This is an excerpt from EERE Network News, a weekly electronic newsletter.

September 12, 2007

Report: Gulf Hurricane Could Cause $65 Billion in Energy Damages

A strong Category 5 hurricane that tracks through the heart of the offshore energy platforms in the Gulf of Mexico could wreck $35 billion in energy assets and cause an additional $30 billion in operating losses, according to a new report from Eqecat, Inc. The company, which bills itself as an authority on extreme-risk modeling, has developed a computer model to quantify the risk to U.S. offshore energy production. According to the company, the model is innovative in its ability to calculate the risk of disruption of petroleum and natural gas delivery to onshore facilities due to pipeline damage. Eqecat notes that insured losses are harder to quantify, but may be as low as $15 billion. See the Eqecat press release.

Meanwhile, all signs point to an active end to this year's hurricane season. In August, the National Oceanic and Atmospheric Administration (NOAA) updated its outlook for the Atlantic hurricane season, indicating a strong chance for an above-normal season and predicting 13 to 16 named storms, 7 to 9 of which will become hurricanes, and 3 to 5 of which will reach Category 3. Last week, the hurricane forecasters at Colorado State University (CSU) seconded that notion, calling for 10 named storms during September, October, and November, with 6 becoming hurricanes and 3 becoming major hurricanes. According to the National Hurricane Center, from June to August, 5 tropical storms and one subtropical storm formed, and one storm, Dean, became a major Category 5 hurricane. Combining those figures with the CSU forecast yields 16 named storms, 7 hurricanes, and 4 major hurricanes for the full season, which is in agreement with the NOAA forecast. See the forecasts from NOAA and CSU, and the National Hurricane Center's summaries for June, July, and August.

NOAA also noted last week that La NiƱa conditions are developing in the Pacific Ocean, creating conditions more favorable for hurricane conditions. As of September 11th, one tropical storm has formed in September, pushing the total named storms for the year to seven. See the NOAA press release and the National Hurricane Center Web site.