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Enbridge Sees Near Pre-Katrina Flows on 5 Offshore Pipeline Corridors by January

Enbridge reported last week that it expects total gas flows on its five offshore Gulf of Mexico pipeline corridors to come close to pre-Hurricane Katrina levels of 2.7 Bcf/d by the end of the year, compared to only about 600 MMcf/d most of last week on Destin (200 MMcf/d of which is from storage).

The company said that although it found very little significant damage Enbridge Inc. will see a total net earnings impact of C$5 million (US$4.29 million), while Energy Partners expects a C$2 million (US$1.72 million) reduction in net income this year.

The main thing standing in the way of a return to full service by the end of the year, said Enbridge's Doug Krenz, vice president of transportation, will be the damage to Shell's Mars platform, which was toppled by Katrina. On an investors conference call Tuesday, Krenz told analysts that he believes Mars, which is connected to the Mississippi Canyon pipeline, will be down until sometime in the second half of next year. Mars was producing 150-170 MMcf/d of gas and 150,000 bbl/d of oil prior to Katrina.

Krenz expects Shell's Mensa and Ursa facilities, which also are Enbridge's Mississippi Canyon pipeline system, back in service in November. The other major setback will be BP's Thunder Horse semisubmersible production facility, which was supposed to add 200 MMcf/d of supply in the second half of 2005 to Mississippi Canyon. Thunder Horse was damaged by Hurricane Dennis and could be down until the second half of 2006. BP's deepwater Atlantis platform, which was expected to come online in the fourth quarter, also won't provide Mississippi Canyon with its 150 MMcf/d until sometime in the first quarter, Krenz said.

Enbridge Inc. found "no material incremental damage from Hurricane Rita" to its five major offshore pipeline corridors, which were flowing about 2.7 Bcf/d prior to Katrina: Mississippi Canyon (capacity 800 MMcf/d), Garden Banks (1 Bcf/d, plus 250 MMcf/d on Magnolia), Green Canyon (includes Nautilus, 600 MMcf/d; Manta Ray, 800 MMcf/d; and Cleopatra, 500 MMcf/d), Stingray (1,120 MMcf/d, plus 275 MMcf/d on Triton) and Destin (1.2 Bcf/d).

However, four of the corridors were not receiving any gas production last Tuesday -- Destin was back up to about 390 MMcf/d. By Friday, Nautilus joined Destin and was receiving about 154 MMcf/d.

Enbridge said the Stingray system may be down for several months for repairs of minor equipment damage and damage to downstream processing, i.e., Williams' Cameron Meadows gas processing plant (500 MMcf/d) near Johnson's Bayou. The Mississippi Canyon system (800 MMcf/d) also could be down much longer because of damage to Dynegy's Venice gas processing plant.

Krenz said the Garden Banks pipeline system will be the next to return to service. "We may get some short-term benefits on Garden Banks because one of the competing pipelines has had pipeline damage so we will be transporting some incremental gas there."

He said the majority of the damage sustained by Enbridge's facilities was to onshore operations from storm surges that hit the beaches at Venice and at Stingray. "We estimate that the surge at Venice was probably 12 to 20 feet. The surge at Stingray was probably more in the [area] of five feet. While we have very little if any damage to our offshore facilities, we do have controls and electrical equipment that need to be repaired at those beach facilities. We think we can get that repaired in a 30- to 45-day time frame."

He predicted that Stingray could be ready to operate by the end of November. But whether it can be brought back to full operations at that point may depend on the status of Cameron Meadows.

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