A report from an anonymous insider

A synopsis of oil company reports from an anonymous source I consider credible.  All below the fold.
We still cannot get people into the affected areas, so most production is remaining shut-in. Several platforms were left running on timers which will or have expired, allowing them to shut-in. There is no available phone service or power in the coastal areas east of ICY. Most generator systems will need to be purged and the fuel checked for water before even emergency power can be started. Mobil phone service is very patchy at best, and the landlines into Lafayette are overworked - please keep your communications at a minimum until further notice. Phones are non-existent from the Atchafalaya Basin eastward.

We will continue to try and get fueling stations up and running to allow us to field helicopters, but right now everything must be flown out of ICY or westward, and the standard fuel depots are not running or no longer in existence. We are extremely limited in the areas we can survey until fuel depots and heliports are up and running again.

From a helo pilot:

I just heard from our flight, which we sent to Venice and Fourchon for a look. There is a single building standing in Venice. The fuel tank is nearby but floating, along with huge amounts of debris from everywhere. All the nearby docks, boats and barges appear destroyed. There is lots of water inside the levees and destruction everywhere you look.

Fourchon looks OK at first glance. The roads even APPEAR POSSIBLY passable. The airport at Golden Meadow looks OK but no-one was around and there was no electricity. I know for a fact they have generators so we may be able to get fuel there later in the day. If our base fuel tank survived and the fuel is not contaminated, we have extra generators and will be trying to get that fuel system going. If Fourchon survived the fuel system on platform X might have as well.

Flight following will be a big problem. I will probably launch a small helo to orbit near GM to relay flight plans. Just for information, the Sikorsky that was abandoned at our base just before the storm hit is floating upside down on our heliport.

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what's Fourchon?
what's Sikorsky?
Fourchon is Port Fourchon, one of the main ports where supertankers carrying American imported oil dock and are unloaded.

Sikorsky is a brand of helicopter.

Fourchon is a huge oil port - they might be referring to oil pumping facilities. Sikorsky makes helicopters. I assume they lost a helicopter.
answer, respectfully: What's google?

Its important for people truly interested in the topic area to be somewhat self sufficient in research. A simple Google search on both topics gives you plenty of hits.


Why is it important to know how to answer questions yourself?

Because you'll read a lot of stuff in a charged discussion like Peak Oil and you are going to what to double check some of it yourself, especially if its not in a subject area you are familiar with, in order to elevate, or demote, the opinions of people you read often.


According to the WWL-TV blog:

"12:44 P.M. - (AP) The Louisiana Offshore Oil Port did NOT suffer major damage as a result of Hurricane Katrina. And a port official says the flow of oil could resume within "a matter of hours" once its power supply is restored."

Great news.

Presumably this refers to the port and pumping stations themselves.  Electricty may even come online quickly.  

But what about upstream*?  The damage all over the NO-MS-AL coastline may make moving that oil inland very difficult, to say nothing of the delay from damage at refineries.

- Silent E

*downstream? - the oil is actually coming INTO the US?

That seems a bit presumptuous to me of the official to say "within a matter of hours".  Perhaps the port didn't suffer any major damage, but what about the pipelines coming from the port?  They couldn't possibly have assessed their status yet.
and nothing about the logistics of getting all of the evacuated operators and technicians, communications lines, etc....

and not taking into account that the waterways will likely need extensive inspection for sand bar formation and possible large scale dredging operations....

just because something is "technically possible" is really meaningless when the amount of variables affecting the situation is this large and complex.

To help folks that may not be familiar with LOOP:


Also, we haven't talked much about Venice, LA here. This link provides some information about the port and a picture.
This story from CBC News has status on several refineries, but mostly of the "Can't get there yet" variety.
Most energy companies still have not been able to visit their facilities and are relying on aerial surveillance for preliminary examinations.

Such is the case for Chevron Corp., which shut down its 325,000 barrel a day Pascagoula, Miss., refinery before Katrina's arrival.

"We are hoping to get in there today, but that's the issue - getting there," said company spokesman Michael Barrett. "It could still be a while before that happens."

Marathon Ashland Petroleum LLC was also playing a waiting game to reach its 245,000 barrel a day refinery in Garyville, La.

"We are trying to re-board and assess what, if any, damage has occurred and what work needs to be done before we can restart," spokesman Paul Weeditz said.

Others were able to identify some trouble by late Monday. Valero Energy Corp. said its St. Charles refinery in Norco, La., which has capacity of 260,000 barrels a day, might not be restarted for another two weeks.

In more positive news, the NYT reports that
An executive with Venezuela's largest oil company, PetrĂ³leos de Venezuela, told Bloomberg News that a refinery it jointly operates with Exxon Mobil near New Orleans was not damaged and would restart production as soon as the government lifted a storm warning. That plant is based in Chalmette, La., just outside New Orleans and was processing about 187,200 barrels of oil a day before it was shut down.
We're going to learn a lot from the process of rebooting Southern Louisiana and Mississipi. Critical infrastructures tend to all depend on each other, so when they're all down together it's non-trivial to get them all back up again.

For example, here's a list of Entergy's generating facilities. As you can see, most of it is powered by natural gas and/or oil. There might to be a bit of a chicken-and-egg problem, where Entergy needs gas to restore power, and the production companies need electricity to operate their infrastructure. I imagine it will be ok - Entergy will run at far less than the full load to begin with, and as they restore customers, they'll get more gas/oil supply to operate their plants.

Still, it's going to be a learning experience.

The Federal Reserve is getting nervous about energy prices, and this was from their just released Aug 9th meeting minutes. What will they think now? Time to raise the interest rates I think. Probably the best way to slow the economy into a lower consumption mode. But what about investing in the future?


takes a long time for taxes to slow the economy appreciably. Remember, recession does not equal lower oil demand, just slower GROWTH in demand.

Sometimes government has to lead and this is one of these times.

MMS report for today finally out (conveniently after main energy markets close LOL). Compare to yesterdays -- shut in/off line %'s went UP.


Today's shut-in oil production is 1,427,969 BOPD. This shut-in oil production is equivalent to 95.20% of the daily oil production in the GOM, which is currently approximately 1.5 million BOPD.

Today's shut-in gas production is 8.798 BCFPD. This shut-in gas production is equivalent to 87.99% of the daily gas production in the GOM, which is currently approximately 10 BCFPD.

The cumulative shut-in oil production for the period 8/26/05-8/30/05 is 4,635,751 bbls, which is equivalent to 0.847% of the yearly production of oil in the GOM (approximately 547.5 million barrels).

The cumulative shut-in gas production for the period 8/26/05-8/30/05 is 25.441 BCF, which is equivalent to 0.697% of the yearly production of gas in the GOM (approximately 3.65 TCF).

I've been trying to access the SPR site and it seems to be down or overly busy:


Wikipedia says petrol can be released from SPR 13 days after a Presidential order, up to 4.something million bpd (fastest they can pump) and Wiki says that their information may be out of date slightly.

EIA on Katrina impact:



As of August 19 (the most recent data available), U.S. commercial crude oil inventories were well above the average range for this time of year. However, gasoline inventories were at the lower end of the average range, and with demand growing at a 1.6 percent rate over the most recent 4-week period, in terms of the amount of days gasoline inventories would supply, they are very low. Distillate inventories remain above the average range for this time of year. Inventory data as of August 26 will be available at 10:30 am ET on Wednesday, August 31.
I'm guessing that this is why the NYMEX wholesale price for gasoline rose over 41 cents/gallon today.

My hunch is that heating oil will be very expensive this winter (above $3/gallon), but not in short enough supply that people will have to do without.  Gasoline could rise a lot more in price (above $4?), and might even see some regional, short-term supply problems.

Look out the nearest window, people.  This is what interesting times look like.

The Henry Hub, which handles natural gas delivery, is back online:


Jumping the interest rate up a point will hammer the housing and mortgage markets into a full-scale downturn.

The refill cost of the SPR will never again be as low as the last time we topped it off.

Oil companies run their power systems on their own produced natural gas - so they can pump as soon as their systems are functional.


This is exactly the sort of thing the SPR is designed for: A short-term stopgap in a temporary emergency.

The government might even make a profit on its oil sales. While the long-term trend is for the oil price to rise, it could (and probably will) dip below the current level once the rigs in the Gulf of Mexico are pumping again. (This is assuming that the damage will be repaired before we get to the other side of Hubbert's Peak.)

If indeed the country decides that a massive slow down in the economy is required then raising rates is one way to go about it.

Hammering the housing and mortgage markets via a full point rate high will first:

  • put a huge dent in consumer spending
  • drop the stock market big - Dow 9000 I suspect as a start but not in a straight line. If indeed there is recognition that a long term energy issue exists, the market will head much lower ultimately. that will feed into business decline and personal bankruptcy etc.

Followed by:

  • layoffs in service sectors and some retail as discretionary spending slows (no more KFC!)
  • layoffs spreading to other sectors
  • raising the unemployment rate;

There will be unemployed people with marginal finances owning all those homes. They will lose them.

Rate increases have the potential to create a new class of bankrupt folks.

Here's why it won't happen, until its too late.


At any rate, as I've said elsewhere here today and over the past few weeks, economic depression is the only way to actually REDUCE demand rather than just slow growth in demand. Imagine getting re-elected on that platform..

Huricane Katrina and the Cold Winter Ahead
August 30, 2005 14 48  GMT

Citgo Petroleum Corp. has requested a crude oil loan of 250,000 to 500,000 barrels from the U.S. Strategic Petroleum Reserve (SPR) in order to maintain normal operations at its Lake Charles refinery in the aftermath of Hurricane Katrina. Citgo is the first U.S.-based refiner to make a request, having done so the evening of the Aug. 29 hurricane. A great deal of Gulf Coast refining and Gulf of Mexico producing assets remained offline the morning of Aug. 30, raising the probability of energy shortages in the United States this winter.

Energy firms and government officials are carrying out damage assessments in the Gulf of Mexico region in the aftermath of Hurricane Katrina's rampage through the region. First-cut assessments are shy on numbers, but so far at least two major drilling platforms are adrift in the Gulf of Mexico, and Royal Dutch/Shell reports that its mammoth Mars platform -- which typically produces 147,000 barrels of oil and 157 million cubic feet of natural gas per day -- has been moderately damaged. More detailed damage assessments will trickle in throughout today, but most are not expected to be completed until late Aug. 31.

That means all we know for sure is that much of the region's energy infrastructure remains in shutdown mode. In preparation for Katrina's arrival, 1.79 million barrels per day (bpd) of the country's refining capacity, 1.375 million bpd of oil production and 8.3 billion cubic feet per day of natural gas production were shut down as a precautionary measure. Such amounts represent 11 percent of total U.S. refining capacity as well as 92 percent of typical U.S. Gulf of Mexico oil production and 83 percent of the region's natural gas production. The producing assets remain offline not simply because of concerns of their continued viability, but because a complete assessment of the maze of collecting and transport pipelines that link offshore assets to the coast must be undertaken before production can be safely restarted.

There is, however, a bit of good news. Despite rampant talk of gasoline shortages, there is not even a minimal danger. Nearly all U.S. refineries already have switched over to heating oil and winter fuel production. The Sept. 3-5 Labor Day weekend marks the end of the U.S. summer driving season, so gasoline demand is about to drop off. There could be some regional tightness in markets and prices will certainly rise on shortage fears -- no matter how misplaced -- but there should not be more than mild supply disruptions.

The real problems will come later. As we noted, most American refineries already are gearing up for winter production runs. The issue is almost exclusively one of refined products, as U.S. commercial crude oil reserves are sitting at six-year highs and the Strategic Petroleum Reserve (SPR) is sitting pretty at 700 million barrels -- it became full for the first time ever earlier in August. If Gulf refining capacity remains offline for any more than a few days, the United States could quite easily face heating oil shortages -- particularly in the Northeast -- in the coming winter. Overall tightness in all refined products is a less acute, but equally legitimate, concern.

Of course, we should not ignore the question of production assets either. Although the absence will not contribute to product shortages, significant damage certainly would affect the broader price situation. Katrina followed the same approximate path through the Gulf of Mexico's producing areas as Hurricane Ivan did in 2004. Ivan wrecked so much havoc that it took 10 months to repair all the damage, and contributed to a sustained 20 percent hike in energy prices. All told, the Bush administration approved 5.4 million barrels of crude oil loans from the SPR to keep the American refinery complex running. With the U.S. energy transport and production infrastructure damaged in all likelihood, Citgo will not be the last U.S. refiner to ask for help.

Another report on gulf operations (clif notes version: Thunder Horse appears fine)


Rowan can't locate its Rowan-New Orleans rig post-Katrina (RDC) By Carolyn Pritchard
SAN FRANCISCO (MarketWatch) -- Rowan Cos. Inc. (RDC) said Tuesday that it's unable to locate its Rowan-New Orleans rig in the wake of Hurricane Katrina and fears it may have capsized and sunk offshore Louisiana. The rig was insured for $8.5 million and had a carrying value of $7.4 million, the company said. Rowan said its other rigs in the area appear to have sustained minimal damage but a complete evaluation of their condition will require a closer inspection from the company's drilling personnel.

August 30, 2005 16 50  GMT

As floodwaters from Lake Pontchartrain poured into New Orleans Aug. 30 -- the result of two major breaches in the city's levee system a day after Hurricane Katrina narrowly missed a direct hit on the city -- serious concerns that Stratfor raised as Katrina barreled though the Gulf of Mexico have returned.

Among the most pressing concerns is the status of the Mississippi River. Although Katrina veered slightly just before making landfall, the storm did strike the river's mouth head on. With the water level low due to a drought in the Midwest, the lower reaches of the delta could no longer be navigable.

In effect, the rising waters will prevent New Orleans from serving as a base of operations for rescue/recovery/assessment operations, meaning focus must now be shifted to the situation south of the city -- areas that will be cut off from substantial assistance for a few days as the U.S. government stretches its resources to get to the tens of thousands of people still stranded in New Orleans.

Over the next few hours, Stratfor will assess the situation in southern Louisiana with an eye on addressing key questions -- the answers to which will determine the status of the entire import-export infrastructure of the middle section of the United States, as well as the status of the energy infrastructure in the Gulf of Mexico.

As of now, the key questions are:

  1. As the U.S. grain harvest gets under way, where are the grain storage facilities in this area -- and what has become of them?

  2. Has silt build-up on the Mississippi River affected its navigability -- and thus affected shipments? The U.S. Coast Guard reports that most efforts up to now are focusing on search and rescue, although it is attempting to move several ships that have run aground. Furthermore, some survey work has begun at mile marker 507 and below, where the Coast Guard has located several smaller sunken ships. The initial survey is expected to be completed within 24 hours.

  3. What is the status of Grande Isle, the city on the Gulf that services the oil industry, and of Port Fourchon, the onshore transfer point for the oil off-loading facility known as the LOOP?

  4. What is the status of the Port of South Louisiana and the Port of New Orleans?

New Orleans Mayor Ray Nagin said earlier Aug. 30 that 80 percent of the city already is flooding. As the waters rise, so do the threats to the U.S. economy.
Slightly outdated (2002) but probably hasn't changed much:

Grain Storage Capacity by State

Louisiana may be a transit point, or THE transit route, but is not a significant storage point.

New Orleans

Now the city is really in trouble. Having seen and worked against flooding I doubt those breaches in the levees can be closed by dropping sandbags from the air.

The potential area of flooding through the reported breaches is some 75 square kilometers. The average water level would be over 1 meter.

That are up to 75,000,000 cubic meter of water that will not evaporate or vanish in the ground. As New Orleans lies below the natural water level, they will have to be pumped out.

The biggest transportable salvage pump I could find on the net does some 750 cubic meter per hour and there are not many of those around.

It will be a long time before New Orleans is dry again.

The question of course is who will have to take the blame. Here is a hint:

It appears that the money has been moved in the president’s budget to handle homeland security and the war in Iraq, and I suppose that’s the price we pay. Nobody locally is happy that the levees can’t be finished, and we are doing everything we can to make the case that this is a security issue for us.

-- Walter Maestri, emergency management chief for Jefferson Parish, Louisiana; New Orleans Times-Picayune, June 8, 2004.

Posted by Bernhard on August 30, 2005 at 03:55


anybody who does not have flood insurance will
be to blame.  and anyone silly enough to think
the levee system would work forever
They're evacuating the superdome.
My heart feels for the people affected, deeply and truly. Unfortunately some made their own choices ... not everyone there has flexibility in where they live but you can bet a great many did.

I chose not to buy property near water for a reason. Where I live, we have immediately adjacent to us (down the hill, over a bridge) a city of almost 200,000 that is, for all intents and purposes, like New Orleans -- completely under sea level. On peat and sand. In an area with a known major earthquake fault.

I'm laughed at by many, including my former partner, when I say I would never buy property or live in that city, not at any price. One day - in my lifetime or my kids lifetime or their kids, it doesn't matter - that city will look like New Orleans does today.

My partner lives one block from the "dike".

Humankind has an irrational belief that we are bigger and more powerful than nature herself.

Maybe this one will get posted.  Living out here in Arizona, where i'ts dry and hot. Gas prices still go up.   I would like to thank the folks at TOD  for keeping me and the rest of the country updated on the situation in NO.    THE HERMIT
What's the story from FOX news about areas in south east LA that had been reclaimed by the river? Any refineries or oil producing facilities there?