Sam Fletcher
Senior Writer
HOUSTON, Sept. 17 -- Crude futures prices climbed Friday amid initial reports of minimal damage by Hurricane Ivan to oil and natural gas facilities in the Gulf of Mexico, while traders worried that flooding and power outages would delay restart of Gulf Coast refineries idled by the storm.
Ivan was downgraded to a tropical depression late Thursday after sweeping into northern Alabama. Still, more than 1.6 million people in the storm's wake in Florida, Alabama, Mississippi, Georgia, and Louisiana were reported without power early Friday. President George W. Bush declared major disaster areas in Mississippi, Alabama, and Louisiana, making federal funding and aid available to storm victims.
Little offshore damage apparent
Initial reports indicated relatively little damage to offshore oil and gas facilities from the storm, but inspections and startups of rigs and platforms are expected to continue through the weekend.
Newfield Exploration Co., Houston, said Friday workers had boarded most of its offshore platforms west of the Mississippi River and found no major structural damage. Aerial inspection of its facilities in the eastern gulf revealed no problems. Most of Newfield's platforms in the central gulf resumed production Thursday, and its eastern gulf operations are expected to be reactivated through the weekend, officials said.
However, Noble Energy Inc., Houston, said a partial aerial survey revealed three of its operated production platforms were missing from Main Pass 293A, Main Pass 305C, and Main Pass 306E and that one platform was damaged in Main Pass 305B. The company assembled a team to assess the damage, identify any environmental impacts, and develop a repair plan. It has not yet determined the financial impact of Hurricane Ivan or its impact on production. Prior to shut-in, net production at the Main Pass field was 3,400 b/d of oil equivalent, said company officials.
Diamond Offshore Drilling Inc., Houston, said its Ocean Star semisubmersible rig was found 12 miles from its pre-storm location in 2,423 ft of water in the Viosca Knoll area of the gulf. However, aerial inspection of the Ocean Star and four other Diamond Offshore rigs that were in the path of the hurricane revealed no apparent damage or pollution. Workers plan to board the Ocean Star to restore power and assess its condition prior to moving it back to its operating location.
Transocean Inc., Houston, said its Deepwater Nautilus semisubmersible was located some 70 miles northeast of its assigned work site in the gulf. Aerial inspection did not reveal any damage to the rig, but a complete assessment of its condition is expected as soon as personnel can board the unit.
Ensco International Inc., Dallas, said its Ensco 64 jack up rig sustained damage but is afloat some 80 miles southeast of Venice, La., and 40 miles south of its previous drilling location in Main Pass 280. Workers will be deployed to assess damage and secure the rig as soon as practicable. The rig is insured for $65 million, with $5 million deductible, officials said. The company said it also received a report of damage to the helideck on its Ensco 25 platform rig adjacent to the storm's path.
Meanwhile, Tropical Storm Jeanne, downgraded from its previous hurricane strength, was lashing the Dominican Republic early Friday, moving north-northwest at 6 mph. Although that storm is not expected to enter the Gulf of Mexico, traders fear it could delay for some days imports of crude, petroleum products, and LNG via the US Gulf Coast.
Energy prices
The October contract for benchmark US light, sweet crudes bumped up by 30¢ to $43.88/bbl Thursday on the New York Mercantile Exchange, while the November contract climbed by 41¢ to $43.92/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was up by 31¢ to $43.90/bbl.
Heating oil for October delivery escalated by 2.71¢ to $1.23/gal Thursday on NYMEX. Gasoline for the same month increased by 1.21¢ to $1.23/gal. However, the October natural gas contract continued to fall, down by 10.5¢ to $4.72/Mcf on NYMEX.
"The drop in [natural gas futures] prices at the height of the hurricane shut-ins and again the day after speaks volumes about the real direction this market wants to go," said analysts Friday at Enerfax Daily. "But prices recovered nearly 20¢[/Mcf] from intraday lows late in [Thursday's] session as rumors of damaged rigs and pipelines swirled," they said. Analysts noted that the oil and gas production that was shut in ahead of Hurricane Ivan is expected to be brought quickly back online.
In London, the November contract for North Sea Brent crude was up by 40¢ to $40.75/bbl Thursday on the International Petroleum Exchange. Gas oil for October delivery lost $12.25 to $380.75/tonne. The October natural gas contract was down by 2.6¢ to the equivalent of $5.11/Mcf on IPE.
The average price for the Organization of Petroleum Exporting Countries' basket of seven benchmark crudes declined by 58¢ to $38.44/bbl Thursday.
Contact Sam Fletcher at [email protected]
