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Chevron's O'Reilly Says Industry Better Prepared for Hurricane Season

The energy industry has done all it can to prepare for possible hurricanes in the Gulf of Mexico this summer, but a "fragile people situation" remains, Chevron Corp. CEO Dave O'Reilly said Wednesday.

In wide-ranging comments before the World Gas Conference in Amsterdam, O'Reilly said "the industry is much better prepared, but that doesn't mean that we're ready if you have something like happened last year." Many of Chevron's Gulf Coast employees and other members of the energy workforce continue to live in temporary housing, which has created a continuing problem that the energy industry overall is trying to resolve.

Almost a quarter of U.S. oil and natural gas production was shut in last year when hurricanes Katrina and Rita stormed through the Gulf, but the plethora of storms -- 27 in all -- continually slowed down exploration. The energy industry has recovered as much production as it could following the extensive disruptions, but O'Reilly predicted some of the lost output will never be recovered.

The Minerals Management Service last week said shut-in natural gas production still stood at 1.099 Bcf/d, which is equivalent to 10.99% of the 10 Bcf/d of annual gas production in the Gulf (see related story). Between Aug. 26, 2005 and June 1, the Gulf lost 784.5 Bcf of production because of the storms, which is equivalent to 21.5% of the offshore's annual production of 3.65 Tcf.

At the conference, O'Reilly also encouraged the energy industry to do more to attract new employees. A shortage of skilled workers, he said, has come because entering the energy industry market was once considered a bad career move.

"We are competing for the same resources now, but we'd better grow new ones," he warned.

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