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Vol. 9, No. 39 Week of September 26, 2004
Providing coverage of Alaska and northern Canada's oil and gas industry

Hurricane Ivan takes its toll

Companies, regulators working to assess damages to rigs, platforms, production

Ray Tyson

Petroleum News Houston Correspondent

Industry and government regulators continue to assess the damage caused by Hurricane Ivan, the strongest and unquestionably the meanest of several tropical cyclones that have touched oil and gas producing areas of the Gulf of Mexico this year.

A week after Ivan ripped through the Eastern Gulf in mid-September, roughly 34 percent of the oil and 20 percent of the natural gas produced in the entire Gulf still remained shut in as of Sept. 22.

Since industry began evacuating offshore platforms ahead of the monster storm on Sept. 13, more than 9 million barrels of oil and nearly 40 billion cubic feet of gas have been shut in, according to the U.S. Minerals Management Service.

The U.S. Gulf normally produces daily about 1.7 million barrels of oil and 12.5 billion cubic feet of natural gas.

However, preliminary reports show that few of the 4,000 platforms or the 117 rigs working in the U.S. Gulf sustained major damage, MMS said.

Seven fixed platforms destroyed

Nevertheless, Ivan’s fury cut several drilling rigs from their moorings and destroyed seven fixed platforms, MMS said. While all of the rigs were eventually located, one was reportedly leaning about three degrees.

“Companies are in the process of reoccupying these facilities to assess the damage onsite,” MMS said. “Damage inspections will continue, including underwater searches, which may reveal additional impacts.”

The semi-submersible rig Noble Jim Thompson, drilling a well for BP America, started to drift after its mooring lines broke during the storm. The rig’s crew had been brought ashore as a safety precaution ahead of the storm.

Noble Drilling said an inspection crew carried to the rig by helicopter reported major damage to one of its crane booms but that it otherwise appeared to have pulled through the storm in fairly good condition.

Transocean said its Deepwater Nautilus was located more than 70 miles northeast of its original location prior to the arrival of Ivan. A visual inspection from an aircraft did not indicate any damage to the unit, the company said. A complete assessment of the rig’s condition was to be made once personnel board the unit.

Diamond Offshore Drilling said its semi-submersible rigs, Ocean Star and Ocean America, which parted their mooring during the height of the hurricane, were moved to shallower waters where crews were working to replace anchor chain and wire lost during the storm. All necessary materials were on hand and the company estimated downtime for each rig would be 10 to 21 days.

Diamond also said its jack-up drilling rig Ocean Warwick sustained damage during the storm and would be moved to a shipyard to complete an inspection and for repairs.

MMS has some damage reports

Ensco International said that one of the company’s jack-up drilling rigs, ENSCO 64, was directly in the path of the hurricane and sustained damage. It was located about 40 miles south of its drilling location at Main Pass block 280 where it was operating for Dominion Exploration and Production.

Ensco said it also received a preliminary report from a third-party of damage to the helideck on one of the company’s platform rigs, Ensco 25, which was adjacent to the path of the storm.

MMS reported that one fixed platform was reported leaning, one rig derrick installed on a production spar was missing, a platform rig derrick was seen leaning over the edge of the spar on which it was installed, two spars had extensive damage, one drilling rig received extensive damage, and four platforms received extensive damage.

Of the 33,000 miles of pipeline in the U.S. Gulf, MMS said 13 leaks had been reported, one of which resulted in a fire that eventually burned out.

But most of the 25,000 to 30,000 workers involved in the production of offshore oil and natural gas in the U.S. Gulf were back at work following the storm. And MMS said Ivan caused no injuries, fatalities or significant pollution.

Companies report damage

Devon Energy said its 2004 third quarter production would be reduced by 650,000 to 750,000 barrels of oil equivalent as a result of the storm. However, despite this reduction, Devon estimated that total production for the third quarter would be between 61.5 and 62.5 million barrels of oil equivalent, which is in line with the company’s previous guidance.

Devon said production from its offshore properties west of the South Pass and Main Pass areas was restored. Production facilities in the Main Pass blocks 153 and 175 areas and in the South Pass block 65 area sustained some storm damage, the company said, adding that resumption of production from these properties would depend on third-party repairs to pipelines and production receiving stations.

Magnum Hunter Resources, another exploration and production independent, estimated its losses in the range of 23.3 million cubic feet of gas equivalent per day for the month of September and 10 million cubic feet per day for the month of October. That represents about 31 percent of Magnum Hunter’s September estimated Gulf of Mexico production levels and 13 percent of October levels.

However, Magnum Hunter said its properties in the Main Pass and West Cameron areas suffered only minor damages. It estimated total capital outlays for repairs would be less than $500,000.

Falcon Gas Storage Co. said its MoBay Storage Hub facilities, just offshore in the Mobile Bay area of Alabama, withstood a full frontal assault from Ivan. Falcon’s MoBay project consists of four separate producing gas reservoirs that will be converted into gas storage.

“We took a direct hit from the worst storm to hit the Mobile Bay area in 50 years and still sustained only minor damage,” said John Hopper, Falcon’s chief executive officer. “Despite all that Ivan threw at us, we were up and running at full production capacity within 72 hours after the storm made landfall.”

ChevronTexaco said Sept. 22 that its oil production was running at 60 percent of the company’s Gulf production capacity. Much of the company’s Gulf production was shut in as a precaution ahead of Hurricane Ivan.

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