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More than Half of Gas Offshore Still Shut In

More than half of the natural gas that had been shut in before Hurricane Ike made landfall Sept. 13 along the Gulf Coast remained shut in Friday, the Minerals Management Service (MMS) reported. Of the 7.4 Bcf/d of gas that was being produced offshore before Ike and Hurricane Gustav crossed into the Gulf of Mexico (GOM) early this month, 52.8% still had not resumed production.

Based on 62 operators' reports that had been submitted by midday Friday, MMS also reported that 57.4% of the usual 1.3 million b/d of oil remained shut in. Operators by late Thursday had restored 36%, or 586 MMcf/d of Louisiana's daily gas production capacity, which is 1,642 MMcf/d, according to the state's Department of Natural Resources. About 68,998 b/d of oil in the state remained shut in.

Ike destroyed 52 of the 3,800 oil and natural gas platforms in the GOM, along with three jack-up drilling rigs and one platform drilling rig, the MMS reported last week. Overall, 1,450 offshore structures were pounded by winds of more than 74 mph during the storm. The destroyed platforms had been producing around 90 MMcf/d of gas and 13,300 b/d of oil, and there were no assurances that the destroyed platforms would be rebuilt, MMS said.

Twenty-nine platforms suffered "extensive damage, which may take from three to six months to repair," according to the federal agency. Examples of damage that would be considered "extensive" may include underwater structural damage or major damage to pipelines carrying the oil or gas to shore, the agency said. One jack-up drilling rig also received extensive damage, MMS said. Additional reports indicated that 33 platforms were "moderately" damaged, and on those platforms, it will take one to three months before production is restored. Moderate damage includes major topside damage to critical process equipment, such as a platform's compressor, or damaged risers or flex joints where pipelines connect to the platforms.

MMS noted that 145, or 20.1%, of the manned platforms remained shuttered Friday. One of the 116 manned rigs also was still evacuated.

Seven major gas pipes in the Gulf Coast area continued to report complete shut-ins of their systems as well. Four of the seven pipes had notified customers that they were ready to return to service, but "due to continued assessments of damage to interconnecting facilities and/or lack of upstream gas flow, these pipelines remain completely shut in," the Department of Energy Office of Electricity Delivery & Energy Reliability stated in a situation report. Repairs were ongoing at the other three pipelines, and the integrity of their lines was being verified.

Seven of the 39 major gas processing plants in Ike's path, with total operating capacity of 4.68 Bcf/d, still were shuttered Friday, the Energy Information Administration stated. Twenty-six plants had resumed operation, and five plants were able to restart once they had power restored or once upstream gas flows were sufficient.

At least two GOM producers revised their production forecasts last week because of the storm damage.

Nexen Inc., based in Calgary, stated that with the "significant production downtime" caused by the twin hurricanes this month, "we expect to be slightly below the low end of our production guidance this year." The producer is forecasting 4Q2008 output in the GOM to range between 10,000 boe/d and 20,000 boe/d. Prior to Ike and Gustav, Nexen was producing around 30,000 boe/d total in the GOM.

Houston-based Newfield Exploration Co. Thursday estimated that the two storms will result in deferred production of about 5 Bcfe net. Newfield's net production capacity in the GOM is around 65 MMcfe/d from eight facilities; the GOM represents about 8% of the company's total daily output volumes. Total company production guidance for 2008 now is estimated at 234-238 Bcfe, compared with an earlier forecast of 238-242 Bcfe. Adjusted for asset sales and acquisitions, Newfield's revised production estimates for 2008 compare with 2007 actually will be about 24% higher.

Shell Oil Co., the largest U.S. producer in the GOM, reported Thursday that several of its operated assets remained shut in for hurricane repairs, maintenance or because of third-party infrastructure repairs. Shell-operated GOM assets produce peak gross rates of around 500,000 boe/d; Shell estimates its current output is 32,000 boe/d gross.

An "accelerated" maintenance schedule is under way on Shell's Mars, Ursa and West Delta 143 platforms, and the producer expect them to be back on line by the end of this week (Oct. 3). Other Shell-operated assets slated to ramp in the coming week are Brutus and South Timbalier 301. By the week of Oct. 6 Shell said that its Auger and Enchilada assets would be back on-line.

"We are back to pre-hurricane offshore staffing levels with about 1,270 personnel manning our facilities," said a Shell spokesperson.

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