Gulf of Mexico Oil and Natural Gas Production Slowly Recovering

Strategic Insights -

Gulf of Mexico oil production remains below pre-storm levels, with 1.16 million barrels per day still shut in due to hurricanes Katrina and Rita. However, progress has been made, with a decrease in shut-in volumes from 1.47 million b/d a week ago. On the natural gas side, shut-ins have also decreased, with 6.44 billion cubic feet per day remaining offline, a decline from 7.94 billion cubic feet per day a week ago. Major producers, including BP, Chevron, ConocoPhillips, and Marathon, have reported missed quarterly production targets due to the storms. Offshore drillers, such as Noble, are also resuming operations after repairing storm-damaged rigs, with some rigs expected to return to service by the end of the month.

Key Takeaways:

  • 1.16 million barrels per day of oil remains shut in, representing 78% of Gulf oil production.
  • 6.44 billion cubic feet per day of natural gas remains shut in, accounting for 64% of gas production in the Gulf of Mexico.
  • Five of Noble's semi-submersibles will return to work in the Gulf of Mexico by the end of the month.
  • A Noble submersible will return to work in December, and another semi-submersible is due to return to Gulf service in the first quarter of 2006.
  • 18 rigs were damaged during Katrina, and another 15 were hit when Rita passed through the area.
  • Noble anticipates a third-quarter reduction in net income of 13 cents-15 cents per share due to the storms.
  • The company expects a fourth-quarter earnings hit of 5 cents-7 cents/share due to the storms.
  • Cheniere Energy will restart construction activities at the Sabine Pass site in Cameron Parish, Louisiana, on Monday, October 10.
  • The company expects activity to return to pre-hurricane levels within the next five to six weeks.

Statistics:

  • 1.16 million barrels per day of oil remains shut in, accounting for 78% of Gulf oil production.
  • 6.44 billion cubic feet per day of natural gas remains shut in, representing 64% of gas production in the Gulf of Mexico.
  • 18 rigs were damaged during Katrina, and another 15 were hit when Rita passed through the area.
  • Noble anticipates a third-quarter reduction in net income of 13 cents-15 cents per share.
  • The company expects a fourth-quarter earnings hit of 5 cents-7 cents/share.

Sources:

  • The Oil Daily (OD) October 7, p. 1
  • Cheniere Energy press release, October 7, 2005
  • Noble Corporation press release, October 7, 2005