions, Comments, & Discussion

[email protected]

www.enrg.lsu.edu

Documents

Understanding the Impacts of Katrina and Rita on Gulf Coast … · 2017-04-11 · Understanding the Impacts of Katrina and Rita on Gulf Coast Energy Infrastructure David E. Dismukes