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Some Oil, Gas Facilities in Gulf of Mexico Resume Pumping


Several oil and gas facilities in the Gulf of Mexico have resumed operations following Hurricane Katrina. However, an industry analyst says the full extent of damage to generating facilities is still unknown.

Jim Flanagan of IHS Energy says the story of Hurricane Katrina is still unfolding. He says there's a lack of published reports by energy companies about damage done to their offshore facilities.

"I think it has a lot to do with, number one, some of the on-shore staging areas have been pretty much devastated," said Mr. Flanagan. "So, it's difficult to get transportation to and from some of these platforms. I think there's 819 manned platforms and 140 or so manned rigs offshore that all need to be checked out. And so there's a big run on transportation equipment and personnel to go out and check on all these facilities. And it's just taking a long time."

He says following previous hurricanes, the energy industry was quick to release reports on the damage their facilities sustained.

IHS Energy is an energy consulting company headquartered in Engelwood, Colorado.

One indication of how bad things may be is a photograph of a toppled Shell Oil platform, which produced 40,000 barrels of oil a day and about 150 million cubic feet of natural gas. Mr. Flanagan says multiply those losses by today's commodity prices and you get an idea of how much money Shell is losing on just that one rig.

The regional manager of IHS Energy's Frontier Gulf of Mexico Group points out that not all the damage to energy facilities occurred offshore.

"The biggest story seems to be what's happened to the onshore infrastructure," he explained. "Natural gas processing plants are flooded. Refineries are flooded. So, even if you could turn on all the different production platforms we have in the Gulf of Mexico, you wouldn't be able to do so because the onshore infrastructure still needs to be repaired."

What's more, Mr. Flanagan says Hurricane Katrina has also affected oil and gas industry workers. So, it's unclear how many are available to help with repairs. "As far as I've been in this business, this is the worst I've seen things," he added.

The Bush Administration is trying to ease soaring gas and oil prices by tapping into the strategic oil reserves. However, Mr. Flanagan is not sure how quickly and to what extent this will have an effect.

"It's a reserve of oil that is held in a salt dome in Louisiana. But it's been filled up over the course of years and it could have upwards of 700 or 800 million barrels of oil in it. I'm not sure how quickly it can be withdrawn and I don't know how quickly it can pump it out, but I think it is a major deposit that the government can go to," he noted.

Mr. Flanagan says Hurricane Katrina has shown just how dependent the United States is on oil and gas and the importance of supplies in the Gulf of Mexico. The Gulf makes up about 25 percent of oil and gas production in the country, not counting Alaska.

"Another thing the country will have to come to grips with is trying to decide whether or not it's possible to develop other reserves in other parts of the Gulf of Mexico," said Mr. Flanagan. "The whole east of the Gulf of Mexico has basically been off-line from leasing for quite a long time. And just now people are beginning to wonder if it's time to actually go out there and at least do an assessment of what might be available for drilling."

Such moves, however, could bring angry reaction from environmentalists and others, who say they fear possible oil spills.

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