Few tropical storms have packed the punch of Isidore. Despite not reaching hurricane strength, the storm, with its wide girth, heavy rain and high seas and winds, wiped out as much as 4.5 million bbl of oil and 25 Bcf of natural gas production in the Gulf of Mexico last week as hordes of producers fled Gulf platforms and rigs, according to the Minerals Management Service (MMS). October futures prices soared to new 15-month highs at $3.99 last Monday before retreating to $3.686 at expiration on Thursday, and Henry Hub cash prices jumped to highs of more than $4 before slipping to $3.59 on Thursday.

Despite packing only 65 mph winds at its strongest, Isidore was a very large storm, covering much of the Gulf of Mexico with tropical storm force winds extending outward 315 miles, mainly to the north of center. Producers reported 21 foot waves/swells, and low-lying New Orleans was hit with 20 inches of rain.

At the height of the storm on Wednesday, the MMS reported 594 platforms and 88 rigs were evacuated and 1.4 million bbl/d of oil production and 13.5 Bcf/d of gas production was curtailed in the federal waters of the Outer Continental Shelf. However, the MMS said later that those production figures were overstated and shut-ins that day were more like 8.5 Bcf/d of gas and 705,292.5 bbl/d of oil. In fact, MMS put out incorrect production and evacuation information each day last week except Friday, attributing the mistakes to human error caused mainly by the shutdown of several division offices in Louisiana.

“We had a whole bunch of problems starting up [data collections this week], and then with the regional offices closing, they weren’t getting the e-mail submissions,” said Greg Gould, chief enforcement officer at the MMS. Gould said he suddenly was called on last week to handle many of the data collection duties from his office in Virginia because the MMS staff in Louisiana was unavailable due to the expected 20 inches of rain from the storm.

In their frantic efforts to collect and distribute production shut-in data early in the week, MMS employees failed to include any e-mail submissions. “We ended up getting about three-quarters of the information [from producers] by e-mail,” said Gould. “Both [Monday’s and Tuesday’s figures] were underestimated.” But on Wednesday, MMS somehow overestimated the shut-ins. Needless to say, it made for a difficult week attempting to get a handle on just how badly the storm was affecting Gulf of Mexico operations. In its last notice on Thursday, MMS said the industry’s latest reports indicated that about 95% of crude oil and 60% of natural gas production from offshore federal lands had been shut down since Wednesday.

Regardless of the specifics, it was clear from the reports from producers that the storm was having a dramatic and widespread impact. BP, ChevronTexaco, Shell Exploration and Production Co. and Anadarko Petroleum all said they were in the process of completing total evacuations of their Gulf of Mexico personnel Tuesday, including 1,500 to 2,000 BP employees and 2,000 ChevronTexaco employees. Anadarko reported production curtailments of 55,000 boe/d, and spokeswoman Lee Warren said employees had been evacuated from the 71 platforms that Anadarko operates.

Shell said it was shutting in most of its 675,000 b/d of oil production and 2.7 Bcf/d of gas. ChevronTexaco reported shut-ins at 160,000 b/d of oil and 550 MMcf/d of gas. Marathon Oil also said it was halting production on seven platforms that produce about 46,000 boe/d. Ocean Energy said it also suspended all rig activity and shut down production in the Gulf, including operations on 21 platforms as well as the company’s new deepwater production in the East Breaks complex. Total production volumes affected by the Ocean closure were in excess of 60,000 net boe/d.

“The amount [of production] affected is so large because production from the Gulf of Mexico OCS currently accounts for more than 25% of domestic oil and natural gas production,” said Walter Cruickshank, MMS Deputy Director. “This demonstrates the extraordinary importance of federal OCS production in the Gulf of Mexico to the U.S. economy.”

Some observers questioned why producers would be evacuating such a large area and shutting in so much gas and oil because of a measly tropical storm when many modern platforms were built to withstand hurricane-force winds.

“Really it’s a judgment about the safety of the employees,” said a spokesman for a major producer. “What you don’t want to happen is for this storm to strengthen and get caught being unable to get people off of platforms. Helicopters don’t fly in 40 mph winds, and no one wants to be on a ship in 15-foot waves, let alone the 21-foot waves this storm is producing.”

“It’s better to err on the side of safety,” said BP spokesman Larry Thomas. BP had been in the process of removing offshore personnel since Sept. 20.

Regarding the need for widespread production curtailments, one observer noted that many platforms that are remotely operated are handled from other platforms in the Gulf or from operations in New Orleans, which also had been evacuated. The storm’s broad swath and unpredictable direction and strength left many producers with no choice but to shut down and take cover.

Tap Runs Dry on Pipelines

The following pipelines reported their share of the production curtailments at the height of the storm: Gulf South Pipeline, 800 MMcf/d; Columbia Gulf Transmission, 550 MMcf/d; Florida Gas, 600 MMcf/d; Transcontinental Gas Pipe Line, 1.4 Bcf/d; TGT, 200 MMcf/d; Florida Gas, 600 MMcf/d; Texas Eastern, 1 Bcf/d; CMS Energy, 650 MMcf/d on Trunkline’s Terrebonne gathering system and 450 MMcf/d on the Sea Robin system; and Destin, 850 MMcf/d.

A Gulf Coast marketer who reported dealing with supply cuts on Sonat, ANR, FGT and Trunkline said there were few transactions taking place on Gulf Coast pipelines during the worst of the storm. “You would think there would be a lot of activity as people scramble around for gas, but I have seen few sellers and even fewer buyers.” Meanwhile, however, market points in the Northeast were seeing significantly greater activity. The start of October bidweek was pretty much neglected because of the storm shakeup. “This was one of the slowest bidweek days I’ve ever seen,” a producer said. “So many producers were worried about their Gulf of Mexico supplies” that they didn’t have time to think about next-month business, he added.

Isidore weakened to a tropical depression after making landfall early Thursday morning at Grand Isle, LA, and all tropical storm warnings were discontinued that afternoon. At 4 p.m. CDT the center of Isidore was about 50 miles north-northeast of Jackson, MS. Meanwhile, former Tropical Storm Lili also dissipated into a tropical depression in the central Caribbean Sea (although it regained tropical storm status on Friday), and Hurricane Kyle remained far out in the Atlantic.

Anadarko, BP and ConocoPhillips were among producers that reported returning workers to offshore platforms on Thursday. An Anadarko spokesperson said, “Essentially all of our significant assets will be manned this afternoon (Thursday) and back on-line with full production by sometime [Friday].”

Pipeline representatives said they expected a small amount of formerly shut-in supplies to begin trickling in Thursday night, with the pace likely to quicken substantially Friday. A Transco representative said it would be a gradual process, but the pipeline did not have any service disruptions during the storm. “We just had to ‘tighten our belt’ and take gas out of storage” as necessary, she said. A Columbia Gulf spokesman said it still had 550 MMcf/d offline Thursday, “but it appears some could be starting to return tonight, and I think by the weekend we’ll be in pretty good shape again.” Texas Eastern had been thinking some West Louisiana pool gas, which was out of the storm’s main track, might be coming back Thursday afternoon, but any new flows were “very incremental” and nothing substantial, according to a spokeswoman. By Friday, however, Tetco said supplies were steadily rising.

The MMS said Friday that based on responses from 31 companies it determined that about 6.4 Bcf/d of gas production and 1.1 million b/d of oil remained curtailed and 241 platforms and 31 rigs were still evacuated.

Some facilities could take several days to reman and restart. Columbia Gulf and Tetco advised shippers that the Venice Plant near the southeastern tip of Louisiana would not restart processing operations until Saturday at the earliest, and thus supplies upstream of the plant were unlikely to meet the quality specs of either pipe until then.

Williams said Friday that only 400 MMcf/d remained curtailed upstream of the 7 Bcf/d Transco system and only 150 MMcf/d remained shut in upstream of Texas Gas. Most Gulf Coast traders said they expected supply to be nearly back to normal for Saturday’s flow.

Although pipes and plants were expected to be back to normal by this week, the storm clearly could have a longer term impact on the market. Several observers noted that the next storage report could show a substantial bite has been taken out of the year-on-year storage surplus because the storm outages forced pipelines and suppliers to make storage withdrawals during the week to meet firm obligations.

The Energy Information Administration (EIA) said 67 Bcf of working gas was injected into storage last week, slightly under prior estimates centering around 70 Bcf. Working gas in storage rose to 2,991 Bcf as of Sept. 20. Stocks were 134 Bcf higher than at the end of the same week last year and 299 Bcf above the five-year average of 2,692 Bcf. In the East Region, stocks were 86 Bcf above the five-year average following net injections of 45 Bcf. Stocks in the Producing Region were 151 Bcf above the five-year average of 709 Bcf after a net injection of 17 Bcf. Stocks in the West Region were 61 Bcf above the five-year average after a net addition of 5 Bcf.

Nymex had a positive response to the 67 Bcf weekly storage injection, rising 19.2 cents to $3.686 on the final day of October futures trading after having collapsed to the high $3.40s on Wednesday when the National Weather Service determined that Isidore probably would not develop into a hurricane. Although Isidore didn’t fully realize its potential, it packed far more of a wallop than many expected.

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