FT: Rita causes record damage to oil rigs

Hurricane Rita has caused more damage to oil rigs than any other storm in history and will force companies to delay drilling for oil in the US and as far away as the Middle East, initial damage assessments show.
Update [2005-9-27 21:8:6 by Prof. Goose]:Here's another interesting piece of the puzzle. (thanks Murray)

Technorati Tags: , , , ,

Not sure where to put this since this is off topic:

http://www.latimes.com/news/nationworld/iraq/complete/la-fg-oil26sep26,1,5000603.story?coll=la-iraq- complete&ctrack=1&cset=true

The failure to rebuild key components of Iraq's petroleum industry has impeded oil production and may have permanently damaged the largest of the country's vast oil fields, American and Iraqi experts say.

The deficiencies have deprived Iraq of hundreds of millions of dollars in potential revenue needed for national rebuilding efforts and kept millions of barrels of oil off the world market at a time of growing demand.

Engineering mistakes, poor leadership and shifting priorities have delayed or led to the cancellation of several projects critical to restoring Iraq's oil industry, according to interviews with more than two dozen current and former U.S. and Iraqi officials and industry experts.

Notice the "permanently damaged the largest of the country's vast oil fields".



Also notice that it was the UN embargo that caused this "failure."

One thing I find confusing in some of this discussion is the distinction between drilling and production "rigs". This article is about drilling rigs, the equipment used to drill new oil wells. Some other articles about damage are about production wells. I'm not sure if it is correct to describe the well head equipment as "rigs" in the case of production wells or if that term is only to be used for drilling.
When are the market prices going to reflect this grim reality? Yesterday I opined that two factors were (1) the extent of the damage was not known -- that news is coming in -- and (2) everybody was in a let's not panic mode.

Well, regarding the latter, how about a sensible increase in prices to reflect scarcity so that people will go about adjusting their energy usage where possible? Not that I think there is much elasticity in the system but there is some. This tapping the SPR crap is a small-time short-lived adjustment. OK, there was some profit-taking in the market and demand is down right now. But it's hard to escape the conclusion that as of now, in the US, the market traders have their collective heads up their ass.
Refineries Hit Hardest by Rita May Be Off for a Month

 ``I've never seen anything like it,'' said Drew Laughlin, an energy consultant who has spent almost three decades in the refining business and used to work for Valero. It will likely take more than two weeks for the refineries in Rita's path to begin recovering, Lauglin said. ``I can't even see them getting the power on in two weeks.''


Speaking of rig/platform damage, where's the EIA's daily report for 9/27? As of 8:00pm eastern, the 9/26 report is still up at http://tonto.eia.doe.gov/oog/special/eia1_katrina.html

The data found in that report has already been released by the MMS and the OED&ER, of course (yet another day of 100% GOM Crude shutin -- now up to nearly 7% of annual production lost) but maybe they're all burning the midnight oil at the EIA to get the inventory data out tomorrow?

The report for 9/27 has been released, just not at the page you posted.  You can find it here.
Bravo FT for reporting the real story! The rest of the MSM has been breathing a sigh of relief that many of the onshore oil refineries were spared, but ignoring the damage to the offshore platforms/rigs. When the storm turned rightward about a day before landfall, one would have expected less damage to refineries and to Houston and Galveston, but more damage to the offshore rigs. That is exactly what happened ... but nobody in the MSM noticed the second half of that.
Yes indeed. Thanks for the great post.
147mph winds = 1,000 year storm???  How many ah them there 1,000 year storms a we had in the last cupla years?  Doh!!
What prices are you expecting to move. With refinery capacity shut in there is no demand for crude so it will not rise right away. Gasoline OTH started up today.  Murray
Gas is up here almost 30 cents in the last week (depending on where you shop, varies by a nickel or so)

"here" is 100 miles NW of Houston.  

November gasoline and natural gas both had life-of-contract high closes today. Prices are sure moving now.
Currently all the top Google News hits on "Rita damage" are happy, happy stuff. Statements like "far less than feared" dominate the headlines.

Have reports and assessments really improved so much in the last few hours, or do you think there could be some kind of temporary skew in the current batch of media reports? I'm a bit confused by this...

Check: http://news.google.ca/news?hl=en&ned=ca&q=Rita+damage&btnG=Search+News