Hurricance Ivan’s continuing impact on Gulf of Mexico infrastructure and production was at least partly to blame for the huge run up in natural gas prices last week. Crude oil futures shot to a record high of $50.47/bbl on Tuesday in response to unrest in Nigeria, the largest African oil-producing country, and that along with expectations of a lengthy supply outage in the Gulf from hurricane damage sent November gas futures soaring to a high of $7.23 on Wednesday.

The November gas contract backtracked on Thursday and Friday (while crude hit a record settle Friday of $50.12), but sharp gains remained on the weekly futures charts. Analysts attributed the mid-week gas futures rally to short-covering by non commercial traders who were spooked by the crude markets and the possibility for lengthy Gulf supply shut ins.

Gas production shut ins due to platform and pipeline damage from Hurricane Ivan were at 2.3 Bcf/d all week, according reports from 22 production companies to the Minerals Management Service (MMS). Furthermore, several producers have reported that damage to their platforms may not be repaired until November or even December.

Forest Oil said last week that 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.

Pogo Producing Co. said about 23,000 bbl/d of its oil production and 33 MMcf/d of its gas production from the Main Pass, South Pass, West Delta and Viosca Knoll areas remain shut in. Repairs to infrastructure are under way but Pogo does not expect to restore production from most of these fields for another month. Repairs to certain of the more heavily damaged facilities, affecting about 18 MMcfe/d of Pogo’s daily production volumes, are not expected to be completed until mid-December.

The MMS said Friday that shut ins were still at 2,341 MMcf/d of gas and 490,493 bbl/d of oil, and that excludes the 3,100 bbl/d of oil production and at least 9 MMcf/d of gas production that is permanently lost due to five destroyed production platforms. The destroyed platforms include the three Noble Energy platforms that were sunk by Ivan, a Taylor Energy platform, and another production facility owned by Forest Oil, MMS’s Caryl Fagot said. Two other non-producing platforms also were destroyed by Ivan: a Main Pass gathering platform owned by El Paso’s Southern Natural Gas and a ChevronTexaco disposal well platform.

There probably are many more platforms that sustained damage due to Ivan. MMS tallied 39 manned platforms and 2 rigs that were still evacuated on Friday and likely damaged. Many other unmanned facilities also may have sustained damage. It probably will be a week or more before MMS is able to deliver a full listing, Fagot said.

Meanwhile, El Paso’s Joe Hollier said on Friday that Southern Natural still has about 43 receipt meters out of service upstream of the Toca, LA, processing plant out of a total of 70 meters in that area. Gas flows into the pipeline were still at only about 340 MMcf/d on Friday from 850 MMcf/d prior to Ivan’s arrival.

Tennessee Gas Pipeline also reported ongoing repairs to a leak on the 26-inch diameter line of its Bluewater pipeline system (owned jointly with Columbia Gas). One producer also remains shut in on the 36-inch line on Bluewater for a total impact into Tennessee of about 195 MMcf/d of supply, according to Hollier. However, Tennessee was receiving 1,090 MMcf/d from the Gulf prior to Ivan and was only receiving 670 MMcf/d on Friday.

Transcontinental Gas Pipe Line and Gulfstream apparently are close to normal flows now, but a Williams spokesman reported some lingering deepwater production shut ins upstream of Transco.

MMS said Friday that cumulative gas production shut ins since Sept. 11 now total 60.182 Bcf, or about 1.4% of annual Gulf of Mexico gas production, which is 4.45 Tcf. Cumulative oil production shut ins stand at 11.8 million bbl, or 1.2% of annual oil production from the Gulf (605 million bbl).

Lehman Brothers analyst Thomas Driscoll last week predicted that by the time repairs are completed to Gulf of Mexico infrastructure cumulative shut ins probably will reach 80-120 Bcf.

Shut ins had some impact on the storage injection number in last week’s storage report by the Energy Information Administration. The EIA reported a 69 Bcf injection for the week ending Sept. 24. It was on the low end of market expectations but was not far from historical average injections for the week and it pushed working gas levels over the important 3 Tcf mark. Working gas levels in storage at 3,011 Bcf are still 183 Bcf above the five-year average and 191 Bcf above levels at the same time last year.

But he added, “Given that storage levels are currently nearly 200 Bcf above five-year averages; prices could soften again in the near term. However, we expect the arrival of the winter heating season will eventually lead to higher gas prices.”

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