Damage estimates by oil and natural gas producers and pipeline operators hit by back-to-back Hurricanes Katrina and Rita are slowly trickling in, but already, some are announcing they will be unable to hit their third quarter production targets.
Only 25% of the usual natural gas production from the Gulf of Mexico was flowing on Monday, but it was about 5% more than daily flows last week, the Minerals Management Service (MMS) reported. Shut-in gas production as of Monday stood at 7.495 Bcf/d, or 74.95% of the daily gas production, down from 7.94 Bcf/d, or 79.4% on Friday.
Based on reports by 75 producers, the cumulative shut-in gas production since Aug. 26 — pre-Hurricane Katrina — is 219.567 Bcf, or 6.016 % of the yearly production of gas in the Gulf, which is about 3.65 Tcf.
Golden, CO-based consultant Bentek Energy, which tracks daily gas pipeline nominations, reported only about 2,554 MMcf/d of gas production was scheduled to flow into gas pipelines onshore and offshore Louisiana on Monday while another 3,130 MMcf/d was scheduled onshore and offshore Texas.
Total scheduled Gulf production flows barely budged over the weekend and were sitting at 5,684 MMcf/d on Monday, the consulting firm reported. About 8,137 MMcf/d of gas production remains shut in based on a comparison with scheduled gas production flows of 13,820 MMcf/d on Aug. 26.
According to MMS, shut-in oil production was 1.392 million bbl/d, or 92.8% of the daily output offshore, compared with Friday’s shut-in total of 1.468 million bbl/d, or 98% of the daily Gulf production. Cumulative shut-in oil output since Aug. 26 is 45.119 million bbl, or 8.24% of the yearly offshore production — about 547.5 million bbl.
MMS also noted 819 manned platforms, or 48.7%, and about a fifth of the 134 rigs, or 17.9%, are still evacuated in the Gulf.
Post Rita, operators were keeping a wary eye on Tropical Storm Stan, which was moving westward into the Bay of Campeche Monday morning. Dr. Jeff Masters of the Weather Underground surmised the storm will be a Category 1 hurricane as it approaches the Mexican coast between Tampico and Veracruz on Wednesday and “a Category 2 hurricane is not out of the question.” The meteorologist noted “there is still a distinct chance that Stan may stall just before the coast, or make landfall, then pop back out over the Gulf of Mexico and re-intensify. Stan may then remain the Gulf many days, and may eventually move north and threaten the U.S.”
El Paso and Enbridge provided some additional details on the damage to their Gulf Coast and Gulf of Mexico pipeline systems, compressor stations and processing facilities on Monday.
El Paso’s Tennessee Gas Pipeline clearly suffered the most from Katrina and Rita. However, the pipeline lifted a force majeure at station 25, Cleveland, TX, on its 100 Line on Monday after power was finally restored. Nevertheless, the pipeline still has extensive inspections and repairs to the rest of its system. According to Bentek, only 64 MMcf/d of gas production was scheduled to flow into the Tennessee system onshore and offshore Louisiana on Monday compared to 1,946 MMcf/d on Aug. 26 prior to Katrina.
Tennessee’s Port Sulfur compressor station (527) is expected to be down three to six months for repairs. The company has had to reconfigure its pipeline system in southern Louisiana in an attempt to redirect gas through another station (523 Cocodrie) for separation and dehydration. The majority of the measurement and electronic equipment in Tennessee’s Main Pass, South Pass, and West Delta areas is damaged or destroyed.
Tennessee also has extensive damage on the offshore Blue Water pipeline system and leaks at multiple other laterals and feeder lines upstream of the 500 Line. The Blue Water Header remains shut in and certain parts of the 26-inch diameter and 36-inch diameter Blue Water lines remain isolated because of leaks. Tennessee also extensive damage in the South Timbalier area and on its Bay Marchand Central Gathering Platform and pipeline. The company plans to provide a timeline for repairs to these facilities this week.
Upstream of Tennessee’s 800 Line there was moderate damage at the Starks and Kinder compressors. Both stations should be available to operate once production resumes, El Paso said. Tennessee’s Johnson Bayou separation and dehydration plant is estimated to be available by mid-October.
As is the case with many of the Gulf pipelines, damage to processing and production facilities also are inhibiting volume restoration on Tennessee and sister company Southern Natural. The Grand Chenier processing plant on Tennessee’s 800 Line experienced flooding and damage and is shut down.
Meanwhile, the Toca Processing Plant and Toca Compressor Station on Southern Natural also were damaged and remain shut down. Southern estimates that it will not begin flowing gas through the Toca compressor station until the middle of October. However, Enterprise Products, which operates the Toca Gas Processing plant, expects part of the plant to be down four weeks (250 MMcf/d) and the other part down eight weeks (850 MMcf/d). Southern said it can only mix a limited amount of unprocessed gas into its gas stream.
Enbridge said Monday Stingray Pipeline could be down until the end of the year because of extensive damage to Williams’ Cameron Meadows gas processing plant (500 MMcf/d) near Johnson’s Bayou. And Mississippi Canyon (800 MMcf/d) could be down much longer because of damage to Dynegy’s Venice, LA gas processing plant.
Enbridge said it would be several weeks before the UTOS offshore pipeline would be repaired. It has minor flooding damage to electrical equipment and process controls. The company expects its Green Canyon and Garden Banks offshore pipeline systems to back in service early this month.
Destin Pipeline, in which Enbridge owns a 33% stake, was receiving about 440 MMcf/d of offshore production Monday compared to 792 MMcf/d on Aug. 26, according to Bentek. Enbridge said Destin was flowing about 600 MMcf/d Monday with about 160 MMcf/d of that coming from storage.
Only a few producers and oilfield service providers updated their damage reports Monday, and it is expected to take several more days, or even weeks before full reports are completed because of continuing transportation and communication problems.
The total storm impact is still being evaluated, but ConocoPhillips said Monday Hurricanes Katrina, Rita and Dennis together cost it about 20,0000 boe/d in the third quarter. The company will announce quarterly earnings Oct. 26.
The biggest hit came from Katrina, when seven Gulf Coast fields in which ConocoPhillips has an interest were shut in. Six fields have ramped up, but the Ursa field, which is jointly operated with Shell Exploration and Production, sustained topside damage (see Daily GPI, Sept. 19), and it remains shut-in, pending a full assessment and infrastructure coming back online.
Rita’s impacts “are largely expected to be short-term in nature,” ConocoPhillips said in a statement. “These production impacts primarily occurred in the Gulf of Mexico fields and the onshore Louisiana and Texas fields in which ConocoPhillips has an interest. The company-operated Magnolia field sustained minimal damage and production is expected to resume shortly, contingent upon resumption of operations at non-operated related infrastructure, such as pipelines and utilities.
Third quarter production on a boe basis, including Syncrude, is expected to be “slightly lower” than output in 2Q2005, with the three hurricanes, along with unplanned downtime in Alaska and the United Kingdom, negatively impacting output. Exploration expenses also are expected to be higher.
Meanwhile, W&T Offshore Inc. said several offshore platforms were damaged when Rita struck, five significantly, including East Cameron 338 A and Eugene Island 397 A. W&T’s pre-Katrina and Rita volumes were approximately 245 MMcfe/d, and the company is currently producing 24 MMcfe/d. W&T is evaluating several alternative methods for bringing shut-in production online, including temporary infrastructure and other operators’ platforms. Currently, total repair cost for both hurricanes is expected to be $35 million net for operated fields; W&T does not carry business interruption insurance.
“In the last month, we have successfully evacuated all of our offshore and office personnel twice,” said W&T CEO Tracy W. Krohn. “By my estimates, Hurricane Rita represents the most catastrophic storm ever in terms of impact on oil and gas operations in the Gulf of Mexico. The damage that was suffered by W&T appears to be in line with the reports of other significant operators in the Gulf of Mexico. However, I am very pleased with the pace of our repair operations.”
W&T’s drilling and construction projects have been delayed 10 days; however, no drilling rigs working for W&T were damaged because of the hurricane. Of the rigs reported to be severely damaged or lost by major rig operators, none are expected to affect the 2005 or 2006 drilling program.
McMoRan Exploration Co.’s initial assessment of exploration and development operations, production facilities and the Main Pass Energy Hub platforms indicated no apparent major damage. After Katrina, production had been restored on all production facilities, with the exception of production at Main Pass Block 299 and Main Pass Block 86 (Shiner). Subsequently, Rita resulted in shut-in of all producing facilities. All facilities have been inspected and all are expected to return to production, pending availability of third party downstream facilities, with the exception of Main Pass Block 299 and Shiner, where repairs to damages resulting from Katrina continue.
McMoRan expects 3Q2005 production to average 40 MMcfe/day, including 11 MMcfe/d for McMoRan’s share of production at Main Pass Block 299. Absent production downtime for Katrina and Rita, McMoRan estimates quarterly production would have been 57 MMcfe/day, including 17 MMcfe/d for McMoRan’s share of production at Main Pass 299.
Helicopter operator Offshore Logistics Inc.’s helicopter fleet operating in the Gulf did not sustain any damage from hurricanes Katrina and Rita, and prior to landfall for both hurricanes, the company moved its helicopters out of the path of the storms. However, Katrina caused a total loss of the company’s shore base facility in Venice, LA and Rita severely damaged the shore base facility in Creole, LA. Rita also caused extensive flooding at the shore base facility in Intracoastal City, LA.
In response to the hurricane damage, Offshore Logistics increased flight activities from its operations headquarters at the Acadiana Regional Airport in New Iberia, LA and consolidated flight activities at its remaining shore base facilities. In addition, the company expanded its shore base facility located at Galliano, LA because of the damage to the Venice facility. “Despite the disruption caused by the hurricanes, the company is currently meeting all of its customers’ needs for flight services from its remaining facilities,” the helicopter company said in a statement.
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