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Nonessential Workers Continue Evacuation Ahead of Wilma

Hurricane Wilma forced an increase in Gulf of Mexico gas production shut-ins on Friday, the Minerals Management Service (MMS) reported. Shut-ins rose to 5,337 MMcf/d from 5,196 MMcf/d a day earlier. Although there was little chance that the hurricane would make a turn into the Central Gulf, that didn't stop some Gulf producers and drilling companies from evacuating personnel and shutting down restoration efforts on offshore facilities.

The MMS said Friday that 211 platforms and 16 rigs were evacuated compared to 210 platforms and five rigs a day earlier. The agency also added Wilma to the title of its daily shut-in report, which it has been releasing regularly since Aug. 26. Cumulative shut-ins since that date now stand at 326.521 Bcf of gas (8.9% of the annual production offshore) and 64.6 million bbl of oil (11.8% of the annual total).

Chevron said it began pulling out about 800 nonessential workers from its offshore operations ahead of Wilma, and Total E&P USA also began evacuating nonessential personnel, following the lead of BP plc and Anadarko Petroleum Corp., which began nonessential evacuations earlier in the week. As of Friday afternoon, the storm was being watched closely.

Total was evacuating personnel from its Matterhorn platform, and the crew at the Virgo platform was going to finish the Friday shift and not return until the storm had passed. Total spokeswoman Jenna Wright said, "Matterhorn and Virgo don't involve shut-ins, and there's no Wilma impact to our production yet." All of Total's current Gulf production comes from the Canyon Express natural gas system, which is still flowing.

Drilling company Transocean Inc. pulled 160 workers from eight rigs and ships as of Thursday morning. Two of the four semisubmersible drilling rigs being evacuated were being repaired after damage by Katrina and Rita.

Dr. Jeff Masters of the Weather Underground said Friday the chances that Wilma could somehow move north and affect the Florida Panhandle, or portions of the Gulf Coast further west were "less than one in 1,000. As we approach winter in the Northern Hemisphere, westerly winds associated with the Jet Stream move far to the south, making it very difficult for any storm to go any direction but east or northeast once it gets into the Gulf of Mexico."

Masters also said there was a lot of uncertainty regarding the timing of landfall in Florida. "Some models are now indicating Wilma may not hit Florida until Tuesday," he said.

If Wilma fails to make much of a dent in restoration efforts, analyst Jim Osten of Global Insight predicts most Gulf repairs to damage from Hurricanes Katrina and Rita should be completed by year-end. In his "Natural Gas Weekly" report last week, Osten noted that daily shut-in gas production has improved 30% in the past three weeks, and "shut-ins should be reduced at a commensurate rate for the remainder of 2005, based upon expectations for repairs."

The largest shut-ins still are upstream of El Paso's Tennessee Gas Pipeline (1.7 Bcf/d), but Osten predicts that 85% of its repairs will be completed by December. Some damage to compression facilities and offshore feeder lines on Tennessee probably will take much longer to fix, however. Meanwhile, sister company Southern Natural still has at least 760 MMcf/d shut in upstream of its damaged Toca, LA, gas compressor station and offshore laterals.

Until the Toca and Venice, LA, gas processing plants are repaired, substantial production in this area should remain shut in. Mississippi Canyon said it expects to be at two-thirds of its capacity (800 MMcf/d) in 2006. Osten is expecting at least 1 Bcf/d of supply will remain shut in due to damaged processing plants at the end of the year.

In a related announcement on Friday, Noble Corp. said it plans to adopt a higher mooring design standard for its semisubmersible rigs in the Gulf to prevent loss of rigs from future hurricanes. Following infrastructure damage from September 2004's Hurricane Ivan, Noble decided to upgrade its mooring equipment to a standard governing mobile offshore drilling units. However, the devastation by Hurricanes Katrina and Rita called for even more changes.

Noble plans a permanent mooring code, which is similar to one used for floating production systems. The higher mooring standard is designed to withstand damage by hundred year storms. The changes are expected to cost between $10-15 million per drilling unit, and the upgrades are expected to be completed in the next three years.

During a conference call with analysts Friday, Noble CEO James C. Day said the changes were being made because, "we think most of you would agree it's not a good proposition to chase rigs around the Gulf after storms."

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