Lehman Brothers analyst Thomas Driscoll predicts that the cumulative amount of Gulf of Mexico gas production that may end up being deferred because of Hurricane Ivan could total 80-120 Bcf. There were indications on Monday that shut-in amounts could stabilized around 2.3 Bcf/d of gas and 480,000 bbl/d of oil until repairs to offshore pipelines and production facilities can be completed.

The Minerals Management Service (MMS) reported Monday that cumulative production shut-ins totaled 50.042 Bcf, which is about 1.125% of the annual gas production in the federal waters of the Gulf of Mexico. However, gas production shut-ins barely fell over the weekend and oil production shut-ins actually rose. The number of platforms and rigs evacuated remained the same at 30 and one, respectively, MMS reported.

Based on reports from 23 companies as of 11:30 a.m. CDT Monday, MMS said that 2,346.91 MMcf/d of gas production remained shut in Monday, which is only 9.5 MMcf/d less than the shut-ins reported on Friday. There actually was more oil production shut in Monday (491,698 bbl/d) than on Friday (471,469 bbl/d). Cumulative oil production shut in because of Hurricane Ivan totaled 11.3 million bbl, or about 1.9% of total annual production.

Driscoll said in a research note Monday he believes a total of 20 Bcf of gas production was deferred during the week ended Sept. 17, another 20 Bcf was shut in last week and 1-2 Bcf/d will remain shut in for the remaining five or six weeks of the gas storage injection season. However, since storage injections have been averaging 1.7 Bcf/d higher than five-year averages over the last five weeks, this may not significantly impair the industry’s ability to reach 3.2 Tcf of gas in storage by the beginning of the winter heating season. Driscoll expects a 70 Bcf weekly injection in this week’s storage report from the Energy Information Administration for the week ending Sept. 24.

In related news Monday, Forest Oil Corp. reported that about 1.2 Bcfe of its third quarter gas and oil production probably will be deferred after being shut in because of Hurricane Ivan. Forest completed an initial review of its operations in the Gulf of Mexico and determined that they were minimally impacted by the hurricane. Only a production caisson at Main Pass 98 was heavily damaged in the storm and may not be repaired. It was producing 1 MMcfe/d net, the company said.

During the height of the hurricane, Forest had 50% of its personnel evacuated and 145 MMcfe/d shut in (about 55% of its offshore Gulf of Mexico production). It currently has 30 MMcfe/d shut in (10 MMcfe/d operated and 20 MMcfe/d non-operated) because of damage to third-party pipelines and production facilities. The company estimates it will take two to three months to complete the repairs necessary to get its full production back on line. As a result, Forest estimates that for the fourth quarter of 2004, an additional 2 Bcfe of production could be deferred as a result of these repairs or delayed rig activity.

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