Strained US Oil Firms Take Stock of Katrina Damage
USA: September 1, 2005


NEW YORK - Inspectors waded through flooded refineries and helicopters passed over wounded drilling rigs in the Gulf of Mexico on Wednesday, as oil companies struggled to assess how long it would take to recover from Hurricane Katrina.

 


The US Coast Guard reported at least 20 oil rigs or platforms missing in the Gulf of Mexico, while officials estimated 95 percent of regional oil and natural gas production and eight refineries along the coast remained shut down.

Several crude pipelines on the Gulf Coast remained out of service due to power outages, damage and flooding, creating more headaches for an industry already strained by the storm.

What's more, the Energy Department said Port Fourchon in Louisiana, which handles a large share of US crude oil and natural gas imports, was severely damaged by Hurricane Katrina and was cut off by flood waters.

Several oil companies said damage to offshore operations was not as extensive as they feared. But few were willing to estimate when production would return to normal.

Murphy Oil Corp. said its two Gulf of Mexico oil production facilities escaped serious damage, including one that fell under the eye of the hurricane. The company said the hurricane has shut down 80,000 barrels per day (bpd) of its crude and gas output.

Exxon Mobil Corp. also said crews were running assessments of its offshore oil and gas production facilities in the Gulf of Mexico. Damage to most of its offshore structures was limited, but 45,000 bpd of oil and 760 million cubic feet per day of natural gas were shut down.

Neither Murphy nor Exxon Mobil would comment on how long it would take to return to full production.

BP Plc also declined say when it would return to full production, adding that a "significant" amount remained closed down.

It said inspections so far showed no significant damage to its massive deepwater facilities. However, seven oil platforms have toppled and two platforms are leaning in the shallow waters of the Gulf of Mexico.

At Anadarko Petroleum Corp.'s Marco Polo deepwater platform in the Gulf of Mexico, staffers have boarded and are conducting damage assessments.

Chevron Corp. has conducted some inspections with helicopter crews, but said it may not have a statement on its damage for several days.

Another oil company, Kerr McGee, reported it was producing roughly 55,000 barrels of oil equivalent per day from operations in the western Gulf of Mexico. It plans to increase output as "pipelines allow."

In all, about 1.4 million bpd of crude production -- about 7 percent of domestic demand -- was down, and concerns about the lack of feedstock for refineries prompted the United States to offer to loan crude from its Strategic Petroleum Reserve to companies to replace lost output.

The offer helped ease oil prices from record highs above $70 per barrel. But US crude still remained at a red-hot $68.94 a barrel, down 87 cents from Tuesday when crude, gasoline and heating oil futures set record peaks.

Placid Refining Company LLC requested one million barrels of crude oil from the SPR to keep its Port Allen, Louisiana, refinery running. Citgo Petroleum has also asked for crude from the reserve for its refinery in Lake Charles, Louisiana.

Eight refineries with combined capacity of nearly 2 million bpd were shut down and four more were running at reduced rates. Three refineries in Louisiana were "under water," according to a US senator.

 


REUTERS NEWS SERVICE