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Associated Press: Repairs ahead of schedule at Shell rig

Updated 7:22 AM on Sunday, April 23, 2006

Repairs ahead of schedule at Shell rig

By ALAN SAYRE
Associated Press

NEW ORLEANS – The Gulf of Mexico's largest producing oil platform knocked offline by Hurricane Katrina could be running again in May, just before the start of this year's hurricane season.

Shell Exploration & Production Co., a unit of Britain's Royal Dutch Shell PLC, said repairs to its Mars platform will be finished this month, with partial production restored in late May. Hurricane season starts June 1.

The platform represents about 5 percent of the Gulf's daily oil and gas production, which before the hurricane stood at 140,000 barrels of oil and 150 million cubic feet of gas a day.

Originally, Shell did not expect the platform to be producing until late 2006.

Marvin Odum, the company's head of exploration and production for North and South America, said two factors put Shell ahead of schedule: immediate and accurate damage assessment and purchasing the right pipeline repair equipment before the hurricane hit in late August.

The quick assessment enabled Shell to lease one of just two barges available worldwide capable of moving a toppled rig structure to shore.

Below the surface, Shell was already working to remotely repair pipelines at depths reaching 2,700 feet with equipment it purchased when production began 10 years ago.

“Getting that barge and having everything else in stock, then being able to put them to use right away saved us many months of time,” Odum said.

Additionally, Odum said assembling a workforce that lived for weeks at a time on an adjacent ship was crucial. The crew of 500 included engineers, geologists and technicians.

With oil prices above $70 a barrel, companies such as Shell have every incentive to resume production as soon as possible.

“We expended every resource to get it done,” Odum said. “I generally don't think people understand to what lengths we went to return all this production as quickly as possible.”

The company said its Katrina-related damage in the Gulf ranges between $250 million and $300 million.

Odum said Shell's estimates placed the Mars platform in the hurricane's eye for about four hours, absorbing 80-foot waves and wind gusts reaching 200 mph. The platform's oil derrick blew away, and pipelines and the rig that repairs wells were damaged. But Odum said it could have been worse.

“The structure itself – the platform, the tendons, connections to Gulf – sustained no damage, so the platform did what it was designed to do,” he said. “There were no problems with the wells, not a drop of oil spilled and no gas was released, so that was encouraging to us.”

On Wednesday, the U.S. Minerals Management Service reported 87 production platforms still out of commission following Hurricanes Katrina and Rita.

About 334,000 barrels of normal daily oil production in the Gulf – about 22 percent – are still blocked from the market, along with 1.33 billion cubic feet of normal daily natural gas production, or about 13 percent, the agency said.

Since Katrina first threatened the Gulf and forced platform evacuations Aug. 26, the Gulf has lost the production of 148.9 million barrels of oil, or about 27 percent of the normal yearly total of 574.5 million barrels, the agency said.

Over the same time, 730.4 billion cubic feet of natural gas – or about 20 percent of the normal yearly total of 3.65 trillion cubic feet – has been blocked from market, the mineral agency said.

The Mars platform is located about 130 miles southeast of New Orleans. Shell operates the platform and has a 71.5 percent working interest. BP PLC has the remaining working interest.

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