Hurricanes Gustav and Ike, striking within less than two weeks of each other, as of late Tuesday had curtailed around 130 Bcf of natural gas production from the federal offshore areas alone, and the ongoing shut-ins now surpass the combined impact on a cumulative basis of hurricanes Katrina and Rita in 2005, energy analysts said this week.

Shut-ins continued Wednesday at many offshore platforms and rigs as damage was assessed. Meanwhile, 15 onshore gas processors that were in Hurricane Ike’s path remained shut in because of flooding; nine other processors were waiting for power before they could ramp up.

Based on data from 83 offshore operator reports submitted by midday Wednesday, 82.3% of the gas produced in the Gulf of Mexico (GOM) — estimated at around 7.4 Bcf/d before Gustav — remained shut in. MMS also reported that 95.9% of the usual oil output, estimated at 1.3 million b/d, was shut in. Personnel have not returned to 425 production platforms, or 59.3% of the 717 manned platforms in the GOM. Fifty of the 121 rigs, or 41.3%, also remain evacuated.

“Any chance of setting new records for natural gas inventory at the end of October this year is quickly slipping away, leaving the year/year storage deficit intact,” wrote Barclays Capital energy analysts George Hopley, Biliana Pehlivanova and Michael Zenker. “A slipping crude market may not be the best guide to near-term natural gas price formation, given currently tighter gas supplies than were perceived just two weeks ago.”

Lehman Brothers analysts Edward Morse and Dan Guertin said gas supplies may be tight along the Gulf Coast, but they were “comfortable” that adequate gas storage could be reached by the time the winter heating season begins Nov. 1.

“Although hurricane disruptions have slowed the rapid closing of the year-on-year storage deficit, the relative looseness of the market at this point in the injection season relative to last year has been easing the impact of the supply losses that are still ongoing,” said the Lehman duo. “As Gulf of Mexico supply gradually returns to normal over the coming weeks, we expect 2008 inventories to resume closing the gap to last year.”

The Lehman analysts noted that energy production and refining contribute the “lion’s share of industrial demand,” and reduced power demand because of outages and evacuations, combined with production and refining shutdowns, resulted in 1 Bcf/d of lost demand “above the demand disruptions from Gustav a week earlier. Ike’s demand-side effects have lasted into this week as well with power outages affecting nearly four million people across multiple states…” In addition, “temperatures cooled significantly during the week, leading to lower week-on-week gas demand in the power sector by about 3 Bcf/d.”

The Barclays team noted that peak volume shut-ins in both the 2005 storms were more than either Ike or Gustav, “but then again, back in 2005, full production from the federal waters reached 10,000 MMcf/d, compared to just 7,400 MMcf/d in 2008.”

A complete assessment of the damage inflicted by Ike onshore and offshore is not yet finished, but recovery appears to be taking longer than initially expected.

In its Wednesday afternoon situation report, the Department of Energy’s (DOE) Office of Electricity Delivery and Energy Reliability reported that gas flow at the Independence Hub in the deepwater was almost 900 MMcf/d, which is up 200 MMcf/d from Monday. The hub produces about 12% of the offshore GOM natural gas. However, “many” gas pipelines have been impacted by the two hurricanes this month — and repairs may take some time, said DOE.

“Certain portions of pipeline segments have commenced gas flow or are ready to resume flow once third-party facilities complete inspections,” DOE stated. “Reports of flood damage and lack of power continue to delay the return of facilities and in some cases it is likely to take several weeks for repairs and clean up in order to restart.”

Fifteen of the 39 major gas processing plants in the path of Hurricane Ike remained shut down Wednesday, including some plants still impacted by Hurricane Gustav, which struck the Gulf Coast early this month. Total operating capacity of the 39 plants is 17.6 Bcf/d; the Energy Information Administration (EIA) estimated that capacity shut in is around 7.31 Bcf/d — 40% lost from Ike.

Fourteen processors had resumed operations as of Wednesday afternoon at reduced or normal levels totaling 5.6 Bcf/d operating capacity, EIA noted. Nine more plants, with 4.55 Bcf/d operating capacity, will be able to restart once power is restored or upstream gas flow begins.

©Copyright 2008Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.