Gas Processors, Oil Drillers on Their Own to Rebuild After Katrina and Rita

Gas processors and oil drillers are on their own to rebuild and re-man offshore platforms and drillings rigs damaged during the onslaught of Hurricanes Katrina and Rita.

No tax money will be headed their way, according Department of the Interior Secretary Gale Norton while speaking at a news conference Tuesday.

She said repair and replacement costs are left up to those businesses impacted by the hurricanes, which are oftentimes self-insured. Damage cost per company is estimated to be several billions of dollars.

Even with the extent of physical damage done to offshore facilities, all 25,000 people who work on offshore platforms were safely evacuated for each of the hurricanes.

“Despite such intense winds and powerful waves offshore, we experienced no loss of life or significant spills from any offshore well on the outer continental shelf,” Norton said, explaining that although Hurricane Rita was labeled as a “Category One” hurricane onshore, offshore it was a three or four.

Of the 3,050 Gulf Coast drilling platforms in the path of Hurricanes Katrina and Rita (out of 4,000 the Minerals Management Service administers), only 109 were completely destroyed while another 50 were extensively damaged; also destroyed were 59 drillings rigs with another 19 suffering major damages. All but one of the drilling platforms completely destroyed were classified by the DOI as being at “the older end of life,” meaning they were not built to MMS’ upgraded design standards. These facilities account for a very low percentage of the Gulf’s oil and gas production (1.7% and 0.9%), and will not be rebuilt.

Still, Norton said, because Gulf Coast is such a significant part of domestic energy production, the nation has lost a cumulative production of some 46 million barrels of oil and 220 billion cubic feet of natural gas.

The latest figures released by the Minerals Management Service, part of the DOI, show Gulf oil production to be shut in at 90%, with 72% of Gulf natural gas production remaining shut in as well.

Since Hurricane Rita, 342 platforms (40%) and 17 drilling rigs (12.7%) remain evacuated.

Investigations into the destroyed platform built to MMS’ new standards have revealed the damage may not have occurred naturally: 19 Mobile Off-shore Drilling Units were torn from their anchor lines by the hurricanes, creating a collision risk which could possibly explain the ruined platform, Norton said.

Over the next several weeks, undersea structural assessments will be made to survey possible pipeline damage due to the MODU’s dragging anchors, but thus far, nothing significant has been discovered.

* * *

Recovery is taking longer to get underway because those who operate the platforms were affected personally by the hurricanes as well – many having lost their homes, offices and possessions.

“Many company headquarters are in pieces,” Norton said. “There are disruptions in ports where the supplies and equipment are taken to offshore platforms.

Even more significant is the extensive damage experienced by onshore processing facilities. “Those onshore issues make it difficult to restore the offshore production,” she explained.

Hurricane Rita will take longer to recover from than Katrina – not only did Rita do more damage to oil and gas facilities, but with Houston and other cities evacuated, oil and gas companies were unable to get organized as quickly.

As one can imagine, competition for construction supplies and materials is high along the Gulf. Norton said federal agencies are working informally to help prioritize reconstruction jobs; but again, there is no federal money involved in the process.

As energy production is restored, the need to diversify our nation’s energy supply remains apparent and should be a “top priority for our nation’s economic and national security,” according to Norton.

She said conservation in driving and in the use of energy from natural gas is greatly encouraged as energy resources will be in short supply this winter and there is no clear indication as to when high prices will stop rising and begin to fall.