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MMS director: The moon or bust Chris Oynes determined to pull off next Gulf of Mexico lease sale, despite hurricane-related troubles; location may change Ray Tyson Petroleum News Contributing Writer
Come hell or more high water, or God forbid another devastating hurricane on the order of Katrina, the U.S. Minerals Management Service is determined to hold the next Gulf of Mexico oil and gas lease sale on time.
“I have every confidence that the March sale will be held as normal. Yes, I’m very confident,” Chris Oynes, MMS director for the Gulf region, said in an Oct. 19 interview with Petroleum News.
MMS typically hosts two major areawide lease sales per year in New Orleans — one for the Central Gulf in March and another for the Western Gulf in August. These sales generate hundreds of millions of dollars in revenue for the federal government, while providing industry with new oil and gas prospects to explore.
However, whether the next sale is held in storm-ravaged New Orleans, previous home to Oynes and his now largely displaced MMS staff, or some other location, most likely Houston, is another question entirely.
One big concern is that New Orleans, the usual location for Gulf lease sales, may not have enough hotel rooms to accommodate bidders.
“We’re at least going to have to entertain the question of what’s the best way to hold a sale,” Oynes said. “We could hold it potentially in Houston. But this is only a potential. We haven’t gone through any heavy duty analysis on this.”
MMS will have a better idea as to where the next lease sale is to be held when the agency issues its final public sale notice in February, Oynes said.
“Now, if you had to choose today, you’d probably say, well, it’s not looking very good” for New Orleans,” he said. “But we have several months” to make that decision. ‘Unprecedented’ damage On a related issue, Oynes said the one-two punch of hurricanes Katrina and Rita caused “unprecedented” damage, adding that it could be months or longer before Gulf production is fully restored. Nearly seven weeks after the first storm made its way into the region, well over half of Gulf production remains shut-in.
However, Oynes said much of the production holdup is due to pipeline and onshore facility damage, not to offshore production platforms. For example, he said Louisiana’s Empire area, through which numerous pipelines pass, “is a mess.”
“There’s no way to get it (production) into the lines — the receiving pipeline or downstream receiving pipeline — at Empire or some other place onshore,” Oynes said. “So there is an unprecedented degree of problems.”
A select group from MMS headquarters in New Orleans, in part consisting of structural engineers and pipeline staff, were sent to Houston ahead of Katrina in an early effort to help any offshore producers hurt by the storm, Oynes said. Some oil being barged ashore He said MMS already has approved three requests to barge oil ashore, issued 30 approvals for repair and re-routing of existing pipelines, and granted permits for 19 new pipelines to “work around” damaged lines.
“That still leaves us with more than 50 percent of the production shut-in,” Oynes added. “But industry has been very creative in terms of how they try to work around this.”
He said that while it may take months for the Gulf to fully recover from Katrina and Rita, “in another 30 days or so, I think some portion of the (remaining) production is going to be back up. We’ve been inching back practically every day (at) 1 or 2 percent.”
Oynes and about 150 of his 500-plus New Orleans staff currently work and reside in Houston, while around 20 employees have returned to MMS Gulf headquarters in the Big Easy. A few are working out of various other MMS district offices, while others are working from home.
“So business is being worked on,” Oynes said. “But the vast majority of the folks are not back at work yet. Oh, yes, it’s putting a crimp on things. We’re severely understaffed on several fronts.” MMS New Orleans building damaged, but spared flooding He said that while the MMS office building was spared in the massive flood that inundated much of New Orleans following Katrina, the building’s top floors were heavily damaged and cannot be occupied for some time.
“The lower floors are basically undamaged. I couldn’t believe that we didn’t get any flood waters in there,” Oynes said, adding that MMS has secured additional office space in New Orleans for returning staff.
He said none of the MMS employees from the New Orleans area was among the hundreds reported killed in South Louisiana.
“We got in touch with every single person,” Oynes said. “Everyone has their own story, and there are many with destroyed or damaged homes — unreal stories. But everyone has come out of this storm just fine.”
Oynes’ house, located on the North Shore of Lake Pontchartrain, was not damaged in the storm. Not as fortunate were MMS media representatives Caryl Fagot and Debra Winbush. Fagot lost here home to the storm, while Winbush’s home was damaged by winds and sacked by looters.
Winbush actually suffered a double whammy — first to her New Orleans home during Katrina followed shortly by wind damage to a rental unit near Lake Charles during Rita. Lake Charles is located several hundred miles west of New Orleans.
“I evacuated to north of Lake Charles,” Winbush recalled. “We were renting a little house there. And a tree fell on that one. So I had to leave there. Now I’m at home in (north Houston), trying to decide what to do, what’s going to happen with my property” in New Orleans.
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