OIL INDUSTRY INFRASTRUCTURE IN SHAMBLES
The following was just recently posted in RIGZONE - an industry oil industry service & information center. The estimate of damage - some 3 times hat of Ivan is exactly what I told my clients was coming last week. Normally, this would have led to $80/bbl oil. But through the magic of having 2 very influential oilmen in the Whitehouse -- about the only really smart thing they did was listen and act immediately to what Oil industry execs told them to do. Had they not waived a number of legal restrictions immediately -- many U.S. cities east of the Rockies would be running out of gasoline completely this week.
The list of completely off-line refineries is Staggering. Another 'moderate storm' could easily push us into a major energy crisis unlike anything seen in our history -- with the economic impact to the national too obvious.
Right now we have 4 active systems in the topics -- Hurricane Maria - Major Hurricane in the north Atlantic -- moving north but a major threat to the north Atlantic shipping lanes -- you know, the ones that will be brings dozens of tankers of gasoline to the U.S. over the next 2 weeks. Tropical storm Nate that formed today well north of the SE Bahamas - but bears close watching. It SHOULD move out to sea in a few days. A disturbance along the Florida east coast that may just drift into the eastern Gulf of Mexico in 2-3days - and a huge tropical wave with a circulation field that is truly enormous. THAT system is currently filled with dust laden, dry Saharan layer air -- but in 3 or 4 days that dry/dusty air may get mixed out - and we could be looking at a significant storm development by the next weekend.
Depending on the comments that this Diary gets --I will provide more detailed infor on the current state of the oil infrastructure - but right now, it appears 4 major refineries - making up to 5% of the U.s. daily refinery production -- will be offline for MONTHS. Advising clients that currnt short positions may no be risky gievn the precarious position of the supply/demand curve - especially for distillates. This is the time of year when rapid building of heating oil and injections of NG should be moving at a rapid pace. And just the oppositie is happening.
Another storm - even a small one -- could lead to major fuel shortages that we would not have enough time to recover from. Only a massive world wide effort to help us would prevent the unthinkable -- the worst energy shortage in history. And even then, $80 oil and $6/gal gasoline would be a certainty. There simply CANNOT be any more storms in the gulf this year.
Steve Gregory
WeatherInsite
The Rigozone article follows:
http://www.rigzone.com/news/article.asp?a_id=25005
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Damage to oil platforms and pipelines in the Gulf of Mexico caused by Hurricane Katrina could be three times as bad as when Hurricane Ivan struck the area last year, warned international energy consultancy Wood Mackenzie.
Eugene Kim, senior energy analyst at WoodMac's Houston office said efforts to inspect damage to offshore installations and subsea pipelines will be severely hampered by the mass destruction of onshore communication, power networks and lack of crew willing to leave their families to go offshore.
WoodMac is finalizing a report on the impact of oil and gas supply interruptions on commodity prices and Kim said preliminary estimates are that crude oil prices will be "upper dollars-60" per barrel in the near-term and crude gas prices will jump from around dollars-10 currently to dollars-12-dollars-14 by winter.
Energy prices, which surged in advance of Hurricane Katrina, eased last Friday after the International Energy Agency (IEA) said it would release emergency gasoline stocks from European refiners. The IEA said members will release two million barrels per day for 30 days and the US will release 30 million barrels of crude oil from the US government's emergency stockpile.
The US market has lost about 42 million gallons of gasoline production daily, equal to 10-per cent of the nation's normal consumption, according to government estimates.
Kim said: "We expect a definite negative impact on prices, not only from Hurricane Katrina, but because we're heading into high winter demand for heating oil with tight supplies."
The American Petroleum Institute estimates that about 58 oil and gas platforms and drilling rigs in the Gulf of Mexico have been damaged, including Shell's Mars deepwater platform.
"Mars is a much larger producer than the fields which were damaged by Hurricane Ivan, " Kim said. He warned that damage estimates so far are based on purely visual assessments and the true extent of damage may be far greater. "Only when you reman the platforms and push the start button will you know the damage level. It's early estimates, but the numbers look quite staggering . . . these are three times greater than with Hurricane Ivan."
Aberdeen-based Wood Group, which has a significant presence in the Gulf of Mexico and Louisiana, is still assessing Katrina's impact.
A spokeswoman said offshore personnel had been evacuated prior to the storm and efforts to account for all employees were continuing. "The safety of personnel and their families is our highest priority, "she said, adding that some of the facilities had been affected by loss of power and flooding.
Stagecoach has sent a group of 12 coaches and 24 drivers from its Coach USA division to help evacuate some of the thousands of people who have been made homeless by the disaster. Coach USA staff have donated bottled water, food items and toiletries, which are being loaded on to the vehicles.