EnergyFactor By ExxonMobil | Pespectives has a new home

On the same page dealing with natural disasters

NOAA_Hurricane_Graphic_06-2015You might have heard that the National Oceanic and Atmospheric Administration Climate Prediction Center projects a “below-normal” hurricane season for the Atlantic and Gulf of Mexico this year.

While theoretically good news, it is cold comfort for those residents of the Gulf Coast battered last week by Tropical Storm Bill.

But that storm does raise an important point, namely that no matter how mild a hurricane season is expected to be, it only takes one storm to do major damage. A tropical storm or hurricane can destroy people’s lives and property. And its impact can incapacitate much of the energy production-and-supply infrastructure assembled along the Gulf of Mexico.

Even a single localized, but intense storm in the Gulf can have significant repercussions for gasoline supplies around the country. (The nearby graphic gives a flavor of the national fuels distribution network, much of which can be affected by a severe storm or other disaster.)

That realization – and the experience from past storms like Hurricanes Katrina and Rita as well as Superstorm Sandy – is what led Energy Secretary Ernest Moniz to ask the National Petroleum Council to look for ways to improve emergency preparedness for natural disasters.

The report the Council issued last December should improve how federal and state and local officials coordinate with industry to deal with potential supply disruptions that can result from storms and other natural disasters.

I encourage you to read the entire report. It praises energy industry preparations (something I’ve discussed here and here) and suggests that the American Petroleum Institute’s preparedness handbook be more widely used.

Industry_Stats_06-2015The report also reveals a lot about the current gaps and limitations in government at all levels – particularly in response coordination in the aftermath of a natural disaster. Overcoming those limitations will be critical to saving lives, managing risks, and enhancing society’s capacity to deal with dangerous storms.

For instance, one key finding was that government agencies often don’t possess adequate understanding of the dynamic nature of oil and gas supply chains – i.e. everything involved in getting resources out of the ground, transporting them, and turning them into useful products and distributing them to consumers.

That makes it difficult or impossible for policymakers to render quick decisions that would facilitate industry making critical repairs and/or resuming deliveries of supplies. The report makes clear that government officials would benefit from a greater understanding of how the oil and gas industry works.

Another finding is that both government and industry are hindered by a host of regulations that are designed to work under normal circumstances, but can grind relief efforts to a halt in the aftermath of disaster.

Ironically, one of the rules specifically criticized is the Carter-era Paperwork Reduction Act, which was designed to streamline government operations but, in the case of natural disasters, can limit the ability of government decision makers to compile necessary information. Another is the Jones Act, a protectionist measure signed into law by Woodrow Wilson in 1920 to benefit the domestic maritime shipping industry.

The report also found that government officials have not acted quickly enough during previous hurricanes to grant product-specification waivers.  Such waivers can be critically important for industry to provide supplies from non-affected regions to areas that are hit. In past cases, officials failed to adequately understand how the oil and gas industry operates.

Compounding this problem is the failure of Washington to act in a way that protects organizations from frivolous lawsuits when acting in the best interest of the communities they serve.

For example, the Environmental Protection Agency may use its discretion to not enforce various Clean Air Act requirements – such as requiring vapor-recovery devices for emergency off-loading of supplies in order to serve communities hit by a disaster.

However, even if the government issues a statement that it will not enforce certain laws so that companies can help get people back on their feet, there is still no protection from lawsuits later filed by environmental groups claiming Clean Air Act violations.

That failing must be addressed by Congress, the report makes clear.

In addition, Congress needs to provide protection from antitrust claims so that energy companies can coordinate their collective efforts with government as society deals with natural-disaster related emergencies.

By pointing out the flaws in the current emergency-preparedness regime, the National Petroleum Council’s report does a tremendous service. It puts government and industry on a positive path to prepare and to take action so that the nation can weather storms and disasters the right way.



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