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Mobile Register, ALABAMA: Shell Oil gears up alternate sources

Mobile Register, ALABAMA: Shell Oil gears up alternate sources

“Shell Oil is ramping up production from natural gas wells around Mobile Bay and along the south Texas coast in an effort to offset major losses from the rich fields off Louisiana, according to company officials.”

Monday, September 05, 2005

By BEN RAINES

Staff Reporter

Shell Oil is ramping up production from natural gas wells around Mobile Bay and along the south Texas coast in an effort to offset major losses from the rich fields off Louisiana, according to company officials.

But given the relatively small sprinkling of rigs off Alabama, and even fewer off the south Texas coast, it’s uncertain whether the effort would significantly ease a tightening supply.

About 89 percent of the Gulf’s daily oil production has been lost, and 79 percent of the natural gas output, according to the U.S. Minerals Management Service. Rigs off Alabama account for about 6 percent of the Gulf of Mexico’s offshore natural gas production, according to the latest statistics released by the U.S. Department of Energy.

“Natural gas prices this week increased sharply as Hurricane Katrina devastated operations and impacted infrastructure on the Gulf Coast. Spot prices at Louisiana trading locations moved up an average of $3.23,” reads a Department of Energy Web site.

The destruction in the offshore fields, where the earliest estimates put about 60 rig platforms out of commission, will likely not be known for a week or more.

Last fall, Hurricane Ivan, which made landfall in Alabama about 80 miles from Louisiana’s oil fields, caused significant destruction to pipelines off Louisiana’s eastern shoreline, even though they received only a glancing blow. That led to $12 spike in oil prices within a matter of days.

Through the heart

But Katrina actually churned right through the heart of the thickest conglomeration of rigs and subsurface pipelines in the United States, just south of the Louisiana coast, according to a survey of federal pipeline maps. Louisiana fields produce about 67 percent of the Gulf’s natural gas. As a result, some expect Katrina’s damage to oil and gas production will be far worse than Ivan’s, once it is fully assessed.

Some early reports suggest that Alabama’s much less productive gas fields, which weren’t directly in the path of the storm, escaped the worst of Katrina.

Mark Rowse, lead pilot at the Theodore base for Petroleum Helicopters Inc., said he flew clients to oil or gas platforms about 70 miles off the Alabama coast Friday and found platforms in that area that did not appear to have suffered greatly from Katrina.

His company has been making inspection flights for a number of oil companies this past week, primarily off Alabama.

“Today was my first day back to work, and the platforms I have been on were minimally damaged,” Rowse said Friday afternoon.

In the days before the storm, sources in the oil industry told the Register that divers, crew boats and other support equipment had been evacuated to Texas or inland Louisiana. Until they return, it will be difficult to determine what happened underwater.

The Register has been unable to contact crew boat captains and other industry support personnel since the storm, but those in the industry predicted massive destruction, especially to the Gulf’s pipeline network.

“This storm is going to pass through the meat of the oil and gas fields. The whole country will feel it because it’s going to cripple us and the country’s whole economy,” said Capt. Buddy Cantrelle with Kevin Gros, the day before Katrina made landfall. His company supplies rigs via a fleet of large crew vessels.

“No matter where it hits at this point, it’s going to hit a lot of rigs and the whole country is going to notice. And if this thing comes up through Port Fourchon like they’re calling for right now, well, that’s where 30 percent of the country’s oil comes ashore. They are forecasting 40-foot seas for Fourchon.”

The storm did come up through Port Fourchon, a low and isolated speck of dry land where the bottom of Louisiana’s boot meets the sea.

Thousands of miles of pipelines criss cross the sea floor, many coming ashore in Fourchon, where the bulk of the Gulf’s 5,000 rigs are located. Depths in the area where those pipelines come ashore range from 20 to 40 feet, suggesting that effects of both wind-driven waves and water-current speeds approaching 20 knots would be important, and most likely destructive.

With major processing facilities in Mobile, Pascagoula and New Orleans out of commission for days or weeks, companies such as Shell and Chevron have shifted energy into tracking down their employees, many of whom lived in the path of the storm. On Friday, call-in phone message systems ask employees to check in with supervisors and figure out when they should report for work.

Call to conserve

The natural gas squeeze has prompted electricity providers in Florida and at least one in Alabama to call on customers to turn thermostats up to 78 degrees to conserve energy in an effort to stave off rolling blackouts. Florida, in particular, may be at risk of such power disruptions as much of that state’s generating capacity relies on Gulf gas piped from Mobile and points west.

One of Florida’s major supply pipelines runs under the sea for hundreds of miles, from Mobile to Tampa. A good deal of the gas that comes ashore in Mobile to feed that pipeline is actually piped in from offshore Louisiana, from wells that were directly in the storm’s path.

royaldutchshellplc.com and its sister websites royaldutchshellgroup.com, shellenergy.website, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net and shell2004.com are all owned by John Donovan. There is also a Wikipedia article.

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