Pipeline Bottlenecks Hold Back US Oil,Gas Output Recovery
By NORVAL SCOTT and ANGEL GONZALEZ
September 7, 2005 2:58 p.m.
Of DOW JONES NEWSWIRES
HOUSTON -- The process of recovering U.S. Gulf oil and gas production shut in by Hurricane Katrina is continuing Wednesday, but only slowly.
Pipeline bottlenecks and infrastructure problems are preventing firms from bringing their output back onstream. Furthermore, it will be months before the four refineries still shut in by Katrina return to normal operations, the head of the federal Energy Information Administration said Wednesday.
Shut-ins across the Gulf Coast before Katrina hit mean that regional production has been reduced to a fraction of its usual level. According a report Friday by the U.S. Minerals Management Service, the amount of crude oil production sealed off in the U.S. Gulf stands at 57.37% of production, or 860,586 barrels a day. Offline natural gas production is 40.36%, or 4.035 billion cubic feet a day.
Cumulative lost oil production from the Gulf has now reached 13.607 million barrels, while natural gas production losses are 71.664 billion cubic feet.
At this point, Hurricane Katrina has had more impact on Gulf oil and gas production than Hurricane Ivan - which wreaked havoc on Gulf production - in the first week of the aftermath. "You'll see significant improvements, but you'll also see that the damage is going to linger longer than it did with Ivan," PFC Energy oil analyst Jamal Qureshi said.
Qureshi said that most of the recovery had occurred so far outside of the New Orleans district, in areas less affected by the Hurricane.
Companies are restaffing their platforms and checking for damage, but recovery of some oil and gas production seems to be held back by pipelines currently being checked for damage, as is the case of Chevron Corp.'s (CVX) Petronius platform.
"Once they get people out there and do an assessment, they'll see a significant chunk come back," Qureshi said.
The progress of the damage assessment, though, is hindered by the severe impact of Katrina on the Louisiana coast, where the hurricane caused flooding and damaged onshore facilities.
Pipeline troubles could render 3 to 4 billion cubic feet a day of Gulf of Mexico natural gas production "out of commission for many weeks," said analyst Dan Pickering, head of Houston-based Pickering Energy Partners, in a report.
Dynegy's (DYN) chief executive officer, Bruce Williamson, said Wednesday that two gas-processing plants operated by the company may be down for three to six months, raising the specter of prolonged natural gas shortages.
A Dynegy spokesman was not able to give details on the type of damage suffered by the plants, which process a combined 3.15 billion cubic feet of gas a day. The 1.85 bcf/d Yscloskey plant and the 1.3 bcf/d Venice plant were both reported to have suffered flooding from the hurricane.
With regard to refineries, EIA Administrator Guy Caruso said Wednesday that the four Gulf Coast refineries still down after Katrina would take months to return to full operations.
The largest refinery still hobbled by Katrina is Chevron Corp.'s (CVX) 325,000 barrel-a-day Pascagoula, Miss., refinery. The other three are the 183,000 b/d Chalmette, La., refinery, a joint venture of Exxon Mobil Corp. (XOM) and state-owned Petroleos de Venezuela SA (PVZ.YY); ConocoPhillips' (COP) Alliance refinery in Belle Chasse, La.; and Murphy Oil Corp.'s (MUR) 120,000 b/d Meraux, La., refinery.
Chevron reported that its U.S. Gulf oil and gas production had reached 45% of its pre-Hurricane Katrina oil and gas production level a week after the storm. The company, however, declined to offer specific production figures for the region.
Chevron's deepwater platforms Genesis, Petronius and Typhoon did not suffer any significant damage, a company release said. Both Genesis and Typhoon are producing, but Petronius is awaiting pipeline damage assessment.
The company reported that a "handful" of its offshore facilities suffered damage.
Marathon Oil Corp. (MRO) reported that its Ewing Bank platform is producing 17,000 barrels of oil a day and 17.5 million cubic feet of gas a day since Monday morning. The company's three South Pass platforms, which produce 1,500 barrels of oil a day and 7.5 million cubic feet of natural gas a day, were severely damaged, and could take "several weeks and possibly months" to repair, the company said. Marathon's onshore facilities in Venice, La., were also damaged by the storm, and may affect repairs. |
