Reports: Climate Change Threatens Texas Oil and Gas Industry

By Marissa Barnett
For Reporting Texas

In 2008, Hurricane Ike hit the oil-rich Gulf Coast, closing 15 refineries and destroying more than 20 drilling platforms. Refineries suffered little permanent damage, but closures cost companies millions and raised gas prices to more than $4 per gallon in parts of the country.

Such powerful storms are likely to occur more often, scientists say, because of climate change. The oil and gas industry, with its many coastal refineries, ports and pipelines, is particularly vulnerable to extreme weather, as well as to rising sea levels and higher temperatures, according to reports from the International Energy Agency and the U.S. Department of Energy.

Much of the nation’s refining capacity lies along the Texas coast, and oil and gas production in Texas is surging with the application of new drilling technologies. The IEA says the U.S. is set to become the No. 1 oil producer in the world by 2015.

The energy industry is a driver of the Texas economy, accounting for more than 8 percent of the gross state product in the year ended Aug. 31, according to the state Comptrollers Office. Oil and gas production taxes provided $4.5 billion in state revenue. Employment in the sector has doubled since 2009.

A June report from the International Energy Agency said that climate change is likely to cause more extreme weather events, including hurricanes and tropical storms, putting the U.S. energy infrastructure at risk. A July report from the U.S. Department of Energy said rising temperatures and sea levels, and regional water scarcity caused by climate change “could restrict the supply of secure, sustainable and affordable energy critical to the nation’s economic growth.”

Across the U.S., nearly 300 facilities are within four feet of high tide, making them more susceptible to flooding from rising sea levels, according to the IEA report. More than half of foreign crude oil imports come through four ports on the Texas coast, and the nation’s largest refinery is in Baytown.

The state’s Gulf Coast is among the most vulnerable areas in the U.S. to rising sea levels and coastal erosion, according to a February study produced by six Texas universities, including Texas A&M campuses at College Station, Galveston and Corpus Christi; the University of Texas at Austin and UT’s Marine Science Institute at Port Aransas; Texas State University; and Rice University.

Scientists who prepared the study estimate that the gulf could rise by as much as six inches by 2030, intensifying flooding at coastal refineries and damaging pipelines during storms. The Texas Oil and Gas Association says energy companies have spent millions to protect against hurricanes and storm surge, but haven’t created specific initiatives concerning sea level rise and the effects of climate change.

James Jones, senior vice president at Turner, Mason & Co., a Dallas-based engineering consultant company, said hurricanes and other severe weather conditions are damaging to refineries but that he doubts whether six inches of sea level rise would “give anybody any trouble.”

“Most of the people in my line of work are climate change skeptics,” he said. “I can promise you there are not a lot of people gearing up for sea level rise.”

Scientists say sea levels already are rising, and quickly, on the Texas coast. The six-university study found that the Gulf Coast’s water level is increasing by one-fifth of an inch per year — five times the average rate over the past 4,000 years and one of the highest rates in the world.

Melting ice caps and warmer ocean water, which has more volume than cooler water, are causing the higher water level, according to the report. Sea level is measured as the distance between the sea floor and the air, and is tracked over several months to account for changes in tide.

Meanwhile, the study found that 64 percent of the Texas coast is eroding at an average rate of six feet a year. Some regions lose as much as 30 feet per year.

An inch of sea level rise in five years may not seem like much, but researchers say that even small increases can flood low-lying areas of the coast.

Jim Gibeaut, chair of coastal and marine geospatial sciences at Texas A&M University’s Harte Research Institute, said that his flood maps are shifting and that more coastal areas are becoming vulnerable.

“Even six inches [in sea level rise] can make a significant difference in the amount of area that is damaged during storm surge,” Gibeaut said in a phone interview from Corpus Christi. “In Texas, some of those areas include refineries, pipelines, ports and docks.”

Flooding can disrupt oil production for days or weeks. During Hurricane Ike, some refineries remained shut down for up to two weeks. The DOE report suggests that climate change increases the frequency and intensity of hurricanes and storms.

A report co-authored by Entergy Corp., a Louisiana-based energy company, and America’s Wetland Foundation, an organization for wetland conservation, found that erosion and rising sea levels could cause more than $330 billion in damage to Texas energy facilities by 2030.

“Over time—let’s say over 30 years with these larger storms—those continuous damages will cost enormous amounts of money, and the study shows the costs will be more than the economies of those states can bear after 30 years,” said Valsin Marmillion, managing director of America’s Wetland Foundation.

“This doesn’t mean we’ll have major problems. It just means that will have to plan for it,” Harte Research Institute chair Gibeaut said.

The university study found that Texas is behind other Gulf Coast states in climate change preparedness. “Today, sea level is rarely considered by governments, organizations and individuals as they make decisions about where to develop, how to build, or what to prepare,” the report said.

Louisiana and Florida are ahead of Texas in sea level rise adaptation, the study said. For instance, the Southeast Florida Climate Change Compact, a joint effort of four South Florida county governments, formed in 2009 to draft resilience policies and address the state’s vulnerabilities to climate change.

Some planning is taking place in Texas. The General Land Office oversees beach erosion and restoration, giving it some authority over the beach dunes systems that help protect industrial and residential areas from storm surges.

The “Ike Dike,” a coastal barrier system proposed by Bill Merrell, a professor at Texas A&M University at Galveston, would protect the Houston and Galveston Bay area from storm surge. The system, including flood gates and 17-foot-high dikes to extend the Galveston seawall, would help protect the refineries and petrochemical processing plants in the area, as well as residents. The project is expected to cost $3 billion to $4 billion. Gov. Rick Perry expressed support for the project in 2010, but the state has legislated no money for it.

Oil and gas companies have their own initiatives to protect against storm surge and other extreme weather.

“They have contingency plans in place, and they go through procedures based on information they get about the weather,” said Debbra Hastings, vice president at the Texas Oil and Gas Association. “Everybody prepares for any event. They have an all-hazard approach to incidents, whether it be a storm or some other type of incident.”

To protect against storm surge, companies install pumps to drain floodwater, build containments around tanks and place equipment behind walls. Many companies have their own meteorologists, who track how weather will affect oil and gas production and transport.

“If you have to shut down a refinery, it’s not like a light switch that you turn on or off. It, takes several days to shut one down and takes 10 days to two weeks to start it back up,” Hastings said. “It’s an economic hardship.”