2nd UPDATE: Hurricanes Have 1-In-8 Chance Of Hitting Gulf Spill

30th Jun 2010 17:26

(Adds location and direction of Hurricane Alex.) By Erik Holm Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)--Disaster models suggest a 1-in-8 chance of a hurricane hitting the Gulf oil spill this year, with the odds of a direct hit rising with the expectation of a busy storm season, according to a firm that predicts catastrophes. The models indicate a 7% possibility of an intense storm of Category 3 or higher hitting the slick, bringing a strong storm surge and "the potential to carry tar deposits far inland," wrote Risk Management Solutions in a report released Wednesday. Gulf Coast residents have been fretting about a direct hit on the still-growing slick since the start of the Atlantic hurricane season on June 1. The damage from a major storm would have wide-reaching effects on a coastal economy that is already suffering from shuttered beaches, declines in tourism and environmental damage. The odds of a major storm striking the spill would be just 4% if the Gulf of Mexico were facing the prospect of an average storm season, RMS said. But this isn't an average year. The National Oceanic and Atmospheric Administration predicts eight to 14 hurricanes and estimates three to seven storms of Category 3 or higher. That is the agency's most extreme forecast since it began releasing its predictions more than a decade ago. While a direct hit is the worst-case scenario, a storm passing within 100 miles of the slick "has the potential to bring waves that break protective booms and allow the oil to be displaced into coastal salt marshes and beaches above the tide line," RMS said. The modeling firm said there was a 40% chance of a hurricane or tropical storm coming that close to the spill by the end of August. The first storm of the season, Hurricane Alex, was trundling across the Gulf towards the Mexican coast on Wednesday, but forecasters predict the Category 1 storm will stay well outside the 100-mile buffer. Still, cleanup work in some spots was suspended and workers on some offshore oil platforms have been evacuated. The storm had sustained winds of 80 miles an hour and was expected to strengthen and make landfall late Wednesday or early Thursday. RMS is one of a handful of companies that build models to predict the costs of catastrophes, including earthquakes, flooding, and terrorist attacks. It sells its work to businesses, primarily insurance companies. The spill will cost insurers between $1 billion and $3 billion, according to the company. BP PLC (BP, BP.LN), which has agreed to set aside $20 billion to pay those affected by the spill, didn't buy insurance and will bear most of the costs itself. The movement of the spill, and its location, indicated it was "unlikely that significant quantities of the oil spill will pass toward southern Florida or into the Atlantic Ocean," RMS said. -By Erik Holm, Dow Jones Newswires; 212-416-2892; [email protected] (END) Dow Jones Newswires June 30, 2010 12:26 ET (16:26 GMT)