Oil companies advance recovery efforts
09/06/2005
NEW YORK (Reuters) - The U.S. energy industry’s desperate push to recover from Hurricane Katrina began to pay dividends on Tuesday, as nearly half of the refineries fully or partially closed by the storm returned to service.
Since the hurricane ravaged the Gulf Coast more than a week ago, crews have been working around the clock to assess damage, make repairs and restore power at eight refineries situated along the Gulf of Mexico.
Two of the largest, a 235,000 barrel-per-day plant owned by Motiva Enterprises in Convent, Louisiana, and a 245,000 barrel-per-day plant owned by Marathon Oil Corp. (MRO) in Garyville, Louisiana, have now been restarted.
Seven others—located as far north as Illinois—that were forced to curtail production because of transportation disruptions have also returned to service.
Among those are Exxon Mobil Corp’s (XOM) massive 494,000 bpd plant in Baton Rouge, Louisiana, and Total’s 285,000 bpd refinery in Port Arthur, Texas.
All told, 20 refineries completely or partially shut down at one point, but recent signs of progress are taking some of the steam out of oil prices. U.S. crude oil futures settled down $1.61 at $65.96 a barrel on Tuesday, and gasoline slumped 12.87 cents, or 5.9 percent, to settle at $2.055 a gallon.
Key to restarting some of the refineries has been the return of crude and petroleum product pipelines, which were previously down and creating supply bottlenecks. Two of the most important, the Colonial Pipeline and the Plantation Pipeline, are now back at 100 percent capacity.
President George W. Bush has been briefed on the work, the White House said.
“We’ve had a temporary disruption of our energy supply, but there’s been some good progress made, major pipelines are up and running, two are fully up and running and two others are near capacity,” White House spokesman Scott McClellan said.
PRODUCTION PROBLEMS
But business is still far from usual. Eleven refineries are still fully or partially closed down. And while at least two more are expected to restart in the coming days, many experts say some of the closures could last for weeks or even months.
Murphy Oil Corp. (MUR) on Tuesday said it still does not know how much oil spilled from an 85,000-barrel tank at its Meraux, Louisiana, refinery, damaged by the hurricane.
Efforts to access the facility to fix the spill were being hampered by flood waters, the company said.
Problems also remain in the oil and natural gas production side of the business, with a number of rigs lost or badly damaged when Katrina tore through the Gulf of Mexico.
The latest government figures showed some improvement in the region’s output, but 58 percent of its oil production and 41 percent of its gas production is still shut down.
And the U.S. Coast Guard said on Tuesday a total of 56 U.S. Gulf offshore platforms have been lost or damaged.
In one positive sign, Anadarko Petroleum Corp. (APC) has resumed production on the Marco Polo platform and the platform is producing 20,000 barrels of oil equivalent per day.
Exxon Mobil said damage to the majority of its offshore structures was limited, and roughly two-thirds of its normal oil and natural gas production was running again in the area.
Apache Corp. (APA) said that 76 percent of its natural gas production and 60 percent of oil production in the region have been restored to pre-hurricane levels.
And BP Plc’s deepwater Holstein development has returned to service, although some of the company’s shallow water platforms suffered damage.
To help with the supply crunch, the International Energy Agency is releasing 2 million bpd of oil over the next 30 days, the first time the IEA has tapped member stocks since 1991.
The U.S. is also tapping into its emergency oil stocks.