Damage to offshore platforms could reach $7bn in insured loss say RMS

A strengthening of Gustav to a category 4 hurricane as forecast could produce a storm surge of between 13 and 18 foot, and may drive water over some floodwalls and levees in New Orleans if it were to hit the city.

That is the forecast from catastrophe risk modellers Risk Management Solutions (RMS) who said the hurricane would set a critical test of whether the floodwalls could handle such a powerful surge without being overwhelmed, as happened during Hurricane Katrina when the city was inundated in 2005.

Gustav is expected to make landfall today. The threat to New Orleans will depend on the eventual path of Gustav, as well as its size and intensity.

"A storm surge of more than 15 foot would put extreme pressure on New Orleans' flood defenses. The city is still vulnerable to a surge from the east, as happened during Hurricane Katrina, and to a lesser extent from Lake Pontchartrain to the north," said Dr Christine Ziehmann, director of model management at RMS.

"The levees have been strengthened since Katrina, but only about a quarter of the planned work on the city's flood defenses has been completed, which would provide protection against a hurricane that occurs on average once every one hundred years."

Regardless of its final landfall location, Gustav will track through a dense region of offshore oil platforms, most likely as a category 4 storm. Powerful winds in the Gulf of Mexico are currently causing extreme wave conditions, and a combination of wave and wind damage to the platforms may cause insured losses of between $2 billion and $7 billion, according to RMS analysis. This would be a result of structural damage and interruptions to oil production, as well as unintentional spills.

"Losses to the offshore platforms will be extremely sensitive to Gustav's extract track and intensity. A slight shift to the west than the current projected path would mean Gustav will hit more platforms, and if it strenghtens the damage will be greater, so the losses will be in the upper range," said Dr Ziehmann. "However, if the storm is weaker than currently projected or moves slightly further east, then losses will be towards the lower end."

She continued: "After two relatively quiet seasons for landfalling U.S. hurricanes, we are seeing a return to the frequency of events we would expect in this new period of heightened activity which we've been experiencing since 1995. Hurricane Hanna is following hot on the heels of Gustav, and we are yet to reach the peak of the season, which occurs around mid September."