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Production recovery slow in Gulf Interior Department says Rita, Katrina create ‘unprecedented challenges’ in U.S. Gulf; 161 offshore platforms destroyed or heavily damaged after major hurricanes lash region Ray Tyson Petroleum News Contributing Writer
Offshore production in the Gulf of Mexico has been slow to recover in the wake of hurricanes Rita and Katrina, with the bulk of oil and gas output shut-in more than six weeks after operators began evacuating platforms and drilling rigs ahead of the first big storm, Katrina.
“With the United States extremely dependent on the Gulf of Mexico for energy resources, the one-two punch delivered by hurricanes Katrina and Rita has created unprecedented challenges,” the U.S. Department of the Interior said Oct. 4.
Three-quarters of the approximately 4,000 manned production platforms in the Gulf were in the direct paths of the two hurricanes, destroying 108 older platforms and causing significant damage to 53 others, Interior said.
However, because the 108 destroyed platforms were “end of life” facilities, accounting for only 1.7 percent of oil and less than 1 percent of natural gas production in the Gulf, “only a very small percentage of production is expected to be permanently lost,” Interior said.
“Many workers, including some who lost their homes and possessions, are in the process of re-manning the facilities and preparing them to resume production,” the department added. Months of repair required However, while repairs are under way on many damaged facilities, Interior conceded that “a substantial portion” of Gulf production “is expected to require several months to resume.”
The U.S. Minerals Management Service said that as of Oct. 6, daily Gulf production amounting to 80.16 percent or 1.202 million barrels of oil and 66.28 percent or 6.628 billion cubic feet of natural gas were shut-in. Moreover, since MMS began reporting production shut-ins on Aug. 26, a total of 48.96 million barrels of oil and 240.07 bcf of gas have been shut-in, the agency said.
Rita and Katrina also took a heavy toll on offshore drilling rigs, which no doubt will delay exploration work in the Gulf. Nineteen rigs were reported torn from their anchor moorings and adrift during the storms.
Consequently, many of the drilling rigs set adrift were damaged to some degree, including units owned and operated by major contract drilling companies Noble, Transocean, GlobalSantaFe, Diamond Offshore and Rowan. Rowan hit hard by Rita Rowan, a key player in the relatively shallow waters of the Gulf’s continental shelf, was hit particularly hard by Rita. The company said Oct. 5 that it had taken steps to replace lost revenues, in part by stepping up Rowan’s construction schedule for both land and offshore drilling rigs.
“Twice in a matter of weeks, Mother Nature has dealt a tremendous blow to the entire Gulf Coast region, and Rowan was not spared,” said Danny McNease, Rowan’s chairman and chief executive officer.
One of Rowan’s jack-up rigs, the Louisiana, was severely damaged during Rita, while three other Rowan jack-ups, the Odessa, Halifax and Fort Worth, were missing and presumed sunk. Louisiana’s hull, with some leg section intact, survived the storm but went aground near Cameron, La., Rowan said.
Weather conditions and a shortage of available marine equipment have hampered Rowan’s recovery efforts, the company said, adding that the damaged and missing rigs were operating under contracts that provided revenues of about $290,000 per day. Damage to Rowan’s other Gulf rigs was minimal, the company said.
By mid-year 2006, Rowan said it should have nine additional land rigs working under term contracts and together contributing about $200,000 per day. In addition, the company said it was reviewing the “economic feasibility” of accelerating construction of Rowan’s third Tarzan Class jack-up, the Hank Boswell, which is currently on schedule for delivery during the fourth quarter of next year. Chevron starting up refinery Meanwhile, Chevron said Oct. 5 that about 20 percent of its Gulf production had been restored and that it had begun startup procedures for its 325,000 barrel per day refinery at Pascagoula, Miss., which was shut down prior to Katrina. The refinery could return to normal operations by the end of October, ahead of previous estimates, the company added. Katrina damaged the refinery’s marine terminal, cooling towers and other equipment and caused significant flooding.
Chevron said a number of its production facilities also sustained damage and that 14 structures were toppled by Rita. The restart of facilities depends on the availability of pipelines and onshore terminals, plants and related infrastructure, the company said, adding that Chevron had begun an investigation to determine why its offshore Typhoon production facility and other structures failed during the storm.
BP said the loss of oil and gas production from the Gulf, reduced refinery runs at its Texas City refinery, and reduced marketing margins would combine to hit profit by more than $700 million.
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