While U.S. energy interests in the Gulf of Mexico and on the coast sighed a collective breath of relief Tuesday, their counterparts in Mexico were not as lucky as Category 5 Hurricane Dean slammed the Yucatan Peninsula and threatened the country’s offshore energy infrastructure. Even though the U.S. dodged this bullet, some forecasters warned there were likely a number of other storms to come in the next few months.
After killing at least 12 people across the Caribbean, Dean strengthened after brushing Jamaica and the Cayman Islands and became a Category 5 hurricane with winds exceeding 155 mph on Monday evening. “Destructive Hurricane Dean made landfall [Tuesday] morning east-northeast of Chetumal, Mexico around 4 a.m. EDT. Dean first impacted a small rural peninsula on the Yucatan, which makes it difficult to pinpoint an exact location of the landfall,” said Eric Reese, a meteorologist with AccuWeather.com. “Dean’s track will take it across the Yucatan [Tuesday], then into the Bay of Campeche [Tuesday night].”
According to the National Hurricane Center’s (NHC) 4 p.m. CDT update Tuesday, Dean was a Category 1 hurricane approximately 60 miles west-southwest of Campeche, Mexico, traveling west at 20 mph with winds near 80 mph. However, the NHC said some restrengthening was forecast over the next 24 hours.
The AccuWeather.com Hurricane Center said that once into the Bay of Campeche, Dean will begin to strengthen and make its second landfall to the south of Tampico, Mexico on Wednesday. Texas was expected to feel the effects of Dean on Wednesday with some rain and gusty winds, but the worst of the storm was expected to remain far to the south, the forecasting firm said.
Even as natural gas and oil futures plummet, some within the industry are discussing the possible market ramifications of potentially long-term production shut-ins offshore Mexico (see related story). The country’s national oil and natural gas exploration and production company, Petroleos Mexicanos (Pemex), was not taking any chances as Dean approached head on. The company said it had evacuated more than 14,000 offshore workers and shut in 407 wells accounting for 2.7 million b/d of oil and 2.6 Bcf/d of natural gas production. Dean was expected to pound the heart of Pemex’s oil and gas production base as it crossed the prolific Campeche Sound. If Pemex production is off-line for any amount of time, U.S. exports to Mexico could return some firmness to both the natural gas and crude oil futures markets.
Joe Bastardi, chief long-range forecaster for AccuWeather.com, said the focus with Dean right now should be on the Mexican oil and gas fields. “It is going to shut them down for two or three days. I don’t think Dean is going to destroy anything down there, but it could affect things down the road,” he said.
Meanwhile, Gulf of Mexico producers were looking at repopulating their platforms and turning the spigots back on. “Given Dean’s current status, Shell has made plans for the redeployment of personnel today and throughout the rest of the week,” said Sarah Andreani, a spokeswoman for Shell. “Shell-operated production rates that remain shut in as a result of Hurricane Dean are approximately 30,000 b/d of oil and 70 MMcf/d of natural gas. We are beginning to bring production back on line.”
According to the Minerals Management Service (MMS) Tuesday afternoon, personnel had been evacuated from a total of 34 production platforms, equivalent to 4.1% of the 834 manned platforms in the Gulf. Personnel from 21 mobile rigs had also been evacuated; this is equivalent to 21% of the 101 rigs currently operating in the Gulf.
From the operators’ reports, the MMS estimates that approximately 3.4% of the oil production in the Gulf has been shut in, or roughly 43,881 b/d. Estimated oil production from the Gulf of Mexico as of April 2007 was 1.3 million b/d. It is also estimated that approximately 1.83% of the natural gas production in the Gulf has been shut in, or roughly 140 MMcf/d. Estimated natural gas production from the Gulf of Mexico as of April 2007 was 7.7 Bcf/d.
With Dean basically in the rear-view mirror in terms of U.S. impact, some weather watchers were warning that the season is far from over. During a webinar Tuesday, Bastardi said now that the 2007 calendar has entered the “real” hurricane season, the U.S. could see up to four landfalling hurricanes before all is said and done.
While noting that the Atlantic is still well within a cycle of increased storm activity, Bastardi said it has never mattered how many storms a season has. “I have never been enamored with the total amount of storms. I’ve been enamored with where they are going to go,” he said.
Bastardi noted that the cone of storm impacts in the U.S. has shifted to the southwest from last season, with Florida facing the highest probability for a strike. “We will see more intensity than last season, but not nearly as many storms as we saw in 2005,” he said. “We will probably see about half of that amount. Our number from June 1 was 13 or 14 total storms, but we had six landfalls, two of which were tropical storms. Now we already have the two tropical storms out of the way, so we are expecting four more landfalls…the rest of them hurricanes, with one or two of them being major. I am not trying to whip up fear or hype, [but] we are looking at three hurricane hits over the next month. I think that is a pretty safe bet right now.” The forecaster said Florida could be in line for two storm hits over the next month, with another possible one coming in October.
Addressing the probability of destruction or disruption to oil and gas infrastructure in the Gulf of Mexico and on the Gulf Coast, Bastardi said disruption is more likely. “I think [the probability] of disruptions is very good. Even Erin disrupted things as they had to pull people off the rigs in the Gulf of Mexico,” he said. “We are also living in a time where people use a prevent defense, especially after Jerry in 1989, who killed those people trying to get off the rigs when that thing developed very quickly. What we say is: disruptive, hopefully not destructive.”
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