HOUSTON, Sept 15 A big chunk of U.S. energy
production shuttered by Hurricane Ike could recover quickly
amid early indications the storm caused only minor to moderate
damage to platforms and coastal refineries.
The biggest hurdle for the oil industry will likely be
restoring power supplies knocked out by the storm, which raked
southeast Texas Saturday and idled a quarter of U.S. crude oil
and refined fuel production, analysts said.
"Initial indications are that refineries could be back
within days and not weeks and that damage wasn't as bad as it
could have been offshore," said Sarah Emerson, director of
Energy Security Analysis Inc in Boston.
U.S. retail gasoline prices spiked more than 15 cents in
the storm's wake to $3.84 a gallon amid fears of supply
disruptions, according to the AAA's daily survey of 100,000
But crude oil futures dove more than $4 in trading Monday
-- a sign retail prices could come back down -- as dealers bet
production would rebound and as wider economic troubles dogged
the demand outlook. [O/R]
"The sell-off is partly because Hurricane Ike hasn't done
significant structural damage to oil facilities, as well as
growing concerns about the economy," said David Moore, analyst
for Commonwealth Bank of Australia.
TRICKLE OF DAMAGE REPORTS
The U.S. Coast Guard said it received reports of damage to
Gulf of Mexico offshore energy installations, the vast majority
of which halted production ahead of Ike, but said details were
not yet available.
So far, Shell Oil (RDSa.L), 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
of the kind seen in the wake of hurricanes Katrina and Rita in
Diamond Offshore Drilling Inc (DO.N) said one of its
shallow water rigs was significantly damaged.
There are about 4,000 energy structures in the Gulf of
Mexico, according to the U.S. Minerals Management Service.
As of Sunday, some 99.6 percent of the Gulf of Mexico's 1.3
million barrels per day of crude oil production and 91.9
percent of its 7.4 billion cubic feet per day of natural gas
production remained shut, according to the MMS.
On the coast, most refineries including the giant Exxon
Mobil (XOM.N) plant in Baytown, Texas, reported little or no
damage, and officials said the plants escaped heavy flooding.
In the only sign of damage to refineries so far, Shell said
its joint-venture Deer Park refinery near Houston required some
repairs after the storm.
But even energy facilities that escaped damage could be
slowed by electricity transmission problems.
"Even though there is little indication of serious damage,
I think it will be difficult to restart these oil refineries
because of the power issue," said Chris Jarvis, senior analyst
at Caprock Risk Management in Hampton Falls, New Hampshire.
"Parts of the power system took a devastating hit."
Ike left more than 2 million customers in Texas without
power and the state's utility said the recovery could be slow.
Some seven of the state's oil refineries appeared to have no
power in Ike's aftermath, according to a Reuters eyewitness.
Power problems could also slow down restart efforts for the
swath of pipelines around the Gulf Coast that shut down due to
Ike, experts said.
The Louisiana Offshore Oil Port, which funnels oil from
tankers in the Gulf into a pipeline system that feeds coastal
refineries, said on Monday it restarted marine offloading but
said rates were reduced by a lack of available electricity.
(Reporting by Erwin Seba, Bruce Nichols, Eileen O'Grady in
Houston, Richard Valdmanis in New York; editing by Jim