When I was a lad, in my mind's eye I pictured a vast cavern, pitch dark, full of blackgold. Above the earthen reservoir of caramelized algae, pockets of natural gas held guard, accompanied only by stalactites in their perpetual gloom. There is no wind, no light, not a whisper of sound; no change of any kind for eons ... Until, finally, a twirling metal straw pierces the subterranean ceiling ...
As a youngster when I thought about an oil well that's what came to mind: A vague vision of the oil down there like it's in some kind of big chamber, Jules Verne style. A geyser of oil shooting from the rig and drenching Jet Rink (James Dean) in the classic Texas Oil movie Giant. Neither icon is terribly accurate and the former is especially misleading.
The oil is in the formation, whatever formation that may be. There are no huge caves or spaces down there. Everything is under layers of mud, and stone, and the oil is in the rock, much like water is in between the grains of sand on a wet beach. It's high pressure hot brine, ancient sea water. Oil floating on top with pockets of gas here and there; all drenched through the interstitial spaces where the rock oozes like warm cheese. To get it out, you make an educated guess where it is using a variety of clever techniques and drill a few cores. Pick your spot and simply drill a hole down to it, you hope, leave a pipe in place, and start pumping. The overlaying strata usually helps out by forcing the oil at least partially up the pipe. And the process is more or less the same when the oil is offshore, except now the drilling and pumping gear is housed on a small, artificial island. A tiny outpost of metal and plastic surrounded by the open and at times unforgiving sea.
Some basic offshore drilling and production rigs from Left to Right: Fixed Platform, Compliant Tower, Seastar Platform, Floating Production Platform, Tension Leg Platform, Sub Sea System, and a Spar Platform. To learn more about each type see Platforms at NaturalGas.org.
There are several basic types of offshore oil production rigs. Each designed for a specific range of water depth and surface conditions. Like anything else, the more you spend the more features you get. Most offshore production in the Gulf of Mexico is located on the continental shelf where the depth allows the [Semi] Fixed Platform. But there are plenty of more expensive rigs.
Four installations owned by Royal Dutch Shell, the largest operator in the gulf, suffered extensive damage from Katrina. These included the biggest offshore facility in the region, a platform called Mars, which is expected to be out of commission for months. At its peak, Katrina caused nearly the entire gulf oil region to be shut down. A few days before it struck, oil companies closed off wells, evacuated platforms and stopped production as a safety precaution. From daily output of 1.5 million barrels a day, the region is now producing an average of 650,000 barrels a day, according to the U.S. Interior Department.
Diagram of a basic oil refinery. Crude is heated and various distillates boil off and are collected such as gasoline or heating oil. See additional correction/clarification
Once you get the crude out it has to be processed into gasoline, heating oil, diesel fuel and other petroleum distillates. In an oil refinery the crude is carefully heated--not exactly a safe process--and various substances 'frac out' in the container or Distillation Tower. Not all oil is the same. We get more gasoline from some grades, more diesel fuel or heating oil from others. Refining was already the bottleneck for US gasoline and distillate production and Katrina made that problem even more pressing. A second major hurricane hitting the Texas/LA coast has the potential to essentially shut down half of all US refinery capacity for an indeterminate period.
Refinery capacity by region. Pre-Katrina; Texas and Louisiana refineries represented almost half of all US capacity
The best case scenario is Hurricane Rita weakens and/or heads due west. If that happens a weaker storm might make landfall near Brownsville, Texas on the Mexican border. A strong Cat 3 or greater hurricane might wipe the town of South Padre Island off the map, destroy much of Brownsville, and disrupt food production in the entire Rio Grande Valley. This is a flat coastal plain where the elevation rises barely a foot per mile inland if that. That means a powerful storm surge could travel several miles inland and inundate entire communities. As bad as this would be, it wouldn't be a national emergency. If the storm turns only slightly north westerly the powerful NE quad of Rita strikes the town of Corpus Christi, pop ~300,000; including nearby coastal cities such as Rockport that figure is probably more like half a million. Corpus is also a major regional port with three primary railheads. The damage from a Cat 3 or larger would be in the multibillions.
If the storm takes the current projected path it will slam square into land just southwest of Galveston, Texas and possibly plaster Houston and nearby communities with that savage northeast quadrant. This is the busiest [foreign goods] port in the US and the second busiest by tonnage in the world. Key to this essential flow of goods is the Houston Ship Channel and Galveston Bay. Roughly a million barrels of oil, of the 20 million bbl/day the US uses flows through this port and two of the four largest refineries in the nation are located there. In addition everything from food shipments to chemicals are moved, stored, and some even made in the area. Including biological hazards.
Port Houston after Tropical Storm Allison
The last major storm to hit Houston was Tropical Storm Allison in 2001. A storm surge of a few feet, tropical force winds, and heavy rainfall produced billions of dollars in flood damage, much of it to Port of Houston infrastructure. And Allison was a gentle summer shower compared to a Cat 3 or 4 Hurricane (OK: Maybe more like a four-day long thunderstorm). Houston is not NOLA: The average elevation is over 25 feet in all but the most southeastern fringes. But the greater Houston metro region is an asphalt jungle; runoff alone could cause massive flooding.
So, you might think that hitting further east would be better? Nope. From The Oil Drum:
The worst tracks are those which put landfall between Freeport and Sabine Pass, Texas. Those three tracks all let the storm hit more rigs and platforms than the tracks that have landfall further south
And that will put further strain on the NOLA levees with rain, wind, and surge. And needless to say if the storm veers hard north and strikes anywhere along the LA/MS gulf coast it will re-flood the same area and knock out slowly recovering critical refineries and shipping; again. What could this mean in terms of our national and global economy?
Data from, last week (which ran through Sept 13) clearly showed the gasoline system moving back toward equilibrium. Even with a slight increase in refinery throughput (many refineries only began to get restarted late last week), gasoline production increased dramatically, rising by more than 400,000 barrels per day. This clearly reflects refiners and blenders attempting to maximize gasoline production, which makes economic sense, given high wholesale prices. Gasoline imports should remain elevated over the next few weeks. Increase supply will put downward pressure on prices. (BUT Rita could totally reverse this picture!)
With as much as 5 percent of refinery capacity expected to remain shut down for months, it will take time for the gasoline supply system to return to normal, implying that prices could remain elevated. As of early Tuesday -- Rita began to reverse much of the progress made over the past 2 weeks. Texas produces about 25 percent of U.S. oil refinery capacity.
There is time for the storm to veer, but the NHC said Rita could make landfall about 100 miles southwest of Houston -- but there is a distinct possibility it will make landfall closer to Galveston -- and this would bring a storm surge into the heart of oil and NG producing real estate.
Oil companies started to close some offshore production Tuesday ahead of Rita. The U.S. Minerals Management Service said Tuesday that 58.5 percent of Gulf crude production was shut, up from 56 percent on Monday. On Tuesday, 34.8 percent of natural gas production was shut, up from 33.8 percent on Monday, the MMS said.
"I think we're going to go back and test the recent high of $70.85 [for crude oil on Aug. 30 after Katrina destroyed or severely damaged 66 Gulf Platforms, flooded several key refineries, and damaged natural gas plants]," said Ed Silliere, trader at Energy Merchant Intermarket Futures. "And it should happen well before the storm makes landfall."
The Gulf of Mexico accounts for about one-third of domestic crude oil production and one-fifth of natural gas output. About 56 percent of oil output from the Gulf of Mexico remained shut, the Minerals Management Service said. Normal daily oil production from the Gulf is 1.5 million barrels per day. For gas, 3.37 billion cubic feet per day, or nearly 34 percent, remained shut. The normal daily output is 10 billion cubic feet per day.
We also have to consider that Europe will be in a similar situation this winter. Demand for fuel oil and diesel oil continues to escalate in Europe as it does here. European ministers are urging OPEC to increase oil production ahead of their September 19 meeting in an attempt to combat soaring energy prices. These same ministers have also suggested that oil companies begin to reinvest the sizable profits they have realized over the past couple of years into exploration and refineries.
Given the factors that we have discussed, energy prices are probably not going to have a significant retracement any time soon. The population of the world continues to grow and massively populated countries such as China and India are driving more cars.
"If we don't start now to get more refineries built then fuel prices could literally rocket to $US100-$US200 (per barrel) and the world economy would come to a grinding halt," Branson said in an interview on CNBC.
Around the world, offshore oil and natural gas platforms are generally built to survive without serious damage a so-called 100- year storm; a hurricane so powerful that it typically occurs only once every 100 years.
"We're seeing more 100-year events happening more often, even every few years," said Jafar Korloo, who has designed and managed platforms for Unocal, the oil company recently acquired by Chevron. "The bar has to be higher."
Hurricanes come in cycles several decades long that alternate between quieter periods and more active seasons. Since 1995, the Atlantic Ocean has been in a period of stronger hurricanes that might last 10 or 15 more years, according to the National Oceanic and Atmospheric Administration.
From 1995 to 2004, hurricane seasons averaged 13.6 tropical storms, 7.8 hurricanes and 3.8 major hurricanes. Six of these years were called "hyperactive," and 2005 is shaping up as another one of those. From 1970 to 1994, hurricane seasons were quieter, averaging 9 tropical storms, 5 hurricanes and 1.5 major hurricanes. None was a hyperactive season.
The industry specialists are more worried about the state of the underwater pipeline network. Totaling 33,000 miles, the grid turned out to be the weakest link because of the effects of Ivan, which produced mudslides that snapped pipelines, shifted parts around and caused long delays and repairs before production could be resumed.
So far, there is little information on the state of the pipelines. Oil companies will have to test the pressure on their platforms before assessing them.
Summary: Needless to say, we hope this storm weakens and/or misses these critical areas. And there is a real chance that might still happen. But be ready to leave if you live in the area or call your folks or siblings or friends and make sure they're ready to bail if need be. For crying out loud after Katrina one would think folks wouldn't dick around but you never know: Bottom line, there is an equal or greater chance a MAJOR catastrophic storm is headed their way. And it may affect the production and refinement capacity we have, which is already stretched to the breaking point in a global environment that may be at or near Hubbert's Peak already, while dealing us another hundred billion dollar plus blow along with even more widespread suffering 'unknown in modern times'.
Either way, it seems to us an excellent plank in the campaign of any forward looking politician would be alternative energy/fuels. I don't care if it's fusion research, public transit, solar or wind, or just plain old conservation and improved design on existing technology. The first credible national contender who comes up with a bold JFK 'moonrocket type speech' calling for a national crash course on alternative energy sources -- and sounds like they mean it--is probably going to get ahead of the pack. Because there's going to be some real pain at the gas pump even if Rita disintegrates. That would be an asset and a gold star on any politicians platform, although given Bush's track record on words Vs deeds I doubt it will do him much good. It would be a damn fine idea imo for a dem leader wannabe to start thinking about it; the only question is, will any of them take that open invitation and start leading?
Update: I'll recycle a new thread with a comprehensive updated forecast in a few hours. Around 10 -- midnight EDT. I need streaming video links from TX if anyone finds one.
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