Sep 02 - Journal Record - Oklahoma City

Oklahoma energy companies that do business in areas affected by Hurricane Katrina are beginning to sort out the damages.

Devon Energy on Thursday reported that it has restored about 50 percent of its Gulf of Mexico oil and natural gas production following Hurricane Katrina. About two-thirds of the restored production is gas.

Devon had suspended essentially all of its production in the Gulf of Mexico commencing Aug. 27 as a precautionary measure.

Devon's Gulf team did an outstanding job preparing our offshore facilities ahead of the hurricane and resuming operations following the storm, said Stephen J. Hadden, senior vice president, exploration and production. The safety of our employees and protection of the environment are always our top priorities. To date, we have experienced no injuries or spills associated with the storm.

Devon produces about 80,000 barrels of oil equivalent per day from wells located in the Gulf of Mexico, or roughly 13 percent of the company's worldwide oil and gas production.

The company also reported that it expects to bring on an additional 30,000 barrels of oil equivalent per day of production upon completion of damage assessments and any necessary repairs to third-party facilities and transportation systems.

Some oil pipelines are in the process of being pressure tested before being placed back into service. Additionally, some onshore oil terminals that are not currently operational await restoration of electrical power.

Devon also reported that it is insured against physical damages and revenues lost due to interrupted production.

Revenue reimbursements are subject to a standard waiting period, officials said.

Helmerich & Payne of Tulsa announced that one of its eight active offshore platform rigs located in the Gulf of Mexico has experienced significant damage as a result of Hurricane Katrina. The company had evacuated all of its personnel from its Gulf of Mexico offshore operations and sustained no injuries or fatalities.

The company's Rig 201, which operates on Shell's Mars tensioned- leg platform, lost its entire derrick and suffered considerable damage to the rig floor and substructure.

Company officials did not have an estimate of damages, but it is anticipated that insurance proceeds will cover all of its capital loss, less a $1 million deductible.

The company is presently analyzing its contract with the operator to determine any effect on income. Quarterly pre-tax cash flow from the platform rig was approximately $1.8 million for each of the past three fiscal quarters.

Early indications from inspections of the remainder of the company's platform rigs and facilities are that little or no damage occurred to the rest of the company's assets in the Gulf of Mexico. However, further assessments are currently under way and are still incomplete.

Officials at Williams Partners LP of Tulsa said some of its interests in the Gulf Coast remain shut-in.

Areas include the Discovery natural gas gathering, transportation, processing and natural gas liquids fractionation system that runs from the deepwater Gulf to a location near Paradis, La., and the Carbonate Trend sour-gas gathering pipeline off the coast of Alabama.

Williams Partners has a 40 percent ownership interest in Discovery, which is operated by a unit of Williams. The Carbonate Trend pipeline is wholly owned by Williams Partners and operated by a unit of Chevron.

The operators of Williams Partners' interests have begun initial inspections at certain onshore and offshore locations.

Williams Partners officials said it is awaiting definitive reports on the Carbonate Trend pipeline and the Discovery natural gas pipeline system that serves gas producers from both onshore and offshore natural gas fields including the deepwater Gulf of Mexico.

The operators have begun initial integrity tests on both the Carbonate Trend and Discovery systems. Both offshore pipeline systems are shut-in pending further inspection.

Gulfport Energy of Oklahoma City reported that the storm had no impact on its ongoing operations and production. As a precaution, Gulfport's West Cote Blanche Bay field, located in St. Mary and Iberia Parishes (at the far western edge of the hurricane) was shut- in and evacuated, but sustained no apparent damage. Production startup operations began on Tuesday and the field is expected to be back at full capacity within the next few days.