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Texas Gulf Coast: Shut In, Shut Down and Evacuating

Natural gas and oil production in the Gulf of Mexico fell sharply Wednesday as Hurricane Rita moved toward the Texas coast with 165 mph winds. And it wasn't just the offshore that was in danger. Much of Houston business was shutting down, from office towers to refineries, as local officials advised businesses to close and citizens to evacuate coastal areas and parts of Houston.

Natural gas production from the Gulf stood at about half the normal daily offshore gas output Wednesday and about 25% of normal oil production, according to the latest Minerals Management Service (MMS) report. Meanwhile, major pipeline companies reported that personnel evacuations were forcing the shut down of compressor stations and other onshore facilities, further disrupting supply.

Shut-in offshore gas production on Wednesday reached 4.713 Bcf/d, equal to 47.13% of the total daily gas production in the Gulf, which is estimated to be about 10 Bcf/d. On Tuesday, 3.482 Bcf/d was shut in. The MMS also reported that 57.36% of the 819 manned platforms and 51.49% of the 134 rigs currently operating in the Gulf had been evacuated.

As of 5 p.m. EST Wednesday, the National Hurricane Center (NHC) said Rita's maximum sustained winds had strengthened to 165 mph, making it a Category Five hurricane. The NHC made a slight shift in its forecast track for Rita, moving it more west-northwest, which would put it more on track to hit the upper Texas coast, around Galveston. A hurricane watch was issued from Port Mansfield, TX to Cameron, LA, and a tropical storm watch was issued for east of Cameron to Grand Isle, LA and from south of Port Mansfield to Brownsville, TX. Forecasters predict Rita could weaken as it travels through the western Gulf.

"Data from both NOAA and Air Force hurricane hunters indicate a significant pressure drop today and winds have increased to 145 knots," NHC said in its update. "Because Rita will be crossing an area of high heat content during the next 12 to 24 hours, it is expected that the hurricane will maintain its strength. Thereafter, the ocean heat content is not as high and the intensity changes will be controlled mainly by eyewall replacement cycles and decreasing heat content. Some weakening is anticipated, but Rita is forecast to make landfall as a major hurricane, at least Category 3."

Dr. Jeffrey Masters, director of meteorology for The Weather Underground (www.wunderground.com), said Rita was "looking more and more like a nightmare copy of Katrina somehow displaced in time... The forecast models we so heavily rely on did not anticipate another Katrina-like storm when Rita first formed and plowed through the Florida Straits. But now, the forecasts mirror the reality unfolding today in the Gulf of Mexico. Rita will be another huge destructive hurricane for the Gulf Coast."

AccuWeather Senior Meteorologist Joe Bastardi said, "I believe this will be the strongest hurricane to hit the state of Texas, and [it is expected to have lower pressure than Hurricane] Carla...in 1961. As serious as it is, if this path is 60 miles further northeast into Galveston, then this is a $40-60 billion storm. If a Category Five storm hits Galveston it will push water all the way to Houston and devastate southeast Texas.

"Right now as it is, it is a very bad hurricane with gusts of 100 mph expected in Houston and 120 mph in Galveston. The worst impact will be in the less populated areas to the southwest."

Hurricane Carla hit Galveston on Sept. 10, 1961 with 150 mph winds and a 930 millibars pressure reading. Only 46 lives were lost because of early warnings. Although Carla only claimed 46 lives, the Greater Houston/Galveston area has changed dramatically since then. The Johnson Space Center, located south of Houston in the Clear Lake area, brought thousands of jobs and new residents when it was constructed in the mid-1960s. Since Carla, there also has been extensive waterfront development along Galveston Bay, with thousands of pricey housing developments and one of the largest private boating harbors in the country.

The Hurricane of 1900 in Galveston is considered the worst storm ever to hit the United States, claiming 6,000-8,000 lives. There were no early warning systems when eight-to-15-foot tides swept the island. Since then, the city has built an extensive seawall around a portion of the waterfront, which has protected it from major storm damage.

Hurricane Alicia, a Category Three storm, was the last one to hit the Houston/Galveston area in August 1983, knocking out about one-third of the region's power. However, most of the area's refineries, chemical plants and processing units remained in operation, and since that storm, many plants have been upgraded to protect against flooding and storm damage. However, a number of refineries believed to be in Rita's path were being shut down Wednesday with only a skeleton staff left on duty.

The likelihood that Rita could strike a major blow to the entire Houston area prompted Mayor Bill White on Wednesday to call for businesses to voluntarily close beginning on Thursday, allowing all "nonessential" employees time to evacuate the area. The surrounding coastal counties, including Galveston County, already had ordered mandatory evacuations in preparation for Rita.

What the impact of the evacuations from Houston's businesses will have on the region's energy infrastructure remained a question early Wednesday (see related story). Houston is headquarters for many major U.S. energy businesses, and is home to most of the energy trading operations. The surrounding area is home to about 25% of U.S. refining capacity also.

Already crippled by Hurricane Katrina three weeks ago, most of the energy companies operating offshore in the Gulf of Mexico had evacuated most of their employees by Wednesday, and they were preparing onshore facilities along the coast from Louisiana to northern Mexico for any storm impacts.

El Paso Corp. intended to shut in all of its Gulf production by late Wednesday. The company has 77 platforms in operation in the Gulf, 16 of which are manned, with most of those located in the eastern and central Gulf. All 16 are being evacuated.

At Shell Oil Co., another 215 personnel were safely evacuated from the operations areas and about 50 remaining offshore personnel were expected to be evacuated on Wednesday. Shell has shut in wells at the Auger, Brutus, Bullwinkle, Boxer and West Cameron 565 fields. Shell's operated, total gross, production day rate for these wells is 133,000 bbl of oil and 250 MMcf of gas. On Tuesday, wells were shut in at the Enchilada, Salsa, Cougar and North Padre 975 fields. Shell's operated, total gross, production day rate for these wells is 28,000 bbl and 188 MMcf.

"Offshore personnel will be redeployed beginning in our eastern operations area after the hurricane has safely passed," said Shell spokeswoman Alice Brink. Shell also had begun a shutdown of its refining and chemical plant facilities along the Gulf Coast. Shell also planned to close its downtown Houston offices Thursday and Friday.

ExxonMobil Corp.'s shut-in production at midday Wednesday was 265 MMcf/d of gas and 35,000 bbl/d of oil. Current shut-in production from the combined impact of Hurricane Katrina and Rita totaled about 63,000 bbl/d of liquids and 535 MMcf/d of gas. The producer also had evacuated 425 workers from offshore platforms, and was also allowing nonessential workers to leave its massive Baytown, TX refinery.

"ExxonMobil continues hurricane preparations for its Gulf of Mexico and Gulf Coast operations," said spokeswoman Susan Reeves. "We continue to monitor the storm closely and have prepared structures for high winds and heavy rain."

ExxonMobil's Gulf Coast refineries and chemical plants also have activated hurricane preparedness plans. The company operates Gulf Coast refineries in Baytown and Beaumont, TX, and in Baton Rouge, LA, and it is a 50/50 partner with the Venezuelan oil company (PDVSA) in Chalmette Refining LLC located outside New Orleans. ExxonMobil also operates Gulf Coast chemical manufacturing facilities in Baytown, Beaumont and Baton Rouge.

Chevron Corp. evacuated about 2,200 employees in the path of the storm by Wednesday, but it will not be releasing how much production was expected to be reduced because of the storm. Total E&P USA also has evacuated its U.S. Gulf operations and shut in 218 MMcf/d of gas production. Swift Energy Co. said all of its personnel were being evacuated both offshore and onshore, where it has been repairing storm damage.

BP plc has evacuated all offshore employees and has shut in a "significant" amount of oil and gas production. It also began closing parts of its massive Texas City refinery on Wednesday and was expected to shutter the entire facility by Thursday. Marathon Oil Corp. has evacuated staff from three platforms in the South Pass area, which have been shut in since Katrina. It is also evacuating staff from its Ewing Bank platform and will shut in 17,000 bbl/d of oil and 17.5 MMcf/d of gas.

Kerr-McGee Corp. has evacuated all remaining workers in the Gulf and is shutting in 110,000 boe/d of production. Amerada Hess also has evacuated all essential and nonessential offshore workers and is shutting in all production -- it produces about 51,000 boe/d in the Gulf; 4,000 boe/d has been shut in since Katrina.

Dominion Resources Inc.'s E&P unit evacuated essential staff from its Main Pass, Ship Shoal and Devils Tower facilities, which already had shut-in production from Katrina. Devon Energy Corp. evacuated 200 nonessential workers and was to decide late Wednesday whether to pull essential staff and suspend production.

ConocoPhillips Inc. also said it had evacuated personnel from three of its four Gulf platforms. And Newfield Exploration Co. pulled 200 workers from its Gulf operations Tuesday, and planned to shut in remaining operations Wednesday, which includes 300 MMcfe/d of gas and oil.

Pipeline Flows Dwindle

Many Gulf of Mexico and Gulf Coast pipeline systems reported sharply lower gas flows on Wednesday, according to Denver-based consulting firm Bentek Energy, which tracks daily gas production nominations on the region's pipeline systems. "There is no flow on Nautilus or Garden Banks," Bentek said in its Hurricane 2005 report. "Flows on Destin are near zero. Transco has lost over 0.5 Bcf/d."

Bentek said onshore and offshore Louisiana gas flows were down to only 4.3 Bcf/d, which is about a 2.3 Bcf/d reduction from Monday's levels and down 5.8 Bcf/d from where production was on Aug. 26 prior to Katrina's arrival.

Shut-ins rose on most major pipeline systems. Tennessee Gas, which appears to have suffered the most extensive damage from Katrina and now faces a hit on its South Texas pipeline leg (the 100 Line) from Rita, had about 1,379 MMcf/d shut in on Wednesday, according to nominated gas flows collected by Bentek from the pipeline's bulletin board. Shut ins also rose on the following systems: Southern Natural (924 MMcf/d shut in), Transco (620 MMcf/d shut in), Destin (784 MMcf/d), Mississippi Canyon (511 MMcf/d), Garden Banks (421 MMcf/d), Trunkline (287), Texas Eastern (247), Chandeleur (120) and Gulfstream (33).

Based on Rita's projected path, the Texas systems of Tennessee Gas, Texas Eastern, Houston Pipe Line and Northern Natural's Matagorda Offshore Pipeline System (MOPS) system, among many others, could be impacted. Northern Natural already has warned shippers of a potential force majeure on the 200 MMcf/d MOPS system.

Kinder Morgan said Natural Gas Pipeline Company of America plans to shut down compressor station 342 in Cameron Parish, LA, by noon Thursday, which will cut capacity on the Louisiana line by 10% initially and by 40% on Friday. The Louisiana Line has been transporting about 900 MMcf/d. Kinder Morgan also is looking at evacuating personnel at NGPL's Texas compressor stations in Montgomery and Liberty counties and shutting down other operations on the parent company's intrastate pipelines. Storage services on Kinder Morgan Texas at Markham and Stratton Ridge are expected to be curtailed and employees are being evacuated. Kinder Morgan's Texas City and Galveston Bay gas processing plants (115 MMcf/d) also are being shut down.

El Paso said all nonessential personnel in Houston are being evacuated and temporary operations are being set up elsewhere in Texas and in other states where operational functions can be switched. El Paso said the official shut in numbers for its pipelines are as follows: Southern Natural, 550 MMcf/d, and Tennessee, 650 MMcf/d, which are far lower than what was reported by Bentek Energy. An El Paso spokesman could not explain the differences.

Texas Eastern said government evacuation orders have forced it to shut down compression that is necessary to move gas out of the South Texas and East Texas zones. As a result some secondary firm service was expected to be curtailed for volumes sourced in those zones, the pipeline said.

Transco initiated its Emergency Supply Allocation Process effective with the Intraday 1 nomination cycle for Thursday's gas day and for all nomination cycles for Friday's gas day.

Many pipelines that run along the Texas Coast and offshore in the Texas waters of the Gulf could be severely impacted by the hurricane. Enterprise's East Breaks gathering system offshore and its High Island Offshore System, which extends more than 200 miles into the deepwater Western Gulf of Mexico, as well as Tennessee's and Texas Eastern's offshore Texas systems, could be particularly exposed to the worst of the hurricane.

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