Panel: US Gulf Rigs Safer, But Still Vulnerable to Storms

HOUSTON Aug 23, 2006 (Dow Jones Newswires)

The Gulf of Mexico's oil and gas infrastructure has come a long way toward being able to weather the likes of Hurricane Katrina or Rita. The city of Houston, not so much, a panel of oil and gas industry experts and hurricane planners concluded at Rice University's Baker Institute Energy Forum Tuesday.

Damage from Katrina and Rita last summer have so far shut in 166 million barrels of oil and 803 billion cubic feet of natural gas, with 9% of pre-Katrina production still out, said Chris Oynes, regional director for the Gulf of Mexico for the Minerals Management Service, which regulates natural resources.

The storms destroyed over 100 rigs, sent 18 rigs wandering through the Gulf unmoored and somehow moved one pipeline nearly a mile from where it was laid, he said.

So far, 2006 has been free of major storms. Most oil and gas companies operating in the Gulf have taken the grace period to begin upgrading the moorings that hold rigs in place from the older eight-point system to 12-point models, Oynes said.

BP PLC (BP) has moved its one older rig to a less hurricane-prone area of the Gulf, to lower the odds that it could come unmoored and slam into a newer, semi-submersible platform, which can cost $500 million or more, said another panelist, Kenny Lang, vice president of BP's Gulf of Mexico production.

Newly interconnected pipelines will make it less likely that a single damaged line could cut off production, Lang said. After Katrina, BP was forced to shut-in all of its production, even though its rigs were still working, because it couldn't find a workable pipeline to transport products to shore.

BP also plans in December to lay fiber-optic cable across the Gulf, from Freeport, Texas, to Pascagoula, Miss. The network will allow Houston-based employees to keep operating rigs, even after on-site personnel are evacuated before a hurricane, he said.

William King, a member of a task force set up by Texas Gov. Rick Perry to create an evacuation plan for the city of Houston, was less optimistic about the chances of surviving a major hurricane unscathed on shore.

He noted that oil companies are coordinating to avoid the gasoline shortages that bedeviled many who tried to flee Houston before Hurricane Rita in September 2005, and that area officials had a game plan to avoid the turf wars and mixed messages that plagued the evacuation.

But even if the mandatory evacuation of 1.5 million residents went exactly as planned, it would take 53 hours to clear the projected flood zone of a Category 4 or 5 hurricane, mainly due to the lack of highway leading out of Houston. The citizens of New Orleans, King noted, had 36 hours at most between when Katrina was first projected to hit the city and landfall.

"I do not for one second think this problem has been solved," he said.

Copyright (c) 2006 Dow Jones & Company, Inc.


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