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Storm danger looms in Gulf Platforms, drilling rigs evacuated as Gustav bears down; 80% of Gulf production could be shut down Ray Tyson For Petroleum News
Companies began evacuating workers and shutting down oil and gas production platforms and drilling rigs ahead of Gustav, which was expected to strengthen from a tropical storm into a full-blown hurricane upon entering the U.S. Gulf of Mexico Aug. 30-31, according to the U.S. National Hurricane Center and other weather forecasters.
Meanwhile, as Gustav churned through the Caribbean on its way to the U.S. Gulf, another potentially dangerous storm, tropical storm Hanna, formed in the Atlantic Ocean with 40 mile-per-hour winds and a track that could take it toward the Bahamas and Florida the first week of September.
Oil prices spiked as fears deepened that Gustav could enter the U.S. Gulf as a powerful hurricane and disrupt offshore production, as well as onshore refineries along the Gulf Coast. Offshore Gulf is home to about 25 percent of America’s oil production and 15 percent of its natural gas output.
One business weather research firm predicted that as much as 80 percent of the U.S. Gulf’s oil and gas production could be shut down as a precaution, if Gustav enters the region as a major storm. And oil prices could spike $5 to $8 should it seriously damage production platforms, according to an analyst with Alaron Trading Corp. in Chicago.
Evacuation ahead of storm Offshore producers, with devastation wrought by 2005 hurricanes Katrina and Rita fresh in their minds, wasted no time announcing plans to evacuate offshore facilities, days before Gustav was expected to reach Gulf waters.
Shell Oil Co., the U.S. Gulf’s largest producer, said it began turning off production on Aug. 28, at a few of its wells while continuing evacuations of hundreds of workers from the Gulf of Mexico.
Anadarko Petroleum Corp., among the largest E&P independents in the U.S. Gulf, said it expected to shut down all its production, including the company-operated Independence Hub, the largest offshore natural gas processing facility in the Gulf, by the weekend as it evacuated all offshore staff.
Other Gulf producers, including ConocoPhillips, BP, Total, Murphy and Apache, said they were pulling workers from production platforms. Major deepwater drilling contractor Transocean also was evacuating workers and preparing to pull more employees off rigs, the company said in a statement. All other companies with Gulf operations said they were carefully monitoring the storm and preparing for evacuations or to shut down production, Reuters news reported.
Additionally, the nation’s only deepwater oil port, the Louisiana Offshore Oil Port, which offloads about 1 million barrels per day of foreign crude, expected to stop offloading over the weekend, perhaps as early as Aug. 30.
The U.S. Energy Department said it was prepared to open the nation’s emergency oil supply if Gustav causes a severe disruption. Also, the International Energy Agency’s chief of emergency planning said the IEA’s 27 member nations were prepared to release strategic oil stocks if Gustav deals a blow similar to Katrina and Rita.
Labor Day impact expected Gustav’s projected path as of mid-day Aug. 28, placed the storm in the middle of the U.S. Gulf on Labor Day Monday, Sept. 1, indicating Gustav likely would pass through major oil and gas producing areas, if it held its projected course. Gustav, forecast to make landfall around Sept. 2, was headed in the general direction of New Orleans, La., which was devastated by Katrina floodwaters in 2005. However, weather forecasters cautioned that depending on atmospheric steering currents and other weather conditions, Gustav could take various routes stretching from Central Texas to Florida’s panhandle.
Katrina and Rita were ranked as two of the 10 most intense hurricanes to ever hit the Atlantic Region and the greatest natural disasters to oil and gas facilities in the history of the Gulf of Mexico.
Both hurricanes registered as category five storms with maximum sustained winds of 175 miles per hour and peak wind gusts up to 235 miles per hour. An estimated 3,050 of the U.S. Gulf’s 4,000 platforms and 22,000 of the 33,000 miles of Gulf pipelines were in the direct path of either Katrina or Rita, resulting in the destruction of 115 platforms, damage to 52 others and damage to 535 pipeline segments. Worse, the hurricanes forced a near total shutdown of the Gulf’s offshore oil and gas production. And more than nine months later, 22 percent of federal oil production and 13 percent of gas production remained shut-in, resulting in the loss of 150 million barrels of oil and 730 billion cubic feet of gas from domestic supplies.
Gustav struck Haiti on Aug. 26, as a hurricane, pummeling the small country with 90 mile-an-hour winds and heavy rain before moving on toward Cuba. At least 22 people were reported killed in Haiti and the Dominican Republic. Gustav was later downgraded to a tropical storm but was expected to regain strength, possibly becoming a dangerous category three or larger hurricane after entering the warm waters of the U.S. Gulf, forecasters said.
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