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The Impact of Climate Change on Offshore Oil Production and Hurricane Activity

Offshore production constitutes 27% of U.S. oil output, generating approximately $40 billion annually. Severe weather events, such as hurricanes, can drastically affect this sector, causing significant production and refining outages, infrastructure damage, increased operational costs, and market price spikes. A recent study by NCAR aims to model future Gulf hurricane activity influenced by climate change, utilizing data from the last 11 years and forecasting for the next 50. Understanding these dynamics is crucial for the industry to mitigate risks and plan for future challenges.

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The Impact of Climate Change on Offshore Oil Production and Hurricane Activity

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  1. Offshore Production is Important • 27% of U.S. oil production; ~$40 B /yr • Katrina knocked out production & refining causing large spike in prices

  2. Weather Impacts Industry in Many Important Ways Fatigue Extremes Operations Downtime Analysis Pollutant Fates Tows

  3. Hurricanes • Generate waves up to 90 ft • Damage infrastructure • Production platforms • Pipelines • Refineries (50% of U. S. capacity) • Logistical support, e.g. shore bases • Affect cost of new facilities e.g. deepwater production facility costs $1 B • Generate evacuation costs & personnel risks ($100-$500 M/yr) Changes in future hurricanes will affect all of the above

  4. Ongoing Study: Climate Change & Hurricanes • Purpose: Estimate effect of climate change on future Gulf hurricanes • Scope • Modeling study conducted by NCAR • Validate by hindcastingpast 11 yrs • Forecast 20 yrs in the next 50 yr • Funding from DOE & 20 Oil Companies • Finish in Feb 2010 with workshop of world-wide experts NCAR model results showing change in hurricane potential in 2030 (blue indicates increase)

  5. Summary • Gulf of Mexico is an important contributor to US energy • Severe weather (hurricanes) costs: • Capital investments • Storm-related damage • Lost production • Supply interruptions & price increases • To properly plan, Industry needs to estimate future hurricane activity • Regional climate modeling is only viable tool to estimate future change

  6. Benefits of Regional Climate Modeling for the Offshore Oil IndustryDr.Cortis Cooper, Fellow

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