Oil and gas exploration and production is getting back to normal after successive hurricanes pounded the offshore petroleum infrastructure and adjacent onshore facilities in September. Hurricane Gustav struck southeastern Louisiana on Sept. 1, and less than two weeks later on Sept. 13, Hurricane Ike made landfall near the eastern tip of Galveston Island and moved inland over the Greater Houston area. Both storms were Category 2 hurricanes at the time they came ashore.
Offshore oil and gas operators in the Gulf of Mexico evacuated platforms and rigs, and shut in more than 90% of production. The Minerals Management Service (MMS) estimated that about 97.5% of oil production in the gulf was shut-in and 94.4% of the natural gas production shut-in in advance of Ike.
Personnel were evacuated from 596 production platforms and 101 rigs.
Curiously, oil and natural gas prices continued to plummet even though a significant portion of the nation’s petroleum production was shut-in. This marked the first time in memory that prices declined at the same time a hurricane was destroying vital infrastructure and all but eliminating production from the Gulf.
Production from the Gulf of Mexico accounts for 25% of the oil produced domestically and 15% of the natural gas produced domestically.
Unlike Gustav, which sped through the Gulf of Mexico at nearly 18 miles per hour, Ike was characterized by the National Weather Service as “big, slow, and dangerous.” A huge storm with a circulation that took up most of the Gulf in satellite images, Ike lumbered along at 10 mph, bringing with it a huge storm surge.
Offshore platforms as far as 200 miles from Ike’s path had to battle hurricane-force winds and withstand 20- to 30-foot waves for as long as 20 hours. By contrast, Gustav’s hurricane-force winds covered an area 120 miles wide at its widest, just 60% of Ike’s width.
As of mid-October, 54 of the 3,800 offshore oil and gas production platforms in the Gulf of Mexico have been confirmed as destroyed. These structures range in size from single-well caissons in water depths of 10 feet to a large complex facility in water depth greater than 7,000 feet. These platforms produced a total of 13,300 barrels of oil per day and 90 million cubic feet of gas per day. At this time, it is not known if any of the destroyed platforms will be rebuilt by any operator.
Additional reports show that 60 platforms received moderate damage taking one to three months before production can be restored. Damage that would be considered moderate may include major topside damage to critical process equipment, such as the platform’s compressor or damaged risers or flex joints where pipelines connect to the platforms.
MMS is still assessing damage, and some platforms originally designated as having extensive damage may be determined to be destroyed.
Pipeline assessments
To date, MMS has received reports of one oil pipeline system and eight gas transmission pipeline systems with damage. The analysis of their impact on resuming production is continuing. Oil and gas operators and pipeline owners are still testing and inspecting other pipeline systems to evaluate the full extent of any damage. Considering the large impacted area, it will take some time to complete the inspections.
There have been no reports of oil released in the Gulf of Mexico federal waters impacting the shoreline or affecting birds and wildlife.
In an Oct. 23 update, MMS reported that most platforms have been reboarded and damage is being assessed. There are no longer any evacuated rigs in the Gulf.
From operators’ reports, it is estimated that about 32.3% of the oil production in the Gulf remained shut-in. As of June 2008, estimated oil production from the Gulf of Mexico is 1.3 million barrels of oil per day. It is also estimated that approximately 34.5% of the natural gas production in the Gulf remains shut-in. As of June 2008, estimated natural gas production from the Gulf of Mexico was 7.0 billion cubic feet of gas per day. Since that time, gas production from the Independence Hub facility has increased, and current gas production is now estimated at 7.4 bcf/day.
As part of the evacuation process, personnel activated the shut-in procedure, which can also be accomplished from a remote location. This involves closing the safety valves located below the surface of the ocean to prevent the release of oil or gas.
During Hurricanes Katrina and Rita in 2005, the shut-in valves functioned 100% of the time, efficiently closing in production from wells and resulting in no major spills from the Outer Continental Shelf (OCS). Shutting in oil and gas production is a standard procedure conducted by industry for safety and environmental reasons.
The OCS is a significant source of oil and gas for the nation’s energy supply. The approximately 43 million leased OCS acres generally accounts for about 15% of America’s domestic natural gas production and about 27% of domestic oil production.
US offshore areas are estimated to contain significant quantities of resources in yet-to-be-discovered fields. MMS estimates of oil and gas resources in undiscovered fields on the OCS total 86 billion barrels of oil and 420 trillion cubic feet of gas. These volumes represent about 60% of the oil and 40% of the natural gas resources estimated to be contained in remaining undiscovered fields in the United States.
