Can oil companies handle more storms?

While the US Army Corps of Engineers scrambles to defend the Gulf Coast against hurricanes on land, oil companies are preparing to avoid the havoc that last year's big storms wreaked offshore.

They are fortifying mobile platforms and drilling rigs, putting backup communications systems in place, and working out advance contracts with tug and helicopter services.

But a manpower shortage is hampering these efforts. The shortage is so acute that many companies are still working on last year's equipment failures. Nine months after hurricanes Katrina and Rita moved through, 21 percent of the Gulf's oil production and 13 percent of its natural-gas production remain offline.

Even more disconcerting to consumers is that oil and natural gas prices could rise even higher if another strong storm hits the Gulf.

While last year's hurricane season destroyed 113 offshore facilities and damaged 53 others, the most problematic were jack-up rigs and mobile drilling units, says the Minerals Management Service (MMS), which regulates the industry in federal waters.

So along with the US Department of Energy and API, the industry's primary trade association, the offshore industry just adopted recommended practices for these more vulnerable structures in time for this hurricane season.

Fortifications to jack-up structures are largely complete, but modifications to floating structures are only a third done, MSS says.

"I don't think there are any lackadaisical attitudes this hurricane season," says Allan Pulsipher, director for the Center for Energy Studies at Louisiana State University in Baton Rouge. "Oil companies have a tremendous financial incentive to learn what lessons they can from last year's hurricane season. These structures are billion-dollar investments, and they don't want to see them upside down in the water."

Oil companies always take hurricane season seriously, but even more advance planning will be necessary with the busy forecast in coming years, says Tim Sampson, coordinator for drilling and production operations with API.

Predictions are for as many as 16 named tropical storms this season, with four to six forming into Category 3 hurricanes or higher.

The Gulf of Mexico produces 30 percent of the nation's oil and 21 percent of its natural gas, so a major hurricane can have a severe effect on prices. Last year, gasoline prices rose to almost $3 a gallon, with natural-gas prices jumping as well.

In addition the challenge of moving employees inland and shutting down drilling operations, companies face having damaged platforms or drilling rigs out of operation for months.

Part of the problem, says Jim Hooper, an engineer and oil industry consultant in Houston, is that the industry as a whole is so short of workers right now that many companies are still working to fix last year's equipment failures.

But companies make every effort to ensure that production comes back quickly, says Mr. Sampson with API. "These companies are in the business of producing oil and gas, and every day they are not is costing them money."

Chevron, which has a large presence in the Gulf, is adding structural bracing to several platforms and raising the height of critical production equipment on others. The company has also obtained more backup office space and equipment in case onshore operations have to be moved, and increased the amount of temporary housing for the 3,000 employees it has in the Gulf at any one time.

"Chevron has been working in the Gulf of Mexico for 60 years and we have a tremendous amount of experience with hurricanes," says company spokesman Mickey Driver. "But we learned a lot last year about what to do onshore as well as offshore."

Houston-based Trans-ocean, the world's largest offshore driller, is trying to better ensure that its equipment will still be there when the storm passes.

On two of its deep-water rigs, the company is expanding the mooring system from the traditional eight-point system to a 12-point one - hoping to better secure them in place.

Both were knocked off location last season and had to be tracked down using the onboard GPS systems. Some companies say even that is not enough, and that they are putting more than one GPS system on board this hurricane season.

But of the more than 4,000 platforms in the Gulf, the majority of those damaged were built before 1988, when stricter construction standards were put in place.

They remain the most vulnerable, says Mr. Hooper. "For the most part, the new platforms were built to handle what hit them" (with the exception of Shell's massive Mars platform, which accounts for about 5 percent of Gulf oil and gas production. It only resumed limited operations this month).

Perhaps even more susceptible are the pipelines that run along the sea floor. Currents can easily break them. Some even washed up on shore during the last hurricane season.

If New Orleans hadn't flooded, Dr. Pulsipher believes the big story would have been the significant onshore oil spills caused by the hurricanes.

"Hurricanes have no doubt been a contributing factor to higher gasoline prices in the United States," says Pulsipher. "But keep in mind that this was a tremendous hurricane season. It's remarkable that as many remained operable as they did."