The impact of Harvey

The impact of Harvey

How the tropical storm in Texas has left the oil industry facing multiple difficulties

Tropical Storm Harvey hit the coast of Texas near Corpus Christi last Friday night, and over the subsequent days brought “unprecedented” rainfall to the heartland of the US oil and gas industry. By Friday, at least 46 people had been reported to have died as a result of the storm.

More than 45 inches of rain fell in some areas around Houston, with the heaviest downpour hitting the area to the south of the city. The highest recorded rainfall was nearly 52 inches at Cedar Bayou, not far from “refinery row” between Houston and Baytown. The National Weather Service reported flooding across an area about 250 miles long by 100 miles wide. The volume of rainfall has made Harvey a “1,000-year flooding event” for Texas, according to Shane Hubbard of the University of Wisconsin. Greg Abbott, the governor of Texas, said he expected Harvey to be more costly than Hurricane Katrina in 2005 or super-storm Sandy in 2012. Katrina cost about $75bn in insured losses and, along with two other hurricanes that same year, triggered more than $100bn in federal spending. The damage from Sandy in the US was estimated at about $71bn, and the relief and reconstruction package approved by Congress was costed at about $50bn.

About a quarter of the offshore oil and gas production in the Gulf of Mexico was shut in at the peak on Saturday, but the more significant impact on energy supplies appears to have come from the flooding onshore. Southern Texas is home to the heaviest concentration of refineries, pipelines and terminals in the US, processing and transporting fuel for the US and world markets. Many companies including Valero Energy, ExxonMobil, Motiva and Royal Dutch Shell shut down operations in southern Texas, and almost one-third of US refineries have been affected by the storm. Web pages with updates on the status of their operations were put up by Valero, Exxon and BP. The Energy Information Administration published a useful real-time graphic showing the track of the storm and other weather events in relation to US refineries, pipelines and production platforms, and the Department of Energy has been publishing regular updates on the impact on the regions oil, gas and electricity industries.

The US shale oil boom has increased the concentration of US oil and gas infrastructure in Texas, reflecting the importance of the Eagle Ford formation in the south of the state and the Permian Basin in the west. Antoine Halff of Columbia University’s Center on Global Energy Policy, published a thoughtful note on the resilience of US energy supplies in the age of shale, concluding: “No country, no matter how mighty an oil and gas producer it may be, is beyond the threat of catastrophic damage.” His colleague Jason Bordoff drew five lessons for policymakers. Housley Carr of RBN Energy had a useful overview of effects on oil markets. There was some panic-buying of fuel that caused shortages in and around Dallas, but on the whole US markets were adequately supplied, with an armada of tankers on its way to bring gasoline from Europe. The US wholesale gasoline price has risen by a third since before the storm, but fell back on Friday morning. The American Automobile Association predicted that the average retail price of gasoline in the US would spike to about $2.50 per gallon, its highest since 2015, but forecast it would quickly fall back by the end of the month.

Fears of cholera and typhoid in the water, and toxic substances leaking from polluted “superfund” sites, have added to concerns about the impact of the flood. One focus for concern has been the fires at the organic peroxides plant in Crosby owned by Arkema, the French chemicals group spun off from Total in 2004. The Environmental Defense Fund published a blog post highlighting how the EPA had recently suspended the implementation of new regulations that would have imposed additional requirements on chemicals plants including Arkema’s.

The question of the influence of climate change on the storm was discussed by Michael Mann of Pennsylvania State University, Andrew King of Melbourne University, Friederike Otto of Oxford university, and The Atlantic. As Phil Klotzbach of Colorado State University pointed out on Twitter, the number of severe Category 4 and 5 hurricanes hitting US appears to have slowed sharply in recent decades. Before Harvey, the US had gone for 4,323 days without a hurricane in Category 3 or above making landfall, the longest period on record. But as well as its unprecedented rainfall, Harvey broke other unwelcome records, including persisting as a named storm longer than any other after making landfall in Texas.

Climate science and policy were debated last week as a result of an article in the journal Environmental Research Letters by Geoffrey Supran and Naomi Oreskes of Harvard University. Discrepancies between what different employees of Exxon have said about climate change at different times and in different places have been a focus for environmental campaigners since reporting by InsideClimate News and the LA Times with Columbia Journalism School in 2015. The attorneys-general of New York State and Massachusetts have been investigating ExxonMobil over whether the company misled investors with public statements about climate change that were different from its private understanding. Exxon has sued the AGs, accusing them of acting in bad faith and going on a politically-motivated “unlawful fishing expedition”.

Mr Supran and Ms Oreskes, who are respectively a postdoctoral fellow and a professor in the history of science at Harvard, took a different approach from the legal inquiries. They compared Exxon’s public stance on climate science and policy, as expressed in paid advertorials for the New York times over 1989-2004, with the views of its employees in internal documents and published scientific papers, and found clear differences between the statements heard by different audiences. Exxon rejected the analysis, saying the study had been “paid for, written and published by activists leading a five-year campaign against the company”, and was “inaccurate and preposterous”. Mr Supran and Ms Oreskes responded with a column in the Los Angeles Times, stressing that “the question is not whether ExxonMobil ‘suppressed climate change research,’ but rather how they communicated about it.”

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