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Sunday 22nd of June 2008
August 31, 2005

Hurricane damage faces assessment as inventories already down

by Brian Turner
Hurricane damage faces assessment as inventories already down

Oil companies have begun the process of assessing the damage to their Gulf Coast and Gulf of Mexico facilities and are trying to figure out how many days, weeks, or months it will take to get production back up to normal.

As of Wednesday, 95 percent of gas and oil production in the Gulf is still shut down and nine refineries on the Gulf Coast are closed. In addition, several pipelines the carry crude oil out of the Gulf region are shut down due to flooding, damage, and power outages, and the US Energy Department has said that Port Fourchon, where facilities that handle a large percentage of US crude oil and natural gas imports was both heavily damaged in the storm and is currently cut off by floodwater.

Most companies have declined to give any estimate of how long it will take to return to full production. However, Murphy Oil Corp. has said that its facilities, including one that encountered the eye of the hurricane, had avoided serious damage, although 80,000 barrels per day of production are currently shut down.

Exxon Mobil Corp. also said that damage to most of its offshore facilities was limited as crews continued damage assessments. 45,000 barrels per day of Exxon Mobil’s crude oil production and 760 million cubic feet per day of its natural gas production are currently offline.

Chevron Corp., meanwhile, has said that it would not have damage estimates for several days. In all, around 7 percent of the US crude oil demand is shut down due to the effects of Katrina, and refineries with a combined capacity of nearly 2 million barrels per day are closed down.

Additionally, inventory figures showed that gasoline inventories fell by 500,000 barrels last week to 194.4 million barrels, according to Wednesday’s US Department of Energy weekly stockpiles report, the ninth week in a row that the US gasoline supply declined.

This data does not take into consideration the impact of Hurricane Katrina on supplies, as the report covers the week ending August 26, before the storm hit the US Gulf Coast.

Gasoline futures for September on the New York Mercantile Exchange gained 17.2 percent to $2.90 per gallon, a record high.

Heating oil and natural gas prices were also up on the day. Nymex heating oil contracts for September were up to $2.0749, a new record high, while October Henry hub natural gas prices advanced by 3.6 percent to $12.08 per million British thermal units.

Crude oil inventories also were down last week, by 1.5 million barrels to 321.4 million barrels. October contract West Texas Intermediate crude on Nymex actually lost 87 cents on the day to $68.94 per barrel, while Brent crude on the International Petroleum Exchange fell by 55 cents to $67.02.

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