Damn you, Katrina!

Gulf offshore oil support industry remains in shambles

As the energy industry attempts to restart its platforms, pumps and pipelines in the Gulf of Mexico, efforts are being hampered by the severe damage to the coastal facilities that serve as the staging area for offshore operations. The Louisiana coast is home to a huge concentration of service companies that bore the brunt of Hurricane Katrina's landfall last month. The assessment of offshore facilities is still a work in progress, but industry officials said it will take considerably longer to recover from Katrina than it did a year ago after Ivan, which skirted the eastern edge of the Gulf energy fields. By contrast, Katrina barrelled directly through a region of the Gulf crammed with producing platforms and then ploughed into the coastal area south of New Orleans, leaving boats, barges, hangars and helicopter pads destroyed. Therefore, it will need to find new locations to perform tasks. Nearly half of oil and natural gas normally produced in the Gulf still remains idled, according to the federal Minerals Management Service, as service firms struggle to right themselves and help their customers assess and repair damage. The same amount of time after Ivan's landfall, only one-quarter of production was still shut down. But the effects of Ivan lingered. In February, five months after Ivan's impact, 4% of daily oil and gas production was still idled. Katrina's destruction appears likely to linger even longer. “There is a mass logistical nightmare out there right now” in the offshore support industry, said Eugene Kim, a senior analyst with international energy consultant Wood Mackenzie. “In my opinion, that's as crucial as the platforms and pipelines and processing plants being mechanically damaged.”

What's more, the permanent damage this time could be greater. The US Coast Guard reports 52 platforms were sunk by Katrina, compared with only seven by Ivan. Many of these platforms won't be rebuilt, meaning the pockets of oil and gas they were tapping could end up out of reach. Katrina also appears to have permanently washed away part of a crucial peninsula used by oil companies as a staging area for work in the Gulf of Mexico, slowing down repair work and raising questions about where to rebuild. The storm effectively turned the course of the Mississippi River westward near Venice, LA, and took part of the town with it, said Simone Theriot Maloz, executive director of Restore or Retreat, a local nonprofit group that studies the delta. The river's shift would further complicate oil-industry efforts to restore exploration and production from the Gulf of Mexico.
(Globe and Mail 050912)