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RESEARCH AND BRIEFINGS

Hurricane Harvey: Energy Risk Engineering Insights

 


While energy firms begin to count the cost of Hurricane Harvey, in its report, Hurricane Harvey – Energy Engineering Considerations, Marsh states that ageing energy facilities and new construction projects remain particularly vulnerable to the continued risk of flooding during the 2017 US hurricane season.

According to Marsh’s Energy Loss Database, storm and flood losses have been recorded almost annually at Gulf Coast energy facilities, in particular following Tropical Storm Allison in June 2001 and Hurricane Ike in September 2008, since Marsh records began in 1970.

The major risks for energy firms in the aftermath of Hurricane Harvey include:

  • ·Fire-following’ incidents as a result of overwhelmed drainage leading to the failure of back-up generators and a loss of cooling, which are critical in the prevention of fires or explosions.
  • Start-up, which can result in significant property damage, business interruption, and injuries, if well practiced operating procedures are not in place.
  • Compromised shift manning and communications, due to employees being personally affected by Harvey, leading to staffing pressures that distract operators from a safe start-up.

Hurricane Harvey has caused catastrophic property damage across large areas of the Gulf Coast. Hurricanes Irma and the emerging Jose, which are currently travelling up through the Caribbean, may not affect the energy industry directly, but are likely to place further strain on the insurance industry.

As the energy industry focusses its attention on flood risk while trying to recover from Hurricane Harvey, it should also consider actions to lower future losses and address the significant risks that may still lie ahead.