OAKLAND, Calif. - 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.

Meanwhile, all signs point to an active end to this year's hurricane season. The National Oceanic and Atmospheric Administration (NOAA) has updated its outlook for the Atlantic hurricane season, indicating a strong chance for an above-normal season and predicting 13 to 16 named storms, seven to nine of which will become hurricanes, and three to five of which will reach Category 3. The hurricane forecasters at Colorado State University (CSU) have seconded that notion, calling for 10 named storms during September, October, and November, with six becoming hurricanes and three becoming major hurricanes. According to the National Hurricane Center, from June to August, five 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, seven hurricanes, and four major hurricanes for the full season, which is in agreement with the NOAA forecast.

NOAA also noted that La Niña conditions are developing in the Pacific Ocean, creating conditions more favorable for hurricanes.

Publication date: 09/17/2007