The Oil Drum

Post-Gustav Landfall Resource/Open Thread

Posted by Prof. Goose on September 2, 2008 - 9:20am
Topic: Supply/Production
Tags: chuck watson, henry hub, hurricane gustav, loop, louisiana offshore oil port, methaz, oil, oil infrastructure, original, peak oil, shut-in production [list all tags]

Well, it's the day after. We need your assistance. In this thread, we would appreciate any materials, links, maps, charts, etc., that will help us all understand what Gustav did to oil and natural gas supply/production and gasoline availability, if any. Help us keep this focused, please. (Eds. Note: Please put damage related issues in this column. Please put comments on more general issues (for example, the impact on the Republican convention, or on politics in general) in Drumbeat.

Under the fold are discussions of the Louisiana Offshore Oil Port, Port Fourchon, damage model maps, the hurricane itself, and many of the other resources we had yesterday.

Here is Chuck Watson at KAC/UCF's landfall composite damage estimate for Gulf (GOM) oil and NG production, which covers the GoM loss for the month of September in to the context of overall oil production, imports, and refining. Note for those crunching the numbers that since GoM is about 25% of US production, 40% of the GOM's contribution of 25% is 10% of the total US production.

COMP ATCF Forecast Time: 2008090112
14 day:    8.21 MMBBL ( 52.36% normal), gas   63.50 BCF ( 65.91% normal)
30 day:   19.98 MMBBL ( 59.46% normal), gas  145.98 BCF ( 70.70% normal)
60 day:   43.01 MMBBL ( 64.00% normal), gas  304.43 BCF ( 73.73% normal)
90 day:   95.23 MMBBL ( 94.47% normal), gas  586.06 BCF ( 94.62% normal)
6 mon :  195.13 MMBBL ( 96.79% normal), gas 1205.43 BCF ( 97.31% normal)
1 year:  400.48 MMBBL ( 97.96% normal), gas 2478.60 BCF ( 98.67% normal)

Interpretation: the models say that 40% of GOM oil will be offline for 30 days and ~30% of GOM NG for will be offline for 30 days--followed by marginal increases in GOM supply (both imports and production) through the next months. (E.g., the 60 day number for oil is 36% shut-in, but between 60-90 days, the number goes down to 5% of GOM oil shut-in.)

UPDATE: 10:00 EDT 9/1 - Graphic below is damage models based on LBAR hurricane forecast track, key is below. Numerical damage estimates are below the fold for oil and natural gas shut-in and damage.

Path/damage estimates using LBAR 10:00 EDT forecast-click twice to enlarge

For all graphics: Rigs/Platforms: Blue: evacuated only; Yellow will require inspection before restart; Red: damage requiring repair; Refineries: Black: operational impact (partial shutdown) Green: Operational impact (full shutdown) Red: Damage likely; Ports: standard hurricane flags for wind

The Louisiana Offshore Oil Port, or LOOP (see JoulesBurn's story on the LOOP here), and Port Fourchon, which has historically been a land base for offshore oil support services in the Gulf, was in the path of Gustav and is expected to be damaged. As you will see below, a good bit of oil and natural gas is also expected to be taken offline: some for weeks, some for much longer, according to Methaz' models.

Matthew Simmons, of Simmons International says this about the importance of the LOOP:

LOOP is the only facility in the Gulf to unload VLCC tankers which carry over 2 million barrels of crude. They can in theory be "litered" by unloading onto smaller tankers that can make it into the Gulf Coast ports but this is very lengthy timewise and the spare capacity of these smaller tankers is slim. We get about 1.2 million b/d of crude imports through Loop. (+/- 10%)

Final forecast update from Chuck Watson at KAC/UCF:

Here's the 9/1 update:

Well, I think someone (who out of modesty shall remain nameless) forecast several days ago, Gustav would hit unfavorable conditions in the northern Gulf and never make it back to mega-storm strength. That seems to be the case. Center landfall with peak winds of 100kts or maybe slightly less looks to be at Grand Isle, at 8am ET - as of 730et the "eyewall" appears to be touching land.

I'm mostly sticking with the synthesis from last night (based on multiple models) as to impacts, and we're now in a "wait and see what the inspections bring" mode. The big question is what if any major damage the LOOP suffered and (perhaps more vulnerable than the LOOP itself) the connection pipelines to shore. Baseline estimate is 10-14 days for the port itself. Radar shot (7:30am ET) with tracks and LOOP labeled attached.

Production: Unless something broke that shouldn't have, we expect production to be back up to 60-70% within 30 days, and back to 95% by the end of the year. We expect a long-term hit of 3% or so since this swath went through some areas that Ivan, Katrina, and Rita missed and some older, less productive wells will not be restored.

Refineries and distribution: Mainly short term disruption due to precautionary shutdowns, no long term unless we get unlucky with pipelines.

All in all, my thinking is that this could have been a lot worse. Storm was disorganized crossing the OCS, so waves and storm surge will be lower than they should be for a storm of this size and intensity.

87 comments on Post-Gustav Landfall Resource/Open Thread

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Gail the Actuary on September 2, 2008 - 8:47am

This is the latest MMS estimate (yesterday's) of damages available at this time:

Sept 1 (Reuters) - Hurricane Gustav, the first big threat to U.S. Gulf of Mexico energy and port infrastructure since Katrina and Rita in 2005, made landfall west of New OrleansMonday morning. [nN01292385]
The following outlines the impact on the energy sector:

*****HIGHLIGHTS*****
*96.3 percent of U.S. Gulf of Mexico oil output shut
*82.3 percent of Gulf of Mexico natgas output shut
*27 percent of U.S. refining affected, 11 percent shut, 16 percent at reduced rates.
*433,600 Entergy customers lose power
*No damage assessments yet
*US waives gasoline standards in parts of Texas and Louisiana, ready to release emergency crude

*****CRUDE OIL, NATURAL GAS*****
*96.3 percent of U.S. Gulf of Mexico's 1.3 million barrels per day crude output shut as of Sunday, according to U.S. government.
*82.3 percent of the Gulf's 7.4 billion cubic feet per day natural gas output shut as of Sunday.

*****REFINING*****
*Ten refineries with capacity of 1.9 million bpd shut
*Eight refineries with capacity of 2.8 million bpd at reduced rates

REFINERIES NOT PRODUCING FUEL:
*ExxonMobil 193,000 bpd Chalmette, Louisiana.
*Murphy 120,000 bpd Meraux, Louisiana
*ConocoPhillips 280,000 bpd Lake Charles and 195,000 bpd Alliance, Louisiana, refineries
*Motiva 236,000 bpd Norco, Louisiana; 235,000 bpd Convent, Louisiana refinery on standby.
*Marathon 250,000 bpd Garyville, Louisiana.
*Calcasieu shut its 80,000 bpd Lake Charles, Louisiana
*Alon 80,000 bpd Krotz Springs, Louisiana
*Valero 250,000 bpd St. Charles, Louisiana

REFINERIES AT REDUCED RATES:
*ExxonMobil 503,000 bpd Baton Rouge, Louisiana; 567,000 bpd Baytown, Texas; 349,000 bpd Beaumont, Texas
*Citgo 430,000 bpd Lake Charles, Louisiana
*Valero 325,000 bpd Port Arthur, Texas; 130,000 bpd Houston, Texas, 245,000 bpd Texas City, Texas
*Motiva 285,000 bpd Port Arthur, Texas

*****ELECTRIC POWER*****
*Entergy says 433,600 of 1.9 million customers without power, 101,500 in evacuated areas, 332,600 in southeast and southwest Louisiana.
*Entergy's Waterford 3 nuclear plant shut Sunday night; River Bend nuclear plant powered down to 75 percent due to lower electricity demand.

*****SHIPPING AND PORTS*****
*Louisiana Offshore Oil Port stopped unloading ships Saturday and shut flows from storage Sunday
*Houston Ship Channel closed to inbound traffic at midnight Sunday (0500 Monday GMT), all outbounders already gone
*Mississippi River traffic at New Orleans halted inbound at noon (1700 GMT) Saturday, outbound as of 6 p.m. CDT (2300 GMT).
*Traffic at Lake Charles, Louisiana, halted Sunday
*Traffic at Beaumont and Port Arthur, Texas, halted Sunday
*Gulf Intracoastal Waterway closed Mississippi to Florida

*****PIPELINES*****
*Explorer Pipeline says entire 700,000 bpd products pipeline, Gulf Coast to Chicago, available Monday night
*El Paso's said its Tennessee and Southern Natural gas pipelines offshore throughput cuts total 2.5 Bcfd.
*TEPPCO's 340,000 bpd products line from Texas to Northeast cuts run rates, Beaumont distillate line down.
*Henry Hub natural gas trading hub shut Sunday.
*Enbridge (ENB.TO: Quote, Profile, Research, Stock Buzz) (EEP.N: Quote, Profile, Research, Stock Buzz) stopped taking natural gas production Saturday on systems with 6.7 Bcfd capacity.

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Rethin on September 2, 2008 - 9:43am

I've seen this movie

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Starship Trooper on September 2, 2008 - 2:02pm

I can't even get into MMS today. I get a partial page (some of the upper graphics) maybe from the cache, but the connection symbol just keeps spinning around and around until the connection fails (times out).

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Gail the Actuary on September 2, 2008 - 6:24pm

This is an excerpt from MMS's press release for Sept 2, 2008.

Based on data from offshore operator reports submitted as of 11:30 a.m. CST today, personnel have been evacuated from a total of 632 production platforms, equivalent to 88.2 % of the 717 manned platforms in the Gulf of Mexico. Production platforms are the structures located offshore from which oil and natural gas are produced. These structures remain in the same location throughout a project’s duration unlike drilling rigs which typically move from location to location.

Personnel from 110 rigs have also been evacuated; this is equivalent to 90.9 % of the 121 rigs currently operating in the Gulf. Rigs can include several types of self-contained offshore drilling facilities including jackups, submersibles and semisubmersibles.

From the operators’ reports, it is estimated that approximately 100 % of the oil production in the Gulf has been shut-in. Estimated current oil production from the Gulf of Mexico is 1.3 million barrels of oil per day. It is also estimated that approximately 95.4 % of the natural gas production in the Gulf has been shut-in. Estimated current natural gas production from the Gulf of Mexico is 7.4 billion cubic feet of gas per day.

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Gail the Actuary on September 2, 2008 - 8:58am

Damage related stories from Drumbeat:

Louisiana Refiners to Take Days to Resume Full Supply (Update1)

(Bloomberg) -- Louisiana refineries that shut down before Hurricane Gustav may take up to 10 days to resume operations because of a lack of power, stunting fuel production at a time when regional gasoline inventories are at a 10-month low.

Marathon Oil Corp., Valero Energy Corp. and other refiners that shut plants as Gustav swept through the Gulf of Mexico won't know the extent of any damage until today at best. Exxon Mobil Corp. shut its Baton Rouge plant, the second-largest U.S. refinery, after winds snapped power lines.

On first scan, little oil damage seen from Gustav

HOUSTON (Reuters) - Several major U.S. refiners said early checks on Monday showed their facilities were unharmed by Hurricane Gustav, but at least two others were said to be considering dipping into the U.S. Strategic Petroleum Reserve to keep operations going after the storm shut down key waterways.

Gustav weakened to Category 2 before roaring ashore near Port Fourchon, Louisiana, on Monday, potentially sparing the kind of damage that the region's platforms, rigs and refineries suffered at the hands of more powerful Katrina three years ago.

Offshore operators said remote sensors indicated that major platforms remained where they were moored before the storm, although Shell, the region's largest producer, said it may take three to five days to restore production.

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howleyj on September 2, 2008 - 9:39am

"Meanwhile, the Colonial Pipeline was operating at reduced rates Monday evening because its Baton Rouge facility was shut following a communications failure and another booster station in the central Louisiana vicinity was evacuated, a spokesman said."

http://www.cattlenetwork.com/Content.asp?ContentID=249038

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the_rage on September 2, 2008 - 9:43am

I guess a big unknown at this point is how widespread any product shortages will be.

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Gail the Actuary on September 2, 2008 - 9:58am

Thanks for the link. The Colonial Pipeline is critical to keeping the East Coast supplied with refined products such as diesel and gasoline. It was shut down for a while after Katrina, causing a shortage of gasoline on the East Coast.
This is a map of where it goes

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howleyj on September 3, 2008 - 9:09am

Oil, gas prices fall to April levels after Gustav weakens
The Washington Times
Wednesday, September 3, 2008

"The Colonial pipeline, the main conduit bringing fuel into the Washington area, was operating at reduced capacity due to power outages and shutdowns at pumping stations in central Louisiana. Because of ample supplies at most gas stations, however, the cutbacks had not caused an increase in pump prices."

http://washingtontimes.com/news/2008/sep/03/oil-gas-prices-fall-to-april...

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Gail the Actuary on September 2, 2008 - 9:42am

Estimates regarding insured losses, from this article:

The California risk management consulting firm Eqecat Inc. estimated Monday that Hurricane Gustav would generate $6 billion to $10 billion of insurance claims, primarily in Louisiana, after making landfall.

The California insurance consulting firm Risk Management Solutions Inc. issued even lower projections Monday evening of $3 billion to $7 billion in insured losses on land from Gustav.

Meanwhile, the Boston consulting firm AIR was working on downgrading its initial estimates issued Sunday of anticipated losses of $11 billion.

Those figures don't include estimates of flood damage, which is covered separately by the National Flood Insurance Program, or estimates of damage to offshore energy facilities.

Regarding impact on reinsurers, Reuters reported the following:

"Gustav is more of an earnings event for reinsurers," Chris Waterman, a senior director in Fitch's Insurance Group in London told journalists, rather than a catastrophe that knocks a hole in the industry's capital.

"Most reinsurers would plan for this kind of event. It's probably in line with their estimates," said Waterman.

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JoulesBurn on September 2, 2008 - 11:02am

I like that. It's an "earnings event". A buy opportunity.

AIR estimates offshore damage at 1.8-4.4 billion dollars, but I'm not sure what that is based on.

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graywulffe on September 2, 2008 - 10:36am

Here's the complete history of Gustav's wind, gust and central pressure, 25 Aug to 02 Sep 2008, with the time over the Gulf of Mexico highlighted (red to blue to reflect the cooler waters northward):

And here's the record of Gustav's movement speed:

-best,

Wolf

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Gail the Actuary on September 2, 2008 - 10:46am

This is the press release from Chuck Watson's company (posted yesterday) regarding the total amount of damages. These damages include things like damages to roads and bridges that are not included in insured damages.

Kinetic Analysis Corporation estimates the impact of Hurricane Gustav on Oil production in the Gulf of Mexico.

Kinetic Analysis Corporation (KAC) is forecasting a shortfall of 17 million barrels of oil (MMBBL) for the month of September, based on an expected loss of 40% of normal Gulf of Mexico Production due to Hurricane Gustav. The Gulf of Mexico normally produces 33.6 MMBBL of Oil out of 155 MMBBL produced domestically. Only 138 MMBBL are expected to be produced in September. With imports averaging 300 MMBBL per month, and refining usage at 458 MMBBL, approximately 20 MMBBL would have to be tapped from stocks during the month of September to maintain current usage levels.

We expect production to be back up to to 95% by the end of the year. We expect a long-term production loss of approximately 3%, since Gustav's swath went through some areas that Ivan, Katrina, and Rita missed, and older, less productive wells that suffered damage will probably not be restored to operation.

The LOOP terminal, source of 25% of US oil imports and the only VLCC class supertanker port on the US East Coast, was directly in the path of the storm. In addition to damage to the offshore port itself, the connection pipelines to shore are also vulnerable to storm damage. Our baseline estimate is 10-14 days downtime for the port itself. As there is some potential for undersea slumping and scour, pipeline disruption is possible and could further aggravate supply issues.

For refineries and distribution, mainly short-term disruption is expected due to precautionary shutdowns; no long term impacts are expected unless there is significant disruption of the pipelines. Flood-related delays in repair and restoration due to high rainfall rates are possible if the storm lingers in the impact area.

Storm total damage (residential, commercial, and infrastructure) is estimated at $35-40 Billion.

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SolarHouse on September 2, 2008 - 11:19am

Here are two short YouTube video's from Port Fourchon.

http://www.youtube.com/watch?v=JXQTyXKR5Bo

and

http://www.youtube.com/watch?v=ovK_ddafsM0

If the links don't work search on Gustav Fourchon.

Paul

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Brian_Timoney on September 2, 2008 - 11:46am

We've posted an interactive web map of the swath of hurricane-force winds and whose production/pipelines were most at risk--

http://www.gulfimpact.com

Of particular interest was how the storm passed over some of the high-dollar deepwater assets of Shell, BP, and ENI.

Thanks,

Brian

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Gail the Actuary on September 2, 2008 - 12:15pm

Interesting site. Exhibits by company are given for oil, natural gas, and platforms. This is an example.

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Leanan on September 2, 2008 - 12:18pm

Exxon: No restart schedule for Baton Rouge refinery

HOUSTON, Sept 2 (Reuters) - Exxon Mobil Corp said on Tuesday no time has been set for the restart of its 503,000 barrel per day (bpd) Baton Rouge, Louisiana, refinery, which was shut by Hurricane Gustav.

Exxon spokeswoman Premlata Nair and Exxon Baton Rouge refinery spokesman George Pietrogallo both said the refinery was doing preliminary checks of the refinery and adjoining chemical plant complex.

"Baton Rouge is conducting a preliminary site assessment to determine the impact of Gustav," she wrote in an email. "We are assessing restart options, but are unable to provide a restart schedule at this time."

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ViewFromHere on September 2, 2008 - 12:35pm

Interesting comments. I'm just putting the finishing touches on a grant proposal to increase access to local foods for older, rural people. I thought I would check oil prices to boost my argument that in an uncertain future with higher gas prices, we need to establish more and varied food distribution plans for our most vulnerable citizens- hence local foods access for the rural elderly. Well, oil is down $6.5/barrel.

Maybe we should just keep driving 120 miles round trip to the nearest Walmart. Just kidding.

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Leanan on September 2, 2008 - 12:41pm

This thread is for Gustav damage reports. Please post comments on other topics in the DrumBeat. Thanks.

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Iconoclast421 on September 2, 2008 - 12:46pm

This just goes to show how much downward pressure there is on oil prices right now. With the largest supply disruption of the year, the price still falls by a record amount. The price of oil right now is lower than it was even before anyone heard the name Gustav.

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PolR on September 2, 2008 - 1:05pm

The LOOP and an array of major refineries are down. I call this demand reduction for crude.

In the coming days, the SPR will make up for the lost wells. I call this mitigation of the crude supply reduction.

I don't see how this disruption would push the price of crude up in the short term. Once the LOOP and refineries are back and we know how many wells are permanently shut down, it will be another story.

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the_rage on September 2, 2008 - 1:19pm

We're up $5-6 off the lows this morning though. What happens to prices when the pipeline levels drop as distributors draw products?

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donshan on September 2, 2008 - 1:55pm

Forbes.com is reporting that the Port Fourchon police drove down the road LA 1 to Port Fourchon and report the road and the port are not severely damaged. Other info in the article.

http://www.forbes.com/business/2008/09/02/gustav-highways-energy-biz-cx-...

Tuesday, Port Fourchon's police were able to use the road to enter the port. "The port and LA 1 are not severely damaged, and water has receded," the Port Fourchon Police Department said in a press release Tuesday afternoon. "Upon quick visual inspection it appears there is no major structural damage to port, and it will begin minimal operation in the next couple of days."

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Leanan on September 2, 2008 - 1:58pm

Major damage reported outside of New Orleans

It could be a day or more before oil and natural gas companies can assess the damage to their drilling and refining installations. Jindal said as much as 20 percent of oil and gas production that was stopped because of Gustav could be restored by this weekend, stressing that it was a rough estimate.

To the east of the city, state officials were unable to reach anyone at Port Fourchon, a vital energy industry hub where huge amounts of oil and gas are piped inland to refineries.

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AlanfromBigEasy on September 2, 2008 - 2:37pm

Came in from helping clean up neighborhood (work best done before the heat of the day).

Caught end of discussion with Plaquemines Parish President about problems with private levee that endanger a refinery (Conoco Philips ?) and natural gas pipeline that supplies 5% of US supply. Unfortunately missed the "meat" of the discussion.

New Orleans is operating as an electrical island with 3 fossil fuel plants (our nuke is still down).

FEMA briefing coming up.
------
100% of oil production (1.3 million b/day) shut in. 95% of natural gas production of 7.4 trillion ft3 also shut-in. Some production back on-line in a week, 100% in two weeks if no problems are discovered today and tomorrow.

Alan

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Leanan on September 2, 2008 - 2:16pm

Sensors indicate no major oil rig damage - API head

ST. PAUL, Minnesota (Reuters) - Sensors on oil rigs and platforms in the Gulf of Mexico indicate no major damage to those facilities from Hurricane Gustav, although flyovers and more detailed physical checks will still have to be made, American Petroleum Institute President Red Cavaney said on Tuesday.

"It does not appear any of those are off-station," Cavaney said in a telephone interview with Reuters on the sidelines of the Republican National Convention which he is attending.

Cavaney said that several thousand rigs and platforms were outfitted with the transponders following the 2005 hurricanes that badly battered the Gulf Coast.

There were no indications that pipelines serving the U.S. Strategic Petroleum Reserve were damaged by the storm, Cavaney said, which would help facilitate any oil company requests for emergency crude oil loans from the stockpile.

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Leanan on September 2, 2008 - 2:20pm

Louisiana Oil Refineries May Take 10 Days to Start Up, Sapping Fuel Supply

(Bloomberg) -- Louisiana refineries that shut down before Hurricane Gustav may take up to 10 days to resume operations because of a lack of power, stunting fuel output at a time when regional gasoline inventories are at a 10-month low.

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Post-Gustav Landfall Resource/Open Thread

87 comments on Post-Gustav Landfall Resource/Open Thread

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