The industry desperately needs a quick solution to the problem of drilling rigs drifting around the Gulf of Mexico during hurricanes, toppling platforms and cutting gashes into underwater pipelines with their anchors or broken steel legs, said Doug Krenz, vice president of transportation for Enterprise Products Partners, in an interview with NGI.

Onshore damage was extensive due to storm surge from Hurricanes Rita and Katrina, but offshore potentially billions of dollars in damage was caused by the 19 mobile offshore drilling rigs that were torn from their moorings and went adrift, dragging their anchors with them. The 30-million-pound semisubmersibles were never designed to stay put, especially not in major hurricanes, so they end up careening through the region’s densely populated fields endangering billions of dollars of infrastructure, including other platforms and the pipeline network.

The semisubmersible rig Transocean Marianas was forced off its drilling location during Rita and was grounded in shallow water at Eugene Island block 133, 140 miles northwest of its pre-storm location. Also, Transocean’s moored semisubmersible rig Deepwater Nautilus, which sustained damage to its mooring system during Katrina and was undergoing repairs, was set adrift following the failure of a tow line, and a partial crew on board used the rig’s thruster-assist capabilities to navigate the unit 40 miles south of Grand Isle, LA., where the rig was grounded. Four rigs operated by Noble Corp. drifted 75-123 miles off their original locations.

“One floating structure, Chevron’s Typhoon, was possibly hit by a drilling rig,” Krenz noted. Chevron’s $256 million Typhoon facility is a state-of-the-art permanent platform expected to produce 40,000 barrels of oil and 60 MMcf/d of gas. Tennessee Gas Pipeline’s system offshore Louisiana also appears to have significant damage from drifting rigs dragging their steel across its pipes.

“It’s one of the issues that the industry is going to have to get a handle on right away,” said Krenz. “We’ve tried to track on our map the path of all the drilling rigs that were afloat and it’s very concerning. The potential for impact to structures and the damage that the anchors do dragging over pipelines [is tremendous].

“We saw some of it with Ivan,” but more so with Katrina and Rita, he said. “The amount of value at the end of the day on what was destroyed or damaged due to the floating drilling rig situation is [significant]. As an industry we have to find a solution. We have to see some changes. It has caused the industry to make very costly repairs.”

In the recent storms, a large percentage of the damage appears to be attributed to these mobile drilling units. There are three major types of mobile offshore drilling units: the jackup, which is a combination drilling rig and barge fitted with retractable legs that can be driven into the sea bottom; the semisubmersible, a large floating vessel supported by pontoon-like structures submerged below the sea surface with an operating deck as much as 100 feet above the pontoons, and with multiple heavy anchor chains that extend to the sea floor; and the drillship, a maritime vessel modified to include a drilling rig that can be held to the sea floor with multiple anchors and kept stationary with a dynamic propulsion system.

The jackup rigs do not require anchors, in large part because they stand on retractable legs that are temporarily attached to the sea floor. A lot of damage is done when the legs break off and drag across the sea bottom.

However, drilling companies say hurricanes develop so quickly there is scarcely time to evacuate offshore personnel in time, much less tow drilling rigs hundreds of miles to safety at five to 10 miles per hour.

Some observers also believe that the rigs need to be better secured while on location, but drilling companies claim that takes away their flexibility to be on another site quickly.

In response to the many rigs that were adrift following Hurricane Ivan last year, many companies outfitted their mobile drilling units with global positioning beacons so they could be found after hurricanes. However, there have been no new regulations governing anchoring systems for these facilities.

The Minerals Management Service plans to hold a conference Nov. 17 to examine the problems associated with drifting drilling rigs during hurricanes. However, many of the problems were identified by MMS a decade ago following Hurricane Andrew in the federal study “Evaluation of Securing Procedures for Mobile Offshore Drilling Units When Threatened by Hurricanes.” When asked by NGI on Wednesday to provide details on the nature of this problem or any potential solutions, MMS flatly refused.

Krenz said that luckily none of the damage done to Enterprise’s five offshore pipeline corridors was due to drifting drilling rigs, but quite a bit of upstream and downstream infrastructure may have been hit by drifting mobile units.

“We incurred fairly minimal damage,” said Krenz. “We’ve got some electrical and control equipment to repair at Venice [at the tail end of Mississippi Canyon]. Obviously there was damage to both the upstream and downstream infrastructure, the production platforms and the processing plant. At this point in time there is no production flowing on that corridor at all. We do expect that probably two-thirds of pre-hurricane production will come back up sometime in the late November timeframe. The balance will be dependent on when the upstream and the downstream infrastructure is repaired adequately.”

He said a major problem at Venice has been access. “We just got in there this week. The roads aren’t even open to Venice yet. Both Enterprise and Dynegy have leased barges to provide housing and staging areas for our equipment to make the repairs. We are making them from the sea side rather than from the land side at this point in time, which obviously makes it a lot harder.”

Enterprise’s Garden Banks (Garden Banks and Magnolia pipelines) and Green Canyon (Nautilus, Manta Ray and Cleopatra pipelines) corridors are back up and running, with Green Canyon already near pre-hurricane levels. Garden Banks is still ramping up and should reach pre-hurricane levels next week or soon after that. In November, Garden Banks and Green Canyon are expecting to be transporting 400 MMcf/d and 290 MMcf/d, respectively.

Rita tracked right up the Stingray Corridor and while the offshore facilities are in good shape onshore structures are a mess. “We had a surge of five to seven feet of water come across the site. We had some damage to our office building, our control buildings and any of the electrical equipment or motors that were down at a low level are going to have to be replaced or repaired.” Stingray has a dehydration facility, a liquids separation plant and a compressor station in Johnson’s Bayou. Dynegy also has an adjacent processing plant.

“It’s a real mess in that area. A lot of the houses on the beach are now up on our property in various pieces, under the slug catcher. There’s about six inches of muck that is just layered over the site. We’ve brought rock in to reestablish the road to the site and at this point we have front-end loaders and equipment that is cleaning up all the debris.

“We’ll have it repaired and running before the end of the year. Our facility at Venice is not nearly as substantial.” However, he noted that major repair work at the Venice processing plant and other facilities there could limit gas flows even if Mississippi Canyon is ready to move supply. “If the gas quality isn’t up to [dewpoint requirements] of the downstream pipelines, then we will have to wait. We think we can possibly do some blending or the shippers can work with the downstream pipelines and have their gas processed at a downstream location.”

Prior to the hurricanes, Mississippi Canyon was transporting about 577 MMcf/d of gas and Stingray was transporting about 488 MMcf/d. By November, Enterprise expects Stingray to be transporting 200 MMcf/d and Mississippi Canyon to still be at zero. By January, Stingray is expected to be transporting up to 575 MMcf/d and Mississippi Canyon should be at 380 MMcf/d.

“There’s a lot of new development offshore,” Krenz noted. “Obviously one of the biggest ones that we expect will come on during 2006 is the Thunder Horse production facility (200 MMcf/d) that is managed by BP. BP also has a development in our Green Canyon area, Atlantis (180 MMcf/d), that is scheduled to start up next year. On the Stingray system there is quite a bit of deep Shelf activity that we’re expecting will be coming on in the not too distant future.

“The focus right now is on repairing the infrastructure. We obviously have to do that before we can grow.” But the industry also has to figure out how to handle the issue of floating drilling rigs, he said. Otherwise, it can continue to look forward to high offshore repair costs, big production delays and extended periods of high gas prices following hurricanes.

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