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Pace of restoring US Gulf crude production ticks up, but 79% of output still down

Highlights

1.44 million b/d of oil output still offline

14% of region's platforms remain shut in

EPA issues ULSD waiver for Port Fourchon

The pace of restoring production and returning crews to oil and gas platforms in the US Gulf of Mexico appears to be ticking up more than a week after Hurricane Ida slammed into the Louisiana coast and left sizeable wreckage in its wake.

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By around noon Sept. 7, upstream producers had restored 20 more platforms from 24 hours earlier, a bit more than the daily restorations over the previous few days, according to US Bureau of Safety and Environmental Enforcement data. Platforms still evacuated totaled 79, compared to 99 a day earlier, 104 on Sept. 5 and 119 on Sept. 4.

But even at that, more than 75% of US Gulf production remains offline in the US Gulf.

"This is an unusual trend," said Sami Yahya, S&P Global Platts Analytics analyst. "It is likely that midstream and downstream bottlenecks are hindering recovery efforts."

"Power outages could be impacting refineries and gas processing plants," Yahya added. "And since most of the natural gas in the US Gulf is associated, if processing plants can't receive the gas due to facility damages and power outages, then crude production could be impacted as well."

Hurricane Ida struck the Louisiana Gulf Coast on Aug. 29, packing winds of 150 mph and even higher gusts. It was one of the strongest storms to hit the region in years.

On Sept. 7, 1.44 million b/d of oil production was still offline in the US Gulf, or about 79% of the roughly 1.8 million of the region's pre-storm average oil production. About 1.53 million b/d or, 84%, was offline a day earlier, BSEE said.

Also, 1.74 Bcf/d, or 78%, of natural gas output was offline Sept. 7, of the roughly 2.2 Bcf/d of production pre-storm. A day earlier, 1.80 Bcf/d of gas was offline, or 81%.

Because Ida directly hit Port Fourchon, a key hub for oil companies' shore-based operations, it disrupted producers' ability to re-crew platforms and assess potential damages prior to restoring production and is likely hindering the output restart process, Yahya said.

Yahya noted after Tropical Storm Marco and Hurricane Laura, a Category 4 storm, made landfall days apart in late August 2020, Gulf production was about 90% recovered by this time post storm, compared to a 20% recovery so far after Ida.

Output was recovering at a rate of 300,000-350,000 b/d each day after the storms in 2020, but in the last three days after Ida the recovery rate has averaged only 80,000 b/d, Yahya said.

MOST SHELL DEEPWATER PLATFORMS SHUT

Shell said Sept 7 it had begun to return crews to the Auger platform. It also continued moving crews back to its Enchilada/Salsa platforms, a process which began two days earlier. Both are located in deepwater.

But most of the company's US Gulf deepwater platforms remain shut in, including not only Auger and Enchilada/Salsa but its Appomattox, Mars, Ursa and Olympus platforms, the company said. In addition, Shell said roughly 80% of its US Gulf production is offline.

Inspections onboard the platforms confirm Ida did not cause any significant structural damage to any of those assets, the company said.

Shell is still assessing damage at the West Delta-143 shallow-water production gathering facility, operated by Shell Pipeline.

The company said it had re-staffed Shell Pipeline's Ship Shoal 28 asset and is working to finalize assessment of the platform and pipelines," the company said. Ship Shoal is also a shallow-water gathering facility.

Production has restarted at the BHP-operated Shenzi platform and is now at "full rate," spokeswoman Judy Dane said.

"As far as our shorebase, we've relocated to Galveston temporarily while we work to resume operations at Port Fourchon.," Dane said, adding there was no significant damage to the facility, equipment, or technical infrastructure.

Murphy Oil said Sept. 7 was assessing facilities, re-manning platforms and was "in the early stages of restoring our production," a company spokeswoman said, who declined to name which platforms had been offline.

At Shell's Norco refinery, damage assessment continues, the company said, adding the site is still without electrical power and remains in elevated flare with visible smoking.

FUEL WAIVER SUPPORTS FOURCHON OPERATIONS

The US Environmental Protection Agency said it issued a waiver for ULSD fuel requirements at Port Fourchon on Sept. 7.

"Specifically, this fuel waiver will help support critical marine operations in and around Port Fourchon," the EPA said. The waiver is effective immediately and ends Sept. 16.

According to the port's most recent storm update Sept. 4, port "tenants have been given full access to return to their facilities, and work is progressing to get the port back up and running."

In another update, Talos Energy said crews installed a containment dome Sept. 6 on affected pipe that was the source of an oil spill last week. The dome allows for the recovery of the release and transfer to surface vessels, the company said.

Talos confirmed its pipeline assets were not the source of the spill in Bay Marchand Block 5, two miles south of Port Fourchon. The company, which opted to lead the control and response effort to the spill, said in a Sept. 7 statement it stopped producing at the shallow-water block in 2017.

After physical inspections and subsea sonar scans, Talos said it saw several non-Talos owned subsea pipelines that were "likely impacted" by Hurricane Ida, including a 12-inch diameter pipeline that appears to be the source of the release.