With 80% of oil production and 66% of natural gas production still offline in the Gulf of Mexico, one begins to wonder what's taking so long to get things cranked up again. As the first chilly winds of October strip the leaves from the Aspen trees (sorry, couldn't help it), I figured it was time for a little reality check on the status of gasoline and natural gas production.
To my dismay, the news isn't as encouraging as I had hoped.
For example, take a gander at this
article that appeared in the Oil&Gas Journal quoting Houston-based Wood Mackenzie, a research and consulting company for the energy industry.
"Every link in the energy chain--upstream, processing, pipelines, and the support infrastructure maintaining them--was affected by Hurricanes Katrina and Rita..."
Sounds bad, but we kind of knew that, right? We've heard a lot about the "shut in" statistics since the hurricanes. Common sense tells you that inspection and repair of drilling structures and pipelines is underway. So we can expect things to return to normal in a few weeks, or a couple of months at most, right?
Ah, not so fast.
For a better sense of the pace of inspection and repair, we go now to Minerals Management Services, part of the U.S. Department of the Interior that manages offshore energy and minerals and oversees exploration and drilling.
On its Website, a quick dip into the 9/27/05 "Notice to Lessees and Operators" (NTL) reveals the timetable for inspections and repairs for structures and pipelines affected by Hurricane Katrina.
For starters, MMS has instructed drilling companies to conduct a two-part inspection of all Gulf drilling structures east of about 91 degrees longitude - a swath of the Gulf that covers many, many hundreds, of not thousands, of rigs and platforms.
The two-part inspection includes:
- a visual inspection of all above-water structures, and
- a general inspection of underwater structural components by divers or remote-operated-vehicles (ROVs).
How long will all of this take?
Well, the MMS says all inspections must be done by May, 2006. Yes, that's 8 months from now. All repairs must be completed 9 months from now -- by June of 2006.
But at least the pipelines are okay, right? Haven't we heard that they escaped major damage? Here's another directive included in the NLO issued by MMS,
"because of the numerous reports of severe damage to Outer Continental Shelf (OCS) pipelines along the path of Hurricane Katrina, the MMS...hereby directs you to conduct the following inspections for facilities located east of 91 degrees 30 minutes longitude:
- Pipeline Tie-in and Crossing Inspections
- Pipeline Riser Inspections
- Pipeline Steel Catenary Riser Inspections
Again, all of these inspections must be done by divers or ROVs, and certainly involve hundreds, if not thousands of inspection points.
And this is just for Katrina inspections and repairs. No timeline for inspecting and repairing damage from Hurricane Rita has yet been announced by the MMS.
Since Rita blew through the Gulf to the west of Katrina's path, many additional platforms and pipelines were in harm's way. So, if MMS follows the same pattern as it did for Katrina, it will probably issue an NTL for Rita inspections and repairs in late October (about one month after Rita made landfall). If MMS allots the same time for inspection and repairs as it did for Katrina, then that Rita repair process should be complete by July, 2006.
That might be a big if, however. Logic tells you that there are a finite number of divers and ROVs to assess the damage, as well as a finite number of companies that can perform the repair work. I have no idea what kind of limits that could impose recovery speed.
I guess the moral of the story is to be aware that it's going to take quite a while for energy supplies and prices to stabilize. Oil and gasoline will be the first to rebound, because we can more easily make up any shortfalls through existing relationships with other oil producers and by accessing our own petroleum reserves. It's the natural gas shortages and sky-high prices that are likely to be the big story this winter for a number of reasons. But that's a topic for another day.
In the meantime, break out the sweaters and split a few extra cords of firewood for the woodstove. Then pour yourself a hot toddy and say a prayer for those brave souls diving into the depths of the Gulf to get production up and running again.