Hurricane Harvey Halts Domestic Oil and Gas Production

The full damage wreaked by Hurricane Harvey won't be totaled up for days if not weeks, but thankfully the destruction so far has resulted in relatively few fatalities. The impact on energy infrastructure, though, is a different story. The storm hit southeast Texas, a major hub of the U.S. petroleum and natural gas industries. It stands as further evidence that the centralized model for fuel production and transportation is out-of-date, leaving the U.S. exposed to economic disruption and threats to national security. In the age of climate change, a more nimble and flexible approach is needed.

Analysts predict massive energy infrastructure disruption

Part of the disruption was preventive rather than a direct result of storm damage. When Hurricane Harvey grew from a tropical storm to a Category 4 hurricane, energy watchers were all in agreement: This one was going to be bad.

Petroleum and gas stakeholders began ratcheting down operations well in advance of landfall. In addition to offshore and coastal operations, some inland drillers also halted. Aside from any direct impacts, inland operators were concerned that transportation would be disrupted.

Those preventive measures alone caused a shakeup in the oil and gas market. The U.S. Energy Information Agency noted the importance of the Texas Gulf Coast and surrounding areas to the nation's liquid fuel sector:

The U.S. Gulf of Mexico accounts for nearly 20% of total U.S. crude oil production, and the Texas Gulf Coast is home to nearly one-third of U.S. refining capacity. As of Thursday, August 24, several oil companies had already shut in production from several facilities and had evacuated personnel from offshore platforms.

According to EIA, Texas and the Gulf account for about 50 percent of oil production in the U.S. and about 25 percent of natural gas production.

Analysts were also concerned that the South Texas Project nuclear power plant near Bay City would have to shut down. The plant's policy calls for shutting down when sustained winds reach 74 miles per hour, far below Category 4 force. As of Friday night, though, forecasters predicted that winds of only 40 mph would hit that area of the coast.

Although the nuclear power plant dodged a bullet, analysts were still concerned that more than 10 percent of the state's total population could lose power, due to downed power lines.

Energy observers also took a cautionary look at the burgeoning Texas wind industry. Coastal wind farms began ratcheting down in advance of Harvey, and the Southern Alliance for Clean Energy noted that at least nine inland wind farms that could be in the storm's predicted path.

Bloomberg also noted that some wind farms in the storm's path could be idled for days instead of hours, as Harvey is expected to linger in the area rather than passing straight through. However, that appears to be a moot point.

With transmission outages widespread many areas evacuated, analysts anticipated that electricity customers would barely notice the turndown in wind power, if at all.

Hurricane Harvey hits

By Saturday, the impact on oil production was already significant, as vulnerable operations shut down in advance of the storm. CNN reported an analysis compiled from offshore drilling rig operator reports:

...it is estimated that approximately 24.49 percent of the current oil production of 1,750,000 barrels of oil per day in the Gulf of Mexico has been shut-in, which equates to 428,568 barrels of oil per day. It is also estimated that approximately 25.94 percent of the natural gas production of 3,220 million cubic feet per day, or 835 million cubic feet per day in the Gulf of Mexico has been shut-in.

Though the worst of Harvey's wind was over by Saturday, analysts remain concerned that the ripple effect of inland flooding would impact additional refineries in the Houston and Beaumont areas, with a consequent increase in gasoline prices in the eastern U.S.

Transmission was also affected, though so far not as badly as some had anticipated. As of Saturday morning ERCOT, the grid operator for much of Texas, reported "widespread transmission outages" with roughtly 140 circuits out of service by 6:30 a.m.

By Saturday evening ERCOT was estimating 300,000 without power. That's far below the figure of 1.2 million modeled by some researchers.

The energy infrastructure of the future

As of this writing, the extent of permanent damage to energy operations impacted by Harvey -- oil, gas, wind and solar -- is unclear.

The readily available information so far consists of power outages tracked by ERCOT, but those are local impacts. The precautions taken by wind farms also primarily affect the local grid.

The main problem underscored by Harvey is that Texas oil and gas operations have a significant impact on domestic energy markets far beyond the state's borders, and consequently a ripple effect on the national economy.

Since the 1970's, national attention has focused on cutting ties with overseas oil producers, but Harvey is just the latest in a string of damaging storms demonstrating that the nation also needs to reduce its reliance on domestic energy hubs as well (to be clear, realistically speaking that's reduce -- not eliminate).

The nation's electricity grid is already moving toward a more diverse and distributed model across many of the 50 states incorporating renewables and energy storage, but oil and gas stakeholders have continued on the centralized model in use for generations.

That could be on the verge of changing. For example, the mainstreaming of electric vehicles could help mitigate the national impacts of storm-related gasoline supply disruptions while creating favorable conditions for locally sourced, distributed wind and solar energy.

The emergence of second-generation biofuels could also help reduce the impacts of damaging storms on liquid fuel production, including gasoline, diesel and jet fuel.

The Obama administration began leveraging regionally grown biomass to promote the development of refineries outside of the conventional petroleum and gas hubs. As currently envisioned by the U.S. Department of Energy's Integrated Biorefineries program, the biorefinery of the future is capable of handling multiple feedstocks, which also helps to promote local fuel sourcing.

The Energy Department is also forging ahead with its Grid Modernization Initiative, which foresees more wind, solar and other renewables in the energy infrastructure of the future, helped along by new energy storage technology.

In a tragic coincidence of timing, Harvey gained force last Wednesday, and that same evening the Energy Department released a much-anticipated review of national grid resiliency. While many energy observers were concerned about the grid study's assessment of coal-sourced electricity, it actually makes a good case for integrating more renewables into the grid, helped along partly by electric vehicles and smart-charging systems.

Image credit: NOAA/flickr. Yellow indicates light from major cities.