Energy sector could be impacted by an active hurricane season

An active hurricane season could pose significant challenges with respect to the energy sector, according to Bertil Olsson, energy leader for Marsh’s US energy, mining and power practice.
“Last year, many oil companies operating in the Gulf of Mexico had adequate insurance coverage and cash to cover the cost of — and quickly make — the significant repairs needed to address the damage caused by Hurricane Ike,” he said during a panel discussion among Marsh & McLennan Companies, Inc. experts, reports Marsh. “This year, however, with the price of oil and natural gas dramatically lower, cash flows are severely restricted — and insurance coverage for hurricane damage to the oil industry is dramatically limited compared to a year ago.”
“This could translate into significantly longer repair periods, which in turn could impact production volumes and domestic oil and natural gas supplies should we have an active hurricane season that damages the region’s oil assets,” he added.
Understanding the nature of the challenges posed by a severe weather system is vital, Gerry Yurkevicz, associate partner in the energy practice of Oliver Wyman noted during the discussion.
“There is a clear need to clarify and focus response capabilities across locations, functions, crews and supply base partners — as well as focusing on the development of response strategies and the organization for the energy infrastructure of the future,” he added.