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Earl's Impact: Severe but Brief

Earl's Impact: Severe but Brief

Although Hurricane Earl ended up only grazing the Gulf of Mexico gas producing area last week, his impact was sudden and severe, triggering a near total evacuation of Gulf platforms, causing more than 10 Bcf/d of curtailments (70% of Gulf production), according to the Minerals Management Service, and triggering a 25- to 30-cent/MMBtu cash price spike on Tuesday.

"Everybody was watching the hurricanes on the Atlantic Coast and this one just caught them by surprise," noted MMS spokeswoman Caryl Fagot. Earl seemed to pop up out of nowhere Monday as a tropical storm north of the Yucatan Peninsula, and its uncertain course and speed sparked a rapid evacuation process across the entire Gulf of Mexico.

"It's Gulf-wide and even into the bays and lakes," said a Texaco spokesman on Tuesday. "We're still in the process of moving people off rigs and platforms but hope to complete that by nightfall. We will work into night if we have to."

If anything good came out of the industry's experience with Earl, it was the realization of the tremendous speed and efficiency of Gulf producers. "Overall this was one of the smoothest hurricane evacs that's ever been done. That's what our customers are telling us," said Ken Townsend, general manager of the oil and gas division of Petroleum Helicopters International Inc. (PHI), the Gulf's largest helicopter service. "Everyone felt it was a smooth operation, a safe operation. It was just very well planned out. The industry has gotten better over the years. They really have. They don't wait until the last minute. They start moving nonessential people out way ahead of the storm. This one didn't give them the lead time they usually get but they handled it well." Townsend said PHI made about 4,500 flights over a three day period from Tuesday through Thursday, which was about 25% more than normal.

Chevron, which has its own helicopter and ship fleets, evacuated all 1,600 Gulf employees from over 200 manned structures in the Gulf. "With both evacuation and redeployment, we've had a lot of experience. We do know how to do it. It's a pretty efficient operation. It has to be because it's a tremendous expense both ways," said spokesman Brent Wood. Chevron shut in about 80% of its offshore production, which averages about 1 Bcf/d of gas and 104,000 b/d of oil. Shell said it had evacuated 1,350 employees from the shelf and deepwater structures and shut in 1.42 Bcf/d of gas and 225,000 barrels of oil.

The MMS reported 361 platforms and 69 rigs were evacuated, 10.029 Bcf/d of gas was curtailed and 813,843 b/d of oil was shut in. On Wednesday, there was 675 MMcf/d of gas curtailed on Columbia Gulf, 600 MMcf/d shut in at ANR's Eugene Island compressor platform, 482 MMcf/d curtailed at HIOS, 1.2 Bcf/d off Stingray, 750 MMcf/d curtailed on El Paso's Bluewater system upstream of the Tennessee 500 and 800 pipeline legs, 1.9 Bcf/d shut-in upstream of Transcontinental Gas Pipe Line, 250 MMcf/d curtailed on Sonat, 100 MMcf/d on Sea Robin, 900 MMcf/d shut in behind Tetco and 1.1 Bcf/d off the Terrebonne system.

For comparison, Hurricane Andrew in 1992 caused 13 Bcf/d of gas and 750,000 b/d of oil curtailments, which was a complete shutdown of the Gulf at the time. And compared to Andrew, Earl was a breeze. Twenty two platforms were lost and 65 were damaged because of Andrew. And it took four months for production to return to normal.

Last week, almost as quick as turning on a faucet, gas producers brought supply back on line Thursday and prices resumed their downward spiral. The easterly track of Earl allowed producers and pipelines to begin returning work crews to platforms as early as Thursday morning. The market reacted with 10- to 15-cent decreases.

Rocco Canonica

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