Newest (and very informative and very scary) report from an anonymous insider
Posted by Prof. Goose on August 31, 2005 - 5:12pm
Update [2005-8-31 16:02:53 by Prof. Goose]:This story has been confirmed by the Coast Guard, at least 20 rigs gone.
We also set individual wells as satellites and pipe them back to existing platforms. These stand-alone wells are called caisson wells. 90% of those in the storm path are bent over, rendering them a total loss, We would have to remove the existing bent structure and drill a new well, as bent pipe is basically unusable.
We utilize platforms as gathering hubs. We pipe the raw oil/water to them and then send it on for separation, or separate it there and send finished oil on. Damage to a hub means everything going to the hub is offline indefinitely. There are +/- 15 HUBS missing. MISSING!! As in we cannot find them from the air.
Thus even if the wells feeding the hub are ok, we have nowhere to pump the oil to...
The jackup drilling rigs appear to be in various stages of damage, but most rode the storm out with minimal problems. However, each of them has shifted position.
When we jack the rig up, it is carefully positioned directly over the well slot where we are working. The derrick has rails that allow us to slide it in 4 directions to get the derrick directly over the well or slot. If the rig moves (right/left, or from level to uneven), it has to be jacked back down to the waterline and repositioned with tugboats, then jacked back up. After it is back up and level, the derrick is slid on the 2 sets of rails, and bolted into position over the well or slot again.
Thus we have to reset each of the drilling rigs, which requires getting OUT of the well, tugboats and a move, then getting back into the well. The open hole we have drilled (what is not enclosed in cemented casing) is likely to be lost, and if the wellhead or the casing is bent, then the well will have to be redrilled. This is an exploration setback of at least a month, but we don't yet know the boat situation.
Boats are usually brought into harbor to weather storms. We do not have a boat count yet, but from the initial reports, we may have lost or grounded 30% of the Gulf of Mexico fleet. This means everything will cost more, take longer - repairs, repositioning, everything.
In short, the Gulf area hit by the storm is basically in about the same shape as Biloxi. The damage numbers you have gotten from the government and analysts are, in my opinion, much too low. We are looking at YEARS to return to the production levels we had prior to the storm. The eastern Gulf of Mexico is primarily oil production...
Loss of the MARS platform alone cost us 95,000 barrels a day for a year or maybe more.
YEARS, people. I know what this means - hope everyone else gets it too...
Click here to go to an image of a destroyed rig.
The front page of the Houston Chronicle has a rig beached on Dauphin Island. The legs have been sheared off and derrick is missing – thus it is a total loss. This rig was operating in Main Pass (adjacent to Plaquemines Parish), and thus was blown to Alabama and beached.
Update [2005-8-31 10:6:22 by Prof. Goose]:The insider asked me to attach this article to her post.
Technorati Tags: peak oil, oil, Katrina, Hurricane Katrina, gas prices.
Newest (and very informative and very scary) report from an anonymous insider
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69 comments
Newest (and very informative and very scary) report from an anonymous insider
PDF version
69 comments
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The link to the Houston Chronicle seems to be broken.
Is this the same picture that was on the 1st page of the business section of the NYT this morning?
the SPR is released and will replace missing daily oil production for the short term (say 2-4 weeks). also since we are out refineries, we don't have enough refineries to take on oil to convert into distillates, therefore, we may begin to see some crude stocks buildup in the short term (2-4wk period).
so, may be we start to see crude prices come down in a couple wks? only temporarily until the refineries are brought back online to start procesing oil again.
not so for gas/heating oil prices, those remain very bullish in the meantime.
First, this is a great report, and you should thank your correspondant. It's very helpful to get direct first-person reporting like this.
But second, I don't get a sense from this as to the percentage of the total gulf production infrastructure that is damaged. It sounds like this is a survey of the most badly hit areas. Bad as Katrina was, she painted a swath of damage across the gulf, but outside that zone things should be OK. We hear about 10s of platforms lost, but out of how many in the gulf? We hear about 15 hubs missing, but again, out of how many? 90% of the caisson wells in the storm path are damaged or destroyed, but how much of the total gulf production is that? It would be helpful to go back to this person and see if they would be in a position to estimate that.
Third, total gulf production was something like 1.5 mbpd. That's out of 75-80 mbpd worldwide. Even if we lose, say, half of the gulf production for a relatively long term, that's only about 1 percent of the world market. A relatively small reallocation of world supplies can make up for it. (And much GOM production is relatively sour crude, which is plentiful around the world.)
in regards to supply cushion, we have none. the world has none or very little. so missing 1-1.5 mbd of crude oil is a very big deal and very difficult to make up. i'd imagine, besides making up for this with the SPR (which is a temporary solution), the US will eventually have to outbid poorer countries for oil - i.e. Sudan? lol.
I found one reference on the EIA web site that discusses the sour oil situation, but it is a Powerpoint presentation. Drowning in Sour Oil, Adapting to a New Crude Quality Dynamic, slide 11 reads "Non-OPEC, GOM crude quality deteriorating". It has a chart labeled "Gulf of Mexico crude quality" showing the "sour share". In 2000 it was about 73%, and in 2005 it has increased to 90%.
but does anybody know how much of the gulf region
is exported? is this a price problem in the USA
only?
I saw an article about gas prices being up in
the philipenes and indonesia. I just want to
to know if catrina will bring prices up everywhere.
So far i think it will only bring prices up in
the USA. on the oil wikipedia page it said
most of crude is sold 'over-the counter' with
pricing info coming from "platts'
thanks
"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, [still] emergency management chief for Jefferson Parish, Louisiana; New Orleans Times-Picayune, June 8, 2004
Full article:
http://www.pnionline.com/dnblog/attytood/archives/002331.html
Some homeland security policy we have.
There was a proposal to upgrade the levees to withstand a Cat-5 event, but AFAIK no construction was being done. The federal contribution mentioned was for $55m for a planning study. Dozens (if not hundreds) of miles of levees would have to be increased in height by nearly 50% (15ft to 22ft or more!). Earthen levees would have to be at least 50% wider. The project would have cost billions - $55m doesn't buy more than a few yards of levee, and it's no good until its ALL finished.
Whatever major changes are planned for N.O. in the future, their economic cost will be small next to the losses we've already seen and will continue to feel. The direct costs of the hurricane may be $25bn or more, and the long term economic costs will be far greater, to say nothing of shattered lives and communities.
The commondreams article seems to be based upon stories in the Times-Picayune. If one wanted a good source of local information in New Orleans, that would be the first place I would turn.
The Brits built the channel tunnel in 7 years (design and construct)
The Dutch keep out the North Sea every day!!! and whilst they don't have hurricanes the coast is severely battered constantly.
Go back to school son and think before you speak. The US can have these things done and dusted to a schedule governed by their desire and commitment.
We forget that higher levees lead us to believe we can hold back nature. It's just folly to build a major city, subject to major storms, below sea level. If you do build theere, then prepare. The flood/storm preparation that the Netherlands and the British have invested in seems to dwarf the fairly primitive earthen levees in NO.
Moreover, New Orleans is not like, say, the vacation communities built on sandbars along the Atlantic Coast. Its existence was never frivolous.
Unfortunately, deprived of the annual replenishment of soil carried by the floods, the city is slowly sinking into the soft mud on which it is built. That's why it is now 6 feet below sea level on average. The flat barges that would float down the river were level with the rooftops of the buildings nearby.
Most observers viewed catastrophe as inevitable. If not in this form, then in the form of the river escaping its bounds and changing course as it naturally used to do every few years or decades, abandoning New Orleans and all the facilities built around the river. That problem still lies ahead.
Ultimately I think we need to take a different approach to managing the mouth of the Mississippi. We have to find a way to be more accommodating to the river's dynamism and not try to treat it like a piece of machinery that we can just shape as we desire and expect it to stay that way. It's almost more like a living organism. We need to let it move and change and be dynamic, and adjust our infrastructure to be flexible enough to adapt. Otherwise we will be facing another such catastrophe in a few years or decades.
If this had happened in Europe the whole surrounding population would be out digging n pumping. instead you all out shooting each other till even the local cops give up. Get some of the Dunkirk spirit. and national pride!!!
http://geography.about.com/library/weekly/aa033000a.htm
Just what-iffing...
I would also imagine that other port facilities will be sending stuff to Fourchon to get them back up (Cameron and Intracoastal City in Louisiana are both large offshore dock centers). Otherwise the oil companies will have to wait until the road is re-opened to get going.
Also, won't most of these rigs and platforms have to be structurally inspected if they have any damage from impact? Or do people just restart the generators and get back to work willy-nilly?
I heard that there were 3-4 rigs actually lost, as in destroyed. With the 5 leaving for Saudi Arabia, won't that make the rig market very tight, resulting in even higher drilling costs? I looked and there are 94 jackup rigs in the Gulf. If 5 leave and 3-4 are destroyed, that is a loss of 10% of the jackup fleet...
http://www.mms.gov/ooc/press/2005/press0831.htm
Date / Oil / Gas
Sept 15 - 78 / 49%
Sept 16 - 83 / 53
Sept 17 - 73 / 42
Sept 20 - 41 / 24
Sept 21 - 39 / 23
Sept 22 - 34 / 19
Sept 23 - 28 / 19
Sept 24 - 28 / 19
Sept 27 - 28 / 19
Sept 28 - 29 / 19
Sept 29 - 29 / 19
Sept 30 - 29 / 19
Oct. 01 - 29 / 19
... getting bored here. Ivan, much less destructive, kept near 30 / 20 percent of oil and gas off line for some time. Lets see how fast, or not, Katrina damage is mitigated in the early days, that ought to be some sort of predictor.
Report of damage cumulative to Sept 22 2004:
Preliminary reports show that few of the 4,000 platforms or the 117 rigs working in the Gulf sustained major damage. Of the 33,000 miles of pipeline, thirteen leaks have been reported, and most of the 25,000 to 30,000 workers involved in the production of offshore oil and natural gas are back at work.
Preliminary assessments of major damage reported by industry indicate the following:
5 Mobile Offshore Drilling Units (MODU) were adrift. All have been located. One MODU was reported to be leaning about 3 degrees. Companies are in the process of reoccupying these facilities to assess the damage onsite.
7 Fixed platforms have been destroyed.
1 Fixed platform is reported as leaning.
1 Rig derrick installed on a SPAR is missing.
1 Platform rig derrick was seen leaning over the edge of the SPAR on which it was installed.
2 Spars with extensive damage.
1 MODU with extensive damage.
4 Platforms with extensive damage
13 Pipelines leaks were reported - 1 resulted in a fire which is now burned out.
"Q.2. Why did the levees fail?
A.2. What failed were actually floodwalls, not levees. This was caused by overtopping which caused scouring, or an eating away of the earthen support, which then basically undermined the wall.
These walls and levees were designed to withstand a fast moving category 3 hurricane. Katrina was a strong 4 at landfall, and conditions exceeded the design.
Q.3. Why only Category 3 protection?
A.3. That is what we were authorized to do."
This is what we were authorized to do! Why?
President Bush Calls for Permanent Tax Cuts August 9, 2005
yeah, where are we going to find that money?
Government Boondoggle Projects: Bad
This after Hurricane Ivan in 2004:
(http://hurricane.lsu.edu/_in_the_news/phillyinquirer100804.htm)
"It's possible to protect New Orleans from a Category 5 hurricane," said Al Naomi, senior project manager for the Corps of Engineers. "But we've got to start. To do nothing is tantamount to negligence."
It could take 20 years and at least $1 billion to raise the levees high enough and to build floodgates at the mouth of Lake Pontchartrain, Naomi said.
The corps hoped to begin a study this year of the steps necessary and the costs. Just the study would take four years and cost $4 million, Naomi said, but the money is not in the federal budget for 2005, though the Senate has yet to act."
In 2000, Shea Penland, geologist and professor at the University of New Orleans:
(http://www.findarticles.com/p/articles/mi_m0BJK/is_15_11/ai_68642805)
It would cost a billion or two dollars to make the levee 30 feet high. A major flood with loss of life could cost $10 billion. What's wrong with this picture? If we know the worst-case scenario is billions and it would take a billion or two to prevent it, why don't we do it? I don't think anyone's thinking about it."
Another perspective, which takes into account the problem of the disappearing wetlands surrounding the area, is available in this Scientific American article from 2001 at:
filebox.vt.edu/users/jkbrooks/ pictures/New%20Orleans.pdf (Google for the link as the direct link does not work.)
The problem is complex . But it has been known for many years that the levees afforded protection only up to a category 3 storm and that a slow-moving 4 or any five would be disastrous. Yet much that could have been done to lessen the effects of this tragedy was not done. And this from many voices from that area and before the fact. There is simply no honest way to slough this horror all off on nature.
In my own area it took Andrew to get the building codes improved to fully recognize that we live in a hurricane-prone area. In other words, a loss of around $26 billion dollars, thousands of homes smashed to bits and 13 dead. We still have not addressed zoning practices which encourage building in dangerous areas.
http://sciteclibrary.ru/eng/catalog/pages/3237.html
That's 1.9 mbpd offline, and 400K bpd at "reduced" rates. Of the off-line facilities, only ONE has been examined and found to have "minimal" damage.
Oil refineries still shut down.
(AP) - Eight Gulf of Mexico refineries remain shut and one is
operating
at a reduced rate while damage from Hurricane Katrina continues to be
assessed by oil and gas companies.
Access to some of the refineries is difficult. Conditions at those
locations
are as follows:
_ Baton Rouge, La. - At nearly 394,000 barrels a day, one of the gulf's
largest refinery owned by Exxon Mobil Corp. is running at a reduced
capacity.
_ Pascagoula, Miss. - Chevron Corp.'s 325,000 barrel a day refinery
remains shut. The company says access to the refinery remains
difficult.
_ Norco, La. - Valero Energy Corp.'s St. Charles refinery is not likely
to resume its 260,000 barrel a day operations for up to two weeks.
_ Garyville, La. - Marathon Oil Corp.'s 245,000 barrel a day refinery
remains shut. Access is limited.
_ Belle Chasse, La. - ConocoPhillips' Alliance refinery remains shut
while the company continues to assess damage to the 255,000 barrel a day
facility.
_ Convent, La. -- Motiva Enterprises's 255,000 barrel a day facility
sustained minimal damage.
_ Norco, La. - Access to Motiva Enterprises's 242,000 barrel a day
refinery is limited, so damage still is being assessed.
_ Chalmette, La. - Exxon Mobil has not been able to visit the 183,000
barrel a day refinery, which shut down on Sunday.
_ Meraux, La. - The 125,000 barrel a day facility by Murphy Oil Corp.
remains shut down as access remains limited.
People I talk to still are not accepting the magnitude of this event or don't want to believe the accuracy because of the source, a web site.
In my opinion we have a big problem. The data here is accurate and timely but is competing with mass communications which is slow and often innacurate with respect to facts. Now it's an uphill battle convincing them that what they were previously told is wrong. They are going to be extremely mad when they find out how bad it really is.
I am open to suggestions on how to inform people of why the details of storm damage and peak oil are critical to predicting price increases and scarcity. People still expect things to just be worked out but have no rational basis for this belief.
Thanks again for the details it helps me to plan for the future.
what are the best plans for consumers if
the investors and burecrats keep acting
studpid.
there should a section for where to go
if each country has to become self sustaining
and when should we start lining up at the gas pump
or just skip down and drive to ?where?
i know it sounds alarmist but this stuff if too fun
My Company operates from Golden Meadow La. and reports are damage not severe just bad. office is up and running (on generator) So I would assume the same for most in the area.
i want a link on the top of the page that is
an open thread on future prediciton
and then we rate the predictions with stars
like books on amazon or instant polls and then
instead of just linear posts we could get a
community consensus on what will happen in the
future
i want 'the oil drum' people to able to say with
a democratic voice here is what will happen
in the future and we can all vote on it and
see you wins and comments could be used to
verify or question the content of the future claim
week, month and year prediction pages would be great
is this do-able in a blog format?
and these posts are really good, thank you
One suggestion: Do NOT call it a betting pool. Call it The OD Consensus or something similar. "Betting pool" has the wrong connotation, IMO.
http://www.welt.de/data/2005/08/31/768846.html
http://www.livejournal.com/users/dasht_brk
-t
"b. be prepared for environmental concessions
Different states and regions have different legal standards for
gasoline. This means that a refinery in one state can't supply gas to
a different state. If the predicted emergency unfolds, this will
become untenable. Should a call from the administration arise to
relax gas standards temporarily, it is probably best for the left to
endorse this idea."
This is an interesting idea. Let's take care to preserve the environment unless, of course, we really need to have some gasoline. Or let's not burn mercury/sulfur laden coal unless we really want electricity. Jared Diamond's COLLAPSE points out how a culture is likely to prefer its old ways of doing things to making vital changes. Peak oil is thought by some to hold the hope of curbing global warming, but it may do just the opposite as people strive to maintain a disappearing past.
If the issue is simply divergent standards, why not simply impose the most stringent, or get all states to agree to 1 to 3 different standard "mixes".
Because (afaict) most refineries can't meet the most stringent standards in their current state and what I'm discussing is a temporary response to an immediate crisis. It's not like they just flip a switch to mix ethanol in etc. (Isn't that ancient news to readers of this site?)
Peak oil may very well be (let's hope?) the occaision of a shift in consumption patterns but that doesn't imply transitions shouldn't be managed with care.
-t
"We are looking at YEARS to return to the [crude & gas] production levels we had prior to the storm" -- if that's the case, then near-term measures involving the SPR mean nothing. However, a bad precedent has been set here involving temporarily rescinding the Clean Air Act to allow immediate refining of sour crude oil [= a crude oil containing hydrogen sulfide, carbon dioxide or mercaptans]. So, rather than engage in sensible and effective conservation programs immediately, it looks to me like we're going to go in the entirely wrong direction as usual.
Transocean's Deepwater Nautilus Damaged During Hurricane Katrina
http://www.rigzone.com/news/article.asp?a_id=24868&rss=true
A preliminary inspection of the company's semisubmersible rig Deepwater Nautilus has revealed significant damage to the rig's mooring system and the loss of approximately 3,200 feet of marine riser and a portion of the unit's subsea well control system which remained suspended at the time the unit was evacuated. The rig, which was previously reported to have drifted off location, has been secured by an offshore service vessel approximately 80 miles from its moored position prior to the storm.
Shell Says Facilities, Pipeline Hit by Hurricane Katrina Remain Shut
http://www.rigzone.com/news/article.asp?a_id=24845
Sounded as if, even with salt water damage, they must be considering a restart of some of these facilities with the view that all the equipment / infrastructure will eventually need to be replaced - reliability, if they get them running, will be low.
Longer it takes to drain and clean the less likely this scenario is, I would imagine, but perhaps a HV power engineer with salt water experience is reading and can speak up.
New Orleans and Area - down months, and that's only after its drained and assessed.
Other less affected areas - best case 10 days
Suspect they are still accumulating assessments... they still don't know how much equip and material and manpower they will need, perhaps these estimates may get longer...
http://www.nytimes.com/packages/html/national/2005_HURRICANEKATRINA_GRAPHIC/index.html
There was panic buying in progress when I passed on my way home. Vehicles were lined up at 10-deep to access the two pump islands. Of course, the gas being pumped there was the same that sold a day before for $2.55. An immediate tight supply driving the price hikes? Or just jitters?
http://nytimes.com/2005/08/31/national/nationalspecial/31cnd-oil.html
"The lack of power could also hamper or delay the release of oil from the oil reserve. Speaking on CNN, Mr. Bodman said there were two major pipelines that can deliver oil to the refiners, but that both still lacked power. "We are now working with both companies," he said, "to get these lines up and functioning."
... Also, pipelines that bring refined gasoline from the Gulf Coast area to the Northeast are not operating because power failures.
"There is going to be pain long after because we were already short," he said. "This pushed a very, very tight situation over the line. While we can ameliorate pain, we cannot eliminate it."
The pipelines, the Colonial and Plantation, supply most of the gasoline, diesel fuel and jet fuel to much of the Eastern half of the United States are not operating because critical pumps in Louisiana and Mississippi do not have electricity, the Department of Energy reported today. The government was working with power companies and emergency responders to get power restored to those installations."
"We have confirmed at least 20 rigs or platforms missing, either sunk or adrift, and one confirmed fire where a rig was," petty officer Robert Reed of the Louisiana Coast Guard said.
http://www.finance24.com/articles/economy/display_article.asp?Nav=ns&lvl2=econ&ArticleID=151 8-1785_1763118
http://news.yahoo.com/news?tmpl=story&u=/afp/20050831/ts_alt_afp/usweatheroilgulfrigs_0508312136 42
The platforms lost to the storm were: Main Pass 312-JA; South Timbalier 161-A; South Pass (SP) 62-A; SP 62-B; West Delta (WD) 103-A; WD 103-B; WD 104- C; and WD 133-B.
Aggregate gross production from the eight lost platforms was 7,158 barrels of oil and 12.1 million cubic feet of gas per day before the storm.
A detailed inspection of damage to other facilities is under way. Apache personnel have begun the process of restoring production as pipeline and processing facilities become available.
http://biz.yahoo.com/prnews/050901/dath020.html?.v=26
http://www.mms.gov/ooc/press/2005/press0901.htm
The cumulative shut-in oil production for the period 8/26/05-9/1/05 is 7,441,566 bbls, which is equivalent to 1.359% of the yearly production of oil in the GOM (approximately 547.5 million barrels).
Believe I just caught Coast Guard on CNN / news conference starting to talk about ASSISTING IN RESTABLISHING OFF SHORE INFRASTUCTURE
could be an indication of how bad things are, but may be just the common sense thing to say and do given times.
so you add alcohol to gasoline that's fine, it's soluble in gasoline as well.
but if some humidity gets into the gasoline then the alcohol is attracted to the water and can drop out of solution.
so you end up with whatever amount of alcohol is mixed in with the gas coming out of solution.
imagine your gas tank filled with 90% gasoline and 10% vodka. Gives you an idea.
There were big problems with this in Australia and people's engines got wrecked.
They were mixing in as much as 25% alcohol with the fuel (they were meant to put in 5-10% but people got greedy.)
There are also stories of people buying paint thinner and mixing it in with the gas.
Paint thinner has no tax on it so it is very cheap. Some dogey gas stations in Australia were mixing upto 50% paint thinner into their stocks.
You can google for the articles, it was 3-4 years ago now.
The paint thinner runs the car OK, but can damage seals. It also gives you lousy power and lousy gas milegae.
Some people sued the petrol stations when there cars were wrecked by these practices.
I am sure I got one or two tank fulls. I remember one time I filled up the car ran like a dog and ate the tank nearly twice as fast.