Ike damage to U.S. oil sector seen limited so far

HOUSTON (Reuters) - A big chunk of U.S. energy production shut by Hurricane Ike could restart within a week as initial reports showed the storm caused only minor damage to the nation's oil platforms and refineries.

Fuel supply disruptions are still possible in the meantime, as the shutdowns cut already threadbare gasoline inventories to their lowest levels on record, sending pump prices spiking.

The biggest hurdle for the oil industry probably will be restoring power supplies to refineries and pipelines after the storm raked southeast Texas Saturday and idled a quarter of U.S. crude and fuel production.

"As with Gustav, power availability (as well as reportedly limited supplies of steam and industrial gases at some plants) will be the main hurdle to clear before facilities can restart," J.P. Morgan wrote in a research note.

Some 16 oil refineries were left idled after the storm -- many of them cut off from power supplies -- making up just under a quarter of U.S. fuel production capacity, according to a Reuters survey.

So far, the only reports of damage to refineries include Shell's Deer Park plant near Houston and ConocoPhillips Alliance refinery in Belle Chasse, Louisiana -- part of which was flooded by Ike.

The U.S. Department of Energy said Sunday that Ike caused less damage than initially feared, but said even undamaged refineries could take a week to restore operations.

The American Petroleum Institute, Washington's main oil lobby, said it could take a couple of weeks to get the full U.S. energy industry back online.

U.S. retail gasoline prices have spiked more than 15 cents since Friday to $3.84 a gallon and energy analysts said they expect nationwide gasoline inventories to fall to their lowest on record in the storm's aftermath.

But crude oil futures fell more than $5 to $95.71 a barrel -- a sign retail prices could come back down -- as dealers bet production would rebound and as wider economic troubles dogged the demand outlook.

Offshore, oil and gas production remained mostly halted, according to the U.S. Minerals Management Service. The Gulf of Mexico is home to a quarter of U.S. oil production and 15 percent of its natural gas output.

Ike damaged or destroyed 11 offshore production platforms or drilling rigs, but so far there have been no big spills, the U.S. Coast Guard said Monday. There are about 3,800 energy structures in the Gulf of Mexico.

Shell Oil, the largest oil producer in the Gulf of Mexico, said it found "moderate damage" on some of its oil and gas production platforms but no major structural damage.

"The sell-off (in oil prices) is partly because Hurricane Ike hasn't done significant structural damage to oil facilities," said David Moore, analyst for Commonwealth Bank of Australia.

The restart of the swath of pipelines along the Gulf Coast that feed crude to refineries and fuel to markets in other parts of the country could also be slowed by electricity transmission problems, analysts said.

Ike left more than 2 million customers in Texas without power and the state's utilities said the recovery could take two or three weeks.

The Louisiana Offshore Oil Port, which funnels oil from tankers in the Gulf to coastal refineries, said Monday its shipments were reduced by a lack of available electricity.

(Reporting by Erwin Seba, Bruce Nichols, Eileen O'Grady in Houston, Richard Valdmanis in New York Randall Mikkelsen in Washington; Editing by David Gregorio)