No, really?

Hurricanes Katrina and Rita destroyed 109 oil platforms and five drilling rigs in the Gulf of Mexico, but only a small portion of production will be lost for good, the US government said.

Rita accounted for most of the damage in a region that ordinarily produces nearly one-third of US crude oil imports, Interior Secretary Gale Norton said in presenting a preliminary assessment report.

Oh, and here's the MMS numbers for the day.
This is a better thread to post this than where I originally shoved it:

The DOE's Office of Electricity, Delivery and Energy Reliability has a much more comprehensive listing of damage to the GOM infrastructure in today's report, including numbers for both Rita and Katrina, comparing to Ivan - worth a gander:


Point of interest: the "to-date" cumulative shut in for the two recent storms now exceeds that of the entire period of Ivan shut-in from September 04 through Feb 05.

... and the shut in levels are still way-way ...

An interesting take:

Industry Sees Natural-Gas Bidding War
The prewinter buildup of U.S. natural-gas stores has yet to take a big hit from Hurricane Katrina, but that may be about to change.

While the storm has knocked out more than 225 billion cubic feet of natural-gas output since hitting the U.S. Gulf Coast, analysts explain that the losses have been nearly offset by a loss of demand caused mainly by the shutdown of gas-intensive petrochemical plants along the Gulf Coast.

The bad news: that demand is coming back on line faster than production, and it is robust enough to weather prices that have doubled in the past two months.

"The overwhelming, vast majority (of lost demand) is due to production capacity being shut in," said Frank Mitsch, a chemical industry analyst at Fulcrum Global Partners. "It's not because gas prices are high."

"If gas flies through the moon and oil stays flat, of course a large part of the U.S. industry will become uncompetitive," said Mitsch. usiness

Ya gotta love the French (Breitbart runs the AFP feed)

Rita accounted for most of the damage in a region that ordinarily produces nearly one-third of US crude oil imports, Interior Secretary Gale Norton said in presenting a preliminary assessment report.
emphasis added

Or else Norton is as dense as her namesake from the sewer dept.

Here's another question:

How do you both produce and import the exact same product?  

It is an "import" since it is coming from "overseas" a la George Bush (2000)
Another news:

WASHINGTON (Reuters) - A total of 108 low producing oil and natural gas offshore platforms were destroyed by hurricanes Rita and Katrina and some of the other 53 heavily damaged platforms could be offline until next year, the U.S. Interior Department said on Tuesday.


Norton said the destroyed platforms account for about 1.7 percent of oil output in the Gulf of Mexico and 0.9 percent of natural gas production

Uhm, why is oil and gasoline falling?
Mike, I have no idea either, but maybe traders think demand is falling too. (???????)
I heard a trader at a party say "we're swimming in crude, dude" I swear, I was going to go all Matt Simmons on him until I asked if he had ever heard of M. King Hubbert. "Who's he? Does he work at Morgan?"

Oh dude, you've got to google him. You're short crude? You're going to get so squeezed...your position is so dead dude.

Most Traders are clueless 80% of market participants loose. for the last 4 years oil has been a one way street. Easy money if you bet on Mr Hubbert. Why is it falling? Demand drop between the driving season and heating season. Goverment anouncing that the SPR will be used and nothing else bad happening on the planet. Technical traders who just trade on the charts.

Tommorrow is going to be an interesting day with the EIA data being release. We will see Rita's real dammage I think the market has priced in a large amount of demand destruction.

priced in

I think so too - and they may be right too, this time, but eventually participants will overreach. There is a bottom line as to how much less people can drive, and still function in this society. After a big hit to consumption we should expect it to pause here soon - if not this week, next week probably.

I think oil and gasoline are falling because demand for gasoline tapers off in the winter and we're importing the lost production from Europe.  Oil is falling because the feds have pledged to release as much as needed from the SPR.  And heating oil is down because the feds also have indicated that they'll release from the Northeast heating oil reserve.  However, heating oil and natural gas are pretty sky high.

Its called government manipulation of the markets and I can't blame them.  They're really scared of the number of voters who are going to be cold this winter.

The problem is that the SPR and the NE heating oil reserve should be used when things are really really bad.  I don't think this qualifies yet.  I'm imagining what'll happen this winter when the LOOP is blown sky high by jihadists.

We have a slowing economy and the hurricanes have provided the excuse to take the lid off of the petroleum reserve.  Of course neither of these two things add to production capacity, and given the fact that two thirds of the SPR is sour crude, eventually it will rate right up there with the 1.5 million barrels per day that the Saudis keep telling us that they are willing to sell but no one wants.  Right now, I would say that the crude oil futures market is predicting a recession.  Partially because of the huge increase in the cost of natural gas.
I like the Line "a slowing economy".

What no one seems to realize is that the USA can't afford a slowing Economy, not when over half the Nation is hip to neck deep in DEBT. Slow things to much and people start failing to make those Credit Card and House "Pain"ments.  Slow the Economy and people stop buying at the "Big" Malls and the Mall shops start to close, There go those college kids back home to Mom and Dad and ask "can we come in?".

Slow the Economy,  Sounds real good to lessen the pain at that pump, but in time it will snowball. And slow becomes DEAD.  

How long will the SPR be useful if the Shut-In numbers stay high till 2006?  What if we really have to have that oil, When someone figures out we can be hurt if they KNOCK out the LOOP, or Saudi Pipelines.


         Plantain, Broad leaf weed, leaves look like a rounded fan your mom used to use.  Young leaves eaten raw, or cooked like spinach, best if seived to get fiber out. (grows all over the U.S. and Europe)

Hi charles
I couldnt find plantain here

if you could provide links to a database or a picture of the plants you mention that would be great, I always look forward to reading the bottom of your posts

What's also interesting is that Natural Gas futures were up today while NG stocks sold off as much as 5%.

If you don't own 'em, this could be the proverbial "Buying Opportunity."

I bought some late in the day. Even if they head lower tomorrow, its usually good for a minor pop; occasionally a big down day ends up with a gap down and even that frequently rises to break even.

Had NG ended down big... it ended up, I would tend to wait for the next day.

If wrong, I sell and wait to buy even lower.

I just read this:

basically the average price of oil in 4th qtr is projected to be $70, with a run up to 75'ish.

then goes on to say:

{For crude oil as we look toward the first quarter of 2006, we should continue to see strength. Gulf production should be getting back to normal and hopefully we'll start realizing the benefit of a world pumping oil to its full capacity for a string of many months. The strong world economy will start to adjust to higher prices thereby keeping the base oil price in the mid to high 60's. Later in the year in 2006 we will probably test the $80.00 per barrel area but will probably average about $73.00 for the year.}

personally? i think he has conservative estimates.
interesting article though.


I haven't posted here before and I am trying to get a handle on all these numbers for shut in oil and gas and present market pricing and more importantly the potential ramifications for the future.  I gather there has been shut in oil of just over 46 million barrels as of yesterday and I am not sure of the number but lost refinery products since Katrina is probably approaching 40 million.  The SPR gave 30 million barrels of oil and IEA gave 30 million barrels of gasoline(?)and now they are saying there is another reserve of 2 million barrels of heating oil available.

The difference in the numbers I guess is product not going to reserves and lower demand.  But in order to meet present demand I understand working refineries have foregone maintenance, which I assume they are hoping to accomplish when the ddamaged refineries come back on-line .  

Unless there is a permanent reduction in demand doesn't this situation seem bad.  I assume someone paid the IEA which means oil companies profits take a small hit and the SPR has to replace the oil it has released with much more expensive oil. Since refineries were operating at 97% capacity before the hurricanes it seems to me the ramifications are a  long term drop in reserves (unless demand drops) and higher costs, yet the market is signalling all is well.

The Weekly Petroleum Status Report has just came out:

U.S. crude oil refinery inputs averaged 11.7 million barrels per day during the
week ending September 30, down 2.9 million barrels per day from the previous
week's average, as many Gulf Coast refiners were shut down last week following
Hurricane Rita.  Refineries operated at 69.8 percent of their operable capacity
last week (capacity temporarily lost is not subtracted from operable capacity).
Gasoline and distillate fuel production declined dramatically, averaging 7.5
million barrels per day and 3.0 million barrels per day, respectively.

U.S. crude oil imports averaged 8.1 million barrels per day last week, down
nearly 1.6 million barrels per day from the previous week.    Over the last four
weeks, crude oil imports have averaged 9.2 million barrels per day, a decrease
of 504,000 barrels per day from the comparable four weeks last year.  Total
motor gasoline imports (including both finished gasoline and gasoline blending
components) last week averaged over 1.4 million barrels per day, the highest
weekly average ever, while distillate fuel imports averaged 310,000 barrels per
day, an increase of 126,000 barrels per day over the previous week.

U.S. commercial crude oil inventories (excluding those in the Strategic
Petroleum Reserve) inched lower by 0.3 million barrels from the previous week.  
At 305.4 million barrels, U.S. crude oil inventories remain above the upper end
of the average range for this time of year.  Total motor gasoline inventories
dropped by 4.3 million barrels last week, putting them just above the lower end
of the average range.  Distillate fuel inventories fell by 5.6 million barrels
last week, and are just above the middle of the average range for this time of
year. A sharp drop in low-sulfur (diesel fuel) distillate fuel more than
compensated for a slight rise in high-sulfur (heating oil) distillate fuel.  
Total commercial petroleum inventories plummeted by 9.9 million barrels last
week, but are in the upper half of the average range for this time of year.

Total product supplied over the last four-week period has averaged over 19.9
million barrels per day, or 2.9 percent less than averaged over the same period
last year.  Over the last four weeks, motor gasoline demand has averaged nearly
8.8 million barrels per day, or 2.6 percent below the same period last year.  
Distillate fuel demand has averaged 3.9 million barrels per day over the last
four weeks, or 3.8 percent below the same period last year.  Kerosene-type jet
fuel demand is down 0.6 percent over the last four weeks compared to the same
four-week period last year.

src: Summary of Weekly Petroleum Data for the Week Ending September 30, 2005
Looking at the MMS releases (and I think we've noted this before), somewhere between February, which was the last press release for Ivan, and June, which is when Arlene first struck, we lost 200,000 bpd production capacity.

Ivan was always listed as "1.7 million barrels of oil per day (BOPD)"
Arlene had "currently approximately 1.46 million BOPD"
Then beginning with Cindy (July 5) we had recovered to "currently approximately 1.5 million BOPD."

Probably a nit-pick, but when at least some folks are hanging on every press release from the MMS to see how our gulf production is doing (10/5 report: "Today’s shut-in oil production is 1,299,928 BOPD. This shut-in oil production is equivalent to 86.66% of the daily oil production in the GOM, which is currently approximately 1.5 million BOPD) I think it worthwhile to point out that apparently there is some wiggle room in the reporting process.

Cumulative since Katrina hit is 47,756,987 bbls, not a small number.

Ah, the Good Ol' Days... (or Will Wonders Ever Cease?)

Here's a happy document from the Mineral Management Service called Deep Water: where the energy is (2004, small pdf).

Here we learn some about GOM deepwater technology, the estimated 56 bbo reserves there (enough to meet U.S. demand for 7-1/2 years at current rates) and
In 1990, about four percent of the oil and less than one percent of the natural gas produced in the Gulf originated in the deep water areas. By 2003, more than sixty percent of the oil and 29 percent of the natural gas was produced from deep water areas. In the next two years, four new major deep water projects will begin production with a combined production capacity of more than 580,000 barrels of oil and 510 million cubic feet of gas each day.

With deep water production expected to almost double over the next decade, Gulf oil production will rise to 2.25 million barrels per day, or nearly 80% of total Gulf production, by 2011.
All that new oil & gas being produced each day! Worth reading.
all that oil being extracted from 2 miles down, then you hit the mud, there will be a price tag on getting that oil. that price tag will easily exceed $100 per barrel. does this sound outreagous? or am i dreaming? I can't see it priced at $80 or 90. There are costs involved, and that cost will be included in the sale.
As mentioned on the price of that distant/deep oil drilling. $1 billion.