As the federal government and energy industry prepare for the start of hurricane season, a Mineral Management Service (MMS) official said Wednesday that up to 20% of the existing moored rig fleet will not be able to operate in all areas of the Gulf of Mexico during the 2007 hurricane months, a restriction that could impact oil and natural gas production there.

“In terms of the areas in the Central Gulf, where the hurricanes are the strongest, I would say up to about 20% of the existing moored…fleet would have some restrictions and may not be able to operate [there]” during hurricane season, said Bud Danenberg, chief of offshore regulatory programs at the Interior Department agency.

The restrictions could involve a “fairly substantial number of rigs,” which could delay some production, he said during a joint briefing held by representatives from the MMS, Department of Energy, U.S. Coast Guard and American Petroleum Institute (API). Forecasters have predicted an active season, with as many as three to five major hurricanes.

“All the [moored] drilling rigs that we wanted to see upgraded have been upgraded typically by adding [more] mooring lines,” Danenberg said. But “that doesn’t mean that they can operate everywhere in the Gulf during a hurricane season,” which begins Friday and runs through November. He noted that some of these rigs might only be permitted to operate in the western Gulf, “where the conditions are a little better typically.”

MMS Deputy Director Walter Cruickshank estimated that “40% or so” of the companies operating in the Gulf had failed to comply with last year’s guidelines calling for upgrades to rigs. “A lot of folks made their investment decisions not to upgrade all of their rigs. If they want to operate in the Gulf during the hurricane season, they’re going to have to meet those standards,” he said.

Since Hurricanes Katrina and Rita in 2005, which caused “unprecedented damage” to energy infrastructure along the Gulf Coast, Cruickshank said MMS has been working with API and other industry groups to upgrade the best standards and practices for facilities operating in the Gulf.

For the upcoming hurricane season, the agency has recommended that platforms and rigs install global positioning systems and black box information systems, as well as increase the number of mooring lines on energy structures. In most cases, Cruickshank said the required number of mooring lines has been increased by 50% for mobile drilling units to 12 from eight and in some cases by 100% to 16. The MMS also has issued guidance on the use of synthetic fiber ropes for offshore mooring applications, he noted. And it has recommended improvements in the tie-down procedures to secure equipment on topside facilities.

The cost of meeting these higher standards will be “substantial” for industry, Danenberg said, possibly running into the billions of dollars. He noted that new platforms are being designed with higher deck elevations (up to 24 feet higher than the existing standard); jackup rigs are operating with a higher air gap between the water level and hull; and companies are purchasing more boats.

At the MMS, the agency has relocated its computer servers from New Orleans to Denver to avoid any disruptions during hurricanes, and it has installed independent communications systems at each of its five district offices in the Gulf region, according to Cruickshank. He said the MMS will launch a comprehensive website on June 1 that will provide information on hurricane activity and its impact on energy production.

“This job will never be complete,” but “we can say with confidence that we are better prepared today than we were two years ago,” he told reporters in Washington, DC. “We would hope” that less production would be disrupted if a hurricane should strike, Cruickshank said.

If one or more hurricanes enters the Gulf this summer, “there’s a better likelihood that production could be restored faster” because pipelines have built additional interconnections to reroute supply and larger platforms have arranged alternatives as well, said Chris Oynes, associate director for Offshore Minerals Management at MMS. The agency estimates current daily Gulf oil production at 1.3 billion barrels and natural gas output at 7.7 Bcf/d.

API President Red Cavaney reported that pipelines have installed more onsite backup electric power capacity and have improved their communication systems. “Our industry is…preparing for all eventualities,” but “let us all hope that we have another quiet year on the hurricane front just as we did last year.”

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