Tuesday, September 25, 2007

Offshore activity curtailed in Gulf


Oil and gas companies with offshore installations in the Gulf of Mexico whisked workers onshore and shut down some production Thursday while monitoring a disorganized weather system that could gain strength as it moves into the basin.

"It's not really a storm yet, but if it does form, it'll already be on top of everybody," Devon Energy spokesman Chip Minty said.

Many oil and gas platforms dot the central and east-central parts of the Gulf directly south of Louisiana and Mississippi, near the coast as well as more than 100 miles offshore in thousands of feet of water.

They include Royal Dutch Shell's Mars platform, the Gulf's most prolific producer at 160,000 barrels of oil and 121 million cubic feet of natural gas per day. It's 130 miles southeast of New Orleans.

And 185 miles southeast of New Orleans is Anadarko Petroleum Corp.'s Independence Hub, the world's deepest offshore production platform, which began production in July. It had been producing about 250 million cubic feet of gas per day and can ramp that up to 1 billion cubic feet per day, or about 2 percent of all natural gas production in the United States.

Both are among platforms that have been fully evacuated with production shut in as the system approaches.

"In order to ensure the safety of our workers, we are removing all personnel from our operated facilities in the eastern and east-central Gulf of Mexico," said Anadarko spokesman John Christiansen.

The Gulf has about 4,000 offshore platforms — 834 of those manned — which provide nearly 30 percent of the nation's crude oil production and about 20 percent of the its natural gas production.

Companies are watching the weather system off western Florida, remembering havoc wrought by hurricanes Katrina and Rita in 2005. Those storms destroyed more than 100 platforms and shut in 92 percent of oil output and 83 percent of natural gas production.

The Interior Department's Minerals Management Service, which oversees Gulf oil and gas activity, said operators reported Thursday that they have shut in 27.7 percent of the Gulf's 1.3 million barrels of oil per day and 16.7 percent of its 7.7 billion cubic feet of gas per day.

A shut-in involves closing safety valves below the water's surface to prevent oil and gas releases.

Approaching Louisiana
The National Hurricane Center said the low-pressure system was moving northwest and was expected to reach the central Gulf early today. The center anticipated that it would come ashore in southeast Louisiana.

AccuWeather said the system could become Tropical Storm Jerry today before moving inland.

In addition to the Independence Hub, Anadarko evacuated and shut in production at its Constitution, Neptune and Marco Polo oil and gas platforms, which collectively produce 145,000 barrels a day.

Shell said all of its Gulf platforms were being evacuated and production shut in on Thursday. Shell's net operated production in the Gulf is about 370,000 barrels of oil equivalent per day.

The threat to production, along with a falling dollar and lower U.S. interest rates, contributed to upward pressure on oil prices, which closed up $1.39 to a record $83.32 a barrel in trading Thursday on the New York Mercantile Exchange. Brent crude closed up 62 cents to settle at $79.09 a barrel on London's ICE Futures exchange.