Posted on 10/18/2004 9:53:33 AM PDT by Mr. Jeeves
Ivan's Massive Waves Caught Energy Industry Off Guard
NEW YORK (Dow Jones)--Waves and storm surges that were more massive than previously thought may explain why Hurricane Ivan did such severe damage to the platforms and pipelines in its path.
Chris Oynes, regional director for the U.S. Minerals Management Service, said preliminary data from the government's National Oceanic and Atmospheric Administration show the central Gulf of Mexico was hit by mammoth waves - including perhaps the tallest ever recorded in the Gulf - that exceeded the design requirements of the area's infrastructure.
"There were some extremely large waves," he said in an interview. "There is some evidence that there was one rogue wave, the largest ever seen in the Gulf of Mexico, some 90 feet high."
When Hurricane Ivan missed the most rig-heavy area of the Gulf of Mexico, energy producers breathed a sigh of relief at having mostly dodged a bullet from mother nature. That reaction turned out to be premature.
It's now clear Ivan did far more damage to the industry than originally thought and that recovery time from outages will be extensive. That realization has helped push oil prices up more than 20% and natural gas prices up nearly 50% since the storm made landfall.
Pipeline Damage
The Minerals Management Service, the arm of the U.S. Department of Interior that oversees offshore energy resources, said late Friday it could be as much as six months before the bulk of the oil and natural gas knocked out by Ivan comes back on line. The main culprit is damage to pipelines.
Twelve major pipelines were damaged by Ivan, keeping otherwise functional platforms from producing, the MMS said. Of those, four carry oil, seven carry gas and one carries both. The pipelines are owned by units of El Paso Corp. (EP), Royal Dutch/Shell Group (RD,SC), BP PLC (BP), Williams Cos. (WMB), ChevronTexaco Corp. (CVX) and Taylor Energy, accroding to the MMS.
Companies will try to bring up pressure on pipelines gradually in order to minimize environmental damage if leaks are discovered, Oynes said.
"Are they likely to find other problems at some time? Yes," he said.
About 30% of the 33,000 miles of pipelines under the Gulf of Mexico were in Ivan's path, the MMS said. The storm's eastern track, while it spared the heart of the producing area, may have been worse for pipelines.
Damage from the storm surge, both incoming and receding, was made more severe by the tons of mud on the sea floor near the mouth of the Mississippi River, Oynes said.
"We're seeing a lot of damage that is tied to mud slides - there's one where a pipeline moved 3,000 feet," he said.
Some pipelines are under 20 to 30 feet of mud, making repair and damage assessment in water with minimal visibility highly challenging. Two tropical storms in the Gulf since Hurricane Ivan moved through have also hampered damage assessment efforts by companies operating rigs there.
"That's part of the problem - they're still in the midst of completing underwater surveys, and they will be for some time," Oynes said.
Costliest Ever
Despite missing the heart of the rig and pipeline infrastructure in the Gulf of Mexico, Hurricane Ivan is now shaping up to be the most damaging storm in the history of the U.S. oil and gas production industry. With energy prices near record highs, the dollar value of $1.3 billion in lost output, aside from the cost of damaged and destroyed equipment, has already eclipsed other storms like Hurricanes Lili in 2002 and Andrew in 1992.
As of Friday morning 475,000 barrels of oil a day and 1.8 billion cubic feet a day of gas remained off line. Cumulative losses in the three and a half weeks since Hurricane Ivan began affecting production have been 17 million barrels of oil and 74 billion cubic feet of gas.
The U.S. on average consumes about 20 million barrels of oil and 60 billion cubic feet of gas each day.
Although the MMS expects about a third of the disrupted oil output and more than half of the gas to be back on line by the end of October, the MMS said Friday evening the rest could take six months to come back and that 4% wouldn't be back on line even then.
The outages are tightening an already stressed market, sending oil prices to record highs above $50 a barrel. In particular, the storm shut in production of hard-to-replace low sulfur crudes, forcing refiners to turn to the government's Strategic Petroleum Reserve for supplies.
Been to Clearwater Beach once. Gulf of Mexico has the most crummy waves of anywhere in the entire U.S.. I hated that beach. Would never visit another beach along the Gulf again after that day.
I live in Sarasota. We watched Ivan float by on radar and hit the gulf to do some boogie boarding and surfing. By far the largest waves I have seen on this coast. Actually the largest waves I have seen on either of Florida's coasts.
Ivan was a powerful and large hurricane.
Hit Siesta Key in Sarasota. Nicest beach you will ever see. Hey, I know two Josh's in PA. Didn't go to PSU did you?
No, Pitt.
I love your Pitt's library. Tower is beautiful... I had a few friends that went to Duquesne take me sight seeing.
Took a few courses in The Bunker myself.
Library is great, the Cathedral is great. Oakland is one of the greatest college neighborhoods in the country.
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