Early progress reported as industry begins recovery from Hurricane Ike

The US oil and gas industry reported early progress as it began to recover from damages caused by Hurricane Ike.

The US oil and gas industry reported early progress as it began to recover from damages caused by Hurricane Ike.

"Clearly, we have experienced damage to a number of our facilities. However, it appears to be less than that associated with Hurricanes Katrina and Rita in 2005," American Petroleum Institute President Red Cavaney said in an afternoon briefing.

Fourteen refineries in Texas and Louisiana remained shut down as of 9 a.m. EDT on Sept. 15, the US Department of Energy said. But the installations apparently suffered minimal damage and companies are preparing to restart operations, it added.

Valero Energy Corp. reported no significant damage to its refineries which were hit by the storm, according to DOE. It said that the independent refiner-marketer's Houston plant has some electricity but its Texas City and Port Arthur refineries still are without power.

DOE said that Shell Oil Co. is still assessing its refineries at Deer Park, which sustained some damage and is without power, and at Port Arthur. It said that ConocoPhillips Co. has reported that its Sweeny, Tex., refinery has power and its Lake Charles, La., plant is operating at reduced rates.

Exxon Mobil Corp. said on Sept. 15 that a preliminary assessment of its Baytown, Tex., complex indicates that damage from the storm was limited. The installation has power and is developing a startup plan. Assessments are continuing at the Beaumont, Tex., plant which is without power, it added.

Products terminals reopen

"We continue to move fuel supply from non-impacted areas to meet any significant shortfall resulting from Hurricane Ike. Several of our Houston area products terminals are back in operation, and are loading fuel for emergency responders as well as supplying service stations in the impacted areas," the company said in a statement posted at its website.

Shell said that as of 7 p.m. CDT on Sept. 14, 30-40% of its company-owned retailed outlets in Houston and Beaumont were open and another 20 were expected to reopen by Sept. 15, DOE said. It said that Shell completed a safety review of its Beaumont terminal and resumed operations there the evening of Sept. 14.

Cavaney said that refiners will emphasize safety as well as speed in bringing their facilities back into operation. "Typically, a restart can take 3-5 days depending on the shutdown," he told reporters.

Crude oil and product inventories along the Gulf Coast were below normal before Ike's arrival because the area was recovering from Hurricane Gustav two weeks before, Cavaney said. "Already, there are supplies rerouted from other areas that are coming into the region," he said.

He said that API has received preliminary reports of two mobile drilling rigs being set adrift, one jackup which is missing and presumed sunk, and another jackup which was heavily damaged. "We have seen no evidence of leaks from platforms where the shutoff valves apparently worked, as they did with Katrina and Rita," he said.

Nearly all of the oil production and 93.8% of the gas production in the Gulf of Mexico remains shut in, the US Minerals Management Service said on Sept. 15. It estimated current daily production levels at 1.3 million bbl of oil and 7.4 billion cubic feet of gas.

Oil, product pipelines

Crude oil pipelines have not restarted, Cavaney said. "Right now, pipelines are trying to source all available crude and products," he indicated.

The US Pipeline and Hazardous Materials Safety Administration has not received reports of major pipeline problems, a spokeswoman for the US Department of Transportation agency told OGJ on Sept. 15. She said that the emphasis prior to the hurricanes was on working with operators to make sure backup power generation was available.

"For the most part, we've had a lot of encouraging news. The restoration efforts are moving ahead. Some pipelines have already resumed operations at reduced capacity," she said.

DOE reported that as of 7:15 p.m. EDT on Sept. 15, the Colonial Pipeline was maintaining operations at a reduced flow and was ready to receive oil products. It reported earlier that Explorer Pipeline, which moves products north to the Chicago area, had begun to evaluate its operations to determine the extent of any damage.

DOE also said that as of 1:45 a.m. EDT on Sept. 15, the Louisiana Offshore Oil Port (LOOP) resumed unloading crude oil from tankers and was making deliveries to customers from its Clovelly storage facility.

Cavaney said that government officials as well as the oil and gas industry apparently applied lessons learned from Katrina and Rita in responding to Gustav and Ike. "The cooperation from the federal to the local level has been tremendous," he maintained.

Contact Nick Snow at nicks@pennwell.com

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