Bush Officials Warn of Possible Gas Shortages, Output Shows Minimal Gains

Two senior Bush administration officials warned Tuesday of possible natural gas shortages because of the slow recovery following Hurricane Katrina, and their statements were mirrored in the Minerals Management Service report, which showed shut-in gas barely inched up in 24 hours to 3.720 Bcf/d, or 37.20% of daily gas production offshore, compared with Monday's shut-in report of 3.784 Bcf/d.

The cumulative shut-in gas production since Aug. 26 is 95.476 Bcf, equivalent to 2.616% of the yearly production of 3.65 Tcf of gas in the Gulf.

Shut-in oil production as of midday Tuesday was 846,720 bbl/d, equivalent to 56.45% of the daily oil production in the GOM, which is currently 1.5 million bbl/d. The cumulative shut-in oil production since Aug. 26 is 19.690 million bbl/d, equivalent to 3.596 % of the yearly 547.5 million bbl of oil production offshore.

As of Tuesday, 10.62% of 819 manned platforms and 1.49% of 134 rigs currently operating in the Gulf remained evacuated.

Two senior Bush administration officials touring the Gulf Coast region devastated by Hurricane Katrina Tuesday said natural gas shortages are possible because of a slow recovery to production and related facilities. Energy Secretary Samuel Bodman and Interior Secretary Gail Norton told reporters gas shortages are possible because of a slow recovery to production and related facilities. The two flew to Baton Rouge, LA from Houston after meeting with several senior energy executives Monday night to discuss their recovery efforts following the hurricane.

Bodman told reporters less is known about the damage to the gas supply system than the effect on crude oil production because of possible offshore pipeline damage and flooded gas processing facilities onshore.

"The great concern is about natural gas," Bodman said.

About 90% of the Gulf oil platforms will be capable of production by the end of September, said Interior Secretary Gail Norton. However, damage to onshore facilities may reduce oil output.

"But there is more concern about gas because we don't have an international market" to use for additional gas supplies, as oil does, Norton said.

Meanwhile, another energy company on Tuesday revised its third quarter and full-year oil and natural gas production figures because of Katrina.

PetroQuest Energy Inc. dropped its third quarter production guidance to 46-49 MMcfe/d from a previously issued guidance of 49-53 MMcfe/d, "primarily due to production downtime during Hurricane Katrina, production that remains shut-in as a result of the hurricane and a deferral of initial production at the company's Pebble Beach prospect due to the hurricane." Production that remains shut-in is approximately 2.3 Mcfe/d, and "is contingent on third party pipelines and processing facilities." PetroQuest still expects initial production from its Pebble Beach prospect in October. After full inspections were completed, the company found no reservoir damage and only minor superficial damage sustained to surface facilities.

Additionally, PetroQuest revised full-year 2005 production guidance to 47-50 MMcfe/d, down from previous guidance of 50-55 MMcfe/d because of hurricane-related issues, as well as a deferral of production from the company's Main Pass facilities. Main Pass production is contingent on third party pipelines and processing facilities being put back into service. The company expects to complete its lateral line connection in October and production to resume at Main Pass in November.

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