MMS trims royalties due to storm damage

The Minerals Management Service will reduce royalties in the Gulf of Mexico for restoration of production in areas that wouldn’t be profitable otherwise, Dow Jones Newswires reports. Applications were being accepted for the program as of Feb. 1.

Hurricanes Rita and Katrina knocked dozens of platforms out of service, and it’s estimated that 1 percent to 2 percent of the Gulf’s production won’t be restored because the damage is too severe and the reservoirs aren’t large enough to make rebuilding profitable. The storms wrecked 115 of the Gulf’s 4,000 platforms and damaged 52 more, the MMS reported.

Companies are continuing to restore production in the nation’s largest petroleum province, but the work has been slow. MMS figures as of Jan. 25 show nearly 25 percent of normal daily production of oil is still shut-in. That’s 373,407 barrels daily.

Things are a bit better on the gas front, with 16.5 percent of normal Gulf production still shut-in as of Jan. 25. That amounts to 1.7 billion cubic feet daily.

Since Aug. 26, lost oil production is 119 million barrels and lost gas production 609 billion cubic feet.

—Allen Baker