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More than 20% of GOM Gas Output Returns -- What About Ike?

As Gulf of Mexico (GOM) operators continued to ramp up oil and natural gas production and get back to work, the Minerals Management Service (MMS) estimated at midday Friday that more than 20% of the estimated gas output had returned, and more was expected to be returned over the weekend.

Offshore operators were keeping a wary eye on other storms brewing in the Atlantic Basin, but as of Friday, none of the operators contacted by NGI said they were preparing to evacuate ahead of any new storms. Tropical Storm Hanna was becoming better organized Friday and was scheduled to make landfall along the South Carolina coast early on Saturday, having no impact on GOM production.

Two other storms also bear watching. Hurricane Ike remained "a large and dangerous" Category Three hurricane Friday, and it stood a chance of entering the GOM sometime in the next few days, said meteorologist Jeff Masters of wunderground.com. Still another, Tropical Storm Josephine, was struggling against the twin effects of wind shear and dry air and meteorologists were unsure Friday if that storm would survive. "If it does, the storm may be a threat to Bermuda in a week or so," Masters said.

Ike may be another story.

"Ike has begun a west-southwest motion in recent hours," Masters said Friday, "which increases the probability that the hurricane will enter the southeast Bahaman Islands on Sunday" as a Category Three storm. One computer model takes Ike into eastern Cuba as a Category Three storm on Monday, and along the length of Cuba into the Florida Keys as a Category Two storm on Wednesday morning. Another model has Ike skirting Cuba and arriving in the Florida Keys as a Category Four storm Tuesday night.

"It is also possible that the trough of low pressure will not be strong enough to turn Ike to the north, and that the storm will enter the Gulf of Mexico," said Masters. "A second trough of low pressure would then turn Ike north, resulting in an eventual landfall on the Gulf Coast between the Florida Panhandle and Texas...Overall, I'd give the Gulf Coast a 70% chance of getting hit (including the west coast of Florida)."

Estimated gas output from the GOM before Hurricane Gustav stormed into the GOM was 7.4 Bcf/d, and 79.8% of that amount remained shuttered as of Friday, MMS reported. The agency also reported that 90.5% of the offshore oil production remained shuttered; oil output was estimated at 1.3 million b/d pre-Gustav.

According to MMS, 100% of the GOM's oil production and more than 95% of the natural gas output was shut in ahead of the Gustav, which came ashore last Monday in southern Louisiana. Personnel were evacuated from a total of 632 production platforms, equivalent to 88.2 % of the 717 manned platforms. Personnel from 110 rigs also were evacuated; this is equivalent to 90.9 % of the 121 rigs currently operating.

Based on data calculated Friday from 63 offshore operator reports, MMS said personnel remained evacuated from 334 production platforms, equivalent to 46.6% of the 717 manned platforms offshore. Personnel from 34 rigs also remained evacuated; this is equivalent to 28% of the 121 rigs currently operating in the GOM.

Some damage has been found by a few operators, but overall, there were promising status reports about platforms, rigs and pipelines that were in Gustav's path. Producers and drillers began flying over their GOM facilities last Tuesday to assess visible damage, and onshore, gas processing and refinery personnel were making their way past flooded areas and downed power lines to their facilities. Many of the onshore processing facilities remained without power on Friday, and some offshore systems were expected to be impacted by the lack of onshore electricity possibly through the weekend or even longer (see related story).

Shell Oil Co., the largest GOM leaseholder, by the end of the week had restarted gas production from the Fairway field, and it was being operated remotely from the company's Yellowhammer Gas Plant in Coden, AL. However, the company said ramping up at other locations might not be possible before Sunday because of downstream pipeline and processing infrastructure damage. Repairs are under way at the producer's Mars, West Delta 143 and Cognac platforms, and production there was not expected before early in the week.

"There is light to moderate damage to topsides grating, tubing and control cables at Mars, West Delta 143 and Cognac," Shell stated. However, it was returning its crews to the offshore platforms because no "significant" damage had been found. "All facilities' and wells' structural integrity were not impacted by Hurricane Gustav," it said.

Like many of its peers, Swift Energy Co., an independent based in Houston, reported "minimal" damage to most of its onshore infrastructure, located along Louisiana's Gulf Coast. However, its Bay de Chene Field "has experienced structural damage to its production facilities and some production equipment in the field has been damaged or destroyed. The extent of this damage and the cost and timing of repairs is not known at this time."

Swift said "it may take up to two weeks before it can make an accurate assessment of what production level will be possible in the third quarter and what adjustments to its full year production guidance estimates will be necessary." The producer also was concerned about the "availability of market outlets" once its production is resumed. "The natural gas pipelines that handle Swift Energy's natural gas production in Lake Washington and Bay de Chene are not currently accepting delivery of flowing gas into their systems, pending further pipeline system assessments. Swift Energy will continue to monitor this dynamic situation and other factors beyond its control."

Calgary's Nexen Inc., which has extensive deepwater and Outer Continental Shelf operations, said Friday that it appeared to suffer only minor damage from Gustav. Oil and gas output is expected to return to normal over the next few days.

"All we need now is clearance from the infrastructure owners, the pipeline guys, all that type of stuff, and then we'll get producing again and ramp up over the weekend and through the course of next week," said Nexen spokesman Michael Harris.

To view updated MMS GOM production data, visit www.mms.gov.

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