U.S. Gulf Coast oil industry groans under uneven Ida recovery

September 3, 2021

By Marianna Parraga and Liz Hampton

HOUSTON (Reuters) -The engine of the U.S. offshore energy industry struggled to recover from Hurricane Ida on Friday as a lack of crews, power and fuel left companies unable to fully assess the damage to offshore facilities.

Ports were reopening and some pipelines restarted as companies completed post-storm evaluations. However, larger hurdles remained for offshore producers and some refiners that struggled to get enough power to begin restarts.

Five days after the hurricane churned through offshore oil and gas fields, the extent of the damage to key facilities was still unknown. Crews have not returned to three-quarters of the evacuated platforms and more than 90% of production remained offline, government data showed.

EMERGENCY OIL RELEASE

The White House sought to ease regional fuel shortages, authorizing the release of 1.5 million barrels of crude oil to Exxon Mobil to produce gasoline. Four large refineries in the state remain shut.

Fuel and power shortages have hampered recovery. About 860,000 homes and businesses in the state lacked power. More than a third of gasoline stations in Louisiana were without fuel, according to tracking firm GasBuddy.

The shortages included aviation fuel for helicopters that conduct post-hurricane aerial evaluations and ferry workers to and from platforms. Ida’s winds crushed fuel depots and helicopter pads used by transport firms.

“Loading and discharging remains pretty much halted in Louisiana,” said a Gulf Coast shipper, who spoke on condition of anonymity. “Ports have been reopening, but portions of the Mississippi are still closed and there are restrictions on hours of navigation and vessel draft.”

DAMAGES OFFSHORE

Royal Dutch Shell, the largest Gulf of Mexico producer, has resumed just 20% of its usual production, the company said. An offshore facility that connects three large oil production basins was damaged by the storm, though the extent of it was not immediately clear, it said.

Pipeline operator Enbridge said it continues to evaluate its Gulf of Mexico facilities and offshore production remained shut. Damages to offshore oil facilities could cost insurers about $1 billion, estimated CoreLogic.

Overall Gulf of Mexico output declined by 240,000 barrels, according to government data, an unusual reversal. Production restarts are taking longer than after past storms, analysts said, in part because of the extent of infrastructure damage.

Tony Odak, chief operating officer of Stone Oil Distributor, which supplies fuel to offshore producers, said he has begun getting supplies from as far away as Port Arthur and Galveston, Texas.

“We are securing resupply outside the Mississippi River right now,” said Odak.

PORTS REOPENING

Most Louisiana ports have reopened, including the Port of New Orleans, while Port Fourchon, an offshore resupply hub, reopened on Thursday for daylight operations only. Damages at Port Fourchon extended to supply vessels needed for offshore repairs.

Utility operator Entergy Corp. will try to remove a downed transmission line preventing river traffic from moving in one area near New Orleans, officials said. The Louisiana Offshore Oil Port, the largest deepwater oil terminal, also remained closed, according to the U.S. Coast Guard.

(Reporting by Marianna Parraga, Liz Hampton, Sabrina Valle and Arathy Nair; Writing by Gary McWilliams; Editing by Richard Pullin and Louise Heavens)

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