The Gulf of Mexico production industry in the vicinity of Hurricane Ivan’s path took a significant beating, the Minerals Management Service (MMS) reported on Friday. News of production platform damage, platforms and rigs missing and presumed sunk, and pipelines leaking and on fire sent the gas futures market skyward Friday, a day after many apparently had written off the storm.
Gas futures prices soared 39 cents Friday to $5.11 and cash prices at locations in the Midcontinent, Midwest, Northeast, Texas and Gulf Coast moved up about 10-15 cents. The market’s sudden reaction Friday came a day after prices at many cash points had fallen 10-60 cents and near-month futures had dropped a dime to $4.72.
The MMS said Friday that preliminary assessments indicate no fatalities, injuries or significant pollution. However, there was significant damage to facilities and infrastructure that were in Ivan’s path:
Considering there are 4,000 platforms on the Outer Continental Shelf, 33 thousand miles of pipeline and about 30,000 workers, the impact seems minor, but it may take more than a week to resume normal operations. Furthermore, cumulative gas production shut ins from Ivan totaled 23 Bcf on Friday and were still rising. About 5.12 Bcf/d of gas and 1.23 million bbl/d of oil remained shut in on Friday, MMS said, and 217 platforms and 19 rigs were still evacuated. About 5.2 million bbl of oil was shut in during the week.
El Paso’s Southern Natural Gas declared a force majeure late Thursday upstream of its Toca, LA, compressor station, affecting about 65 or more gas supply receipt points. Some of those points were allowed to resume flow on Friday but many more remained shut in. “There are early indications that Southern Natural and interconnecting third parties have sustained damage to their facilities upstream of Southern’s Toca compressor station due to Hurricane Ivan,” the pipeline said in a bulletin board notice. The Toca compressor station is located just onshore in the southern Louisiana supply area. The full extent of facilities damaged was not yet known on Friday.
Tennessee Gas Pipeline reported that it was sending divers out to determine the extent of the damage to the Bluewater pipeline system, offshore Louisiana, which suffered a leak on the 26-inch diameter line of its east leg. The MMS said it received a report of a surface fire near Bluewater at Ship Shoal 158 from Newfield Exploration, but Tennessee was not able to confirm the report.
Tennessee said the leak was between Ship Shoal 198 and Cocodrie, Station 523. It declared a force majeure on the line on Friday. “Operators and producers located on the 523M-2300 line from Eugene Island 365 to Ship Shoal 198, and operators and producers located between Ship Shoal 198 and Cocodrie need to remain shut in,” the company said. “At this time operators and producers located on the Blue Water Header from Vermillion 245 to Ship Shoal 198 can submit nominations and may begin flowing gas.” However, about 320 MMcf/d of capacity was expected to remain out of service on the east leg until the leak can be repaired. Tennessee also declared a force majeure for the Bay Marchand 5 Central Gathering structure due to damage caused by the hurricane.
Meanwhile, Florida Gas Transmission said it was able to repair compressor station 12 near Munson, FL, Thursday night in time for Friday deliveries. On Thursday afternoon, the pipeline was expecting to be without about 400,000-500,000 Dth/d of firm transportation capacity to the market area because high winds from Ivan had damaged the compressor. Florida experienced relatively strong demand all week following service repairs after Hurricane Frances and the Gulf supply shut-ins had caused imbalances on FGT and several days of overage alerts with 2% tolerances. The situation also triggered some of the largest price spikes during the week.
A Williams spokeswoman said Friday that it was still too early to assess the extent of the damage, if any, of the Transcontinental Gas Pipe Line or Gulfstream Natural Gas facilities near Mobile Bay. Gulfstream was still without 600 MMcf/d. However supply started returning to Transco, said spokeswoman Gina Johnson. She said shut-ins totaled only 500 MMcf/d on Friday compared to 1 Bcf/d on Thursday and 1.3 Bcf/d on Wednesday.
“Supply is definitely coming back on line because all the western and central Gulf production was shut down as a precaution. The major brunt of the storm missed those areas so they were starting to bring production back on Friday,” said a producer.
Noble Energy may be among the worst impacted by the storm. On Friday the company reported that it still had not found three of its production platforms in the Main Pass area and another of its Main Pass platforms had sustained damage. The missing platforms are Main Pass 293A, Main Pass 305C and Main Pass 306E. The damaged platform is Main Pass 305B. Prior to shut-in for Hurricane Ivan, Noble’s net production at the Main Pass field was 3,400 boe/d.
“We weren’t able to even start mobilizing to go look looking for them until sun-up Friday morning,” said Noble Energy’s spokesman Greg Panagos. “We do have dive vessels going out there right now.” He added that the company plans on doing a type of sonar survey of the area that will paint a 3D picture of what is happening underwater to try to find the missing platforms and to explain what happened. “In a broader sense, we are undergoing a two-step process. The first is to assess the damage and the second is to figure out how we get as much back as possible.” As of the end of business Friday, Panagos said the three platforms were still missing. He added that the platforms might not be found until Saturday at the earliest.
The entire Main Pass field was shut in prior to the arrival of Ivan and all personnel were evacuated.
Ensco International said its Ensco 64 jackup rig, which was in the direct path of Ivan, was blown about 40 miles south of its original drilling location in Main Pass Block 280 and had sustained some damage. The rig was drilling for Dominion Exploration and Production. Ensco also said it received a report that the helideck was damaged on its Ensco 25 platform.
Two Diamond Offshore rigs that were knocked off location by Hurricane Ivan and floated some distance were also under control Friday. Diamond Offshore listed the rigs as the Ocean America, which is working for Mariner in Viosca Knoll 917, and the Ocean Star, which is working for Kerr McGee.
“We have crews on both,” said Diamond Offshore spokesman Les Van Dyke. “We hooked up to the Ocean Star a little before midnight Thursday night. We are still assessing damage, but there is no major damage apparent on either rig. The Ocean America did break its moorings, but it did not move very far.” Van Dyke added that the Star was about a dozen miles from its location and the America was only a few miles removed.
The Ocean America is a dynamically positioned self-propelled rig, so it can hold on station by itself, he said. “We will probably move both rigs to a location to reattach anchor chains and wire. This is normally not a lengthy procedure. It is more a matter of days than weeks before we will return them to location.”
Another rig, Transocean Inc.’s semisubmersible Deepwater Nautilus, drilling for Shell, had drifted 70 miles from its drilling location but was secured Friday morning.
Nexen Inc. said Friday that it had started restoring its production and that its facilities sustained no major damage. About 45,000 boe/d was shut in, Nexen said. All of that should be flowing by Saturday.
Kerr-McGee Corp. said it returned workers to its operations in the central Gulf and restarted production from its Red Hawk platform offshore Louisiana. However, the company said Friday that it was still assessing the situation in the eastern Gulf.
While producers and pipelines continue to assess the damage and make repairs, the market apparently has plenty of time to spare. Despite the price increases — other than a few slight declines in the West — on Friday, marketers and traders reported little in the way of incremental market demand.
“We’re seeing only a little bit of demand in the market area. We may see even more strength come Monday with all these damage reports, but then again we have to have somewhere to sell our gas,” said a producer.
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