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BLOOMBERG: Shell’s Mars Field, Nearby Rigs May Be Shut Till 2006

BLOOMBERG: Shell’s Mars Field, Nearby Rigs May Be Shut Till 2006


Sept. 9 (Bloomberg) — Royal Dutch Shell Plc, the biggest oil producer in the U.S. Gulf of Mexico’s deep waters, said output from the Mars field and nearby sites may be shut for the rest of the year because of damage from Hurricane Katrina.

Resuming production from the Mars, Ursa, Mensa and Cognac areas in the Gulf, which account for about 40 percent of its normal supply in the area, may not be “feasible during the fourth quarter, depending on options available for recovery,” according to a statement today from the company, based in The Hague.

Shell and energy companies including BP Plc and Exxon Mobil Corp. are struggling to resume oil and gas production after Hurricane Katrina struck Louisiana and Mississippi on Aug. 29, damaging rigs and platforms and forcing refineries, import terminals and pipelines to close. Even before the storm, Shell had said its worldwide oil production won’t rise for years.

“The pressure was already on Shell to get some kind of growth this year, and this is really kicking them when they are down,” said Jason Kenney, an analyst at ING Financial Markets in Edinburgh which has a “hold” rating on the stock. “Shell is the company that has been impacted the most and needs it the least.”

Shell’s current production in the Gulf is about 160,000 barrels of oil equivalent per day, or about a third of average output of 450,000 barrels per day in the first half, the company said. Production should reach about 60 percent pre-hurricane levels in the fourth quarter, the statement said.

Falling Behind

The goal of Shell Chief Executive Jeroen van der Veer this year is to stem production declines as competitors forge ahead with increases in output. He said July 28 an offshore project at Bonga, Nigeria, was further delayed after saying July 14 that costs to develop the Sakhalin venture in Russia, the world’s largest oil and gas project, may double to $20 billion.

Mars is one of the gulf’s largest deep-water platforms, with oil-production capacity of 220,000 barrels a day. Production resumed at Auger, Brutus, Bullwinkle, Cougar, Enchilada, North Padre Island and West Cameron 565, Shell said.

Major oil companies are increasingly pursuing larger and more complex projects, often in deeper waters, as they seek to expand oil and gas production globally after easier deposits have already been exhausted.

Mars Vs Thunder Horse

The Mars damage comes after Shell’s larger rivals, BP and Exxon, were hurt by Hurricane Dennis a month and a half ago.

BP found its $1 billion Thunder Horse platform, the largest of its kind, listing at a 20-degree angle in the eastern gulf on July 11. BP owns 75 percent of the field and Exxon the rest. The Thunder Horse project, which was in the development stage, probably won’t start now until 2006 because of the damage, BP said later in July. The field was originally supposed to start this year and eventually peak at 250,000 barrels a day.

Shell also gave an update on its efforts to restore refinery operations in Louisiana. The Convent refinery, operated by Motiva, a Shell joint venture, has completed repairs and restarted, it said. Yesterday, Shell said the 235,000 barrel-a-day capacity facility was operating at 75 percent capacity.

“Full production rates are expected to be achieved by the end of next week,” Shell said today.

Repair work continues at the Norco refinery, where a restart could begin by the middle of next week, it said. Yesterday it said the restart could be in a “couple of days.”

The Motiva Norco plant has a capacity of 220,000 barrels of crude a day. Other Shell refineries are operating normally.

The Geismar, Louisiana, chemicals plant is operating at 60 percent of capacity and will be fully restored when “logistics issues” are overcome, Shell said, without being more specific.

Operations at wholesale terminals are nearly up and running, Shell said, adding that “movement of product into our retail stations continues to be a significant challenge.”

To contact the reporter on this story:

Stephen Voss in London at [email protected]

Dale Crofts in Amsterdam at [email protected]

Last Updated: September 9, 2005 08:02 EDT and its also non-profit sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

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