#ECOCIDE
Here’s Why U.S. Crude Oil Supplies Took Such a Big Hit From Ida
, Bloomberg News Sep 11, 2021
(Bloomberg) -- Hurricane Ida unleashed such furious winds and waves that almost two weeks later oil drillers, power suppliers and refiners are still picking up the pieces. They won’t be done any time soon.
The damage to offshore platforms, pipelines and even heli-pads was so severe that two out of every three barrels of crude normally pumped from the U.S. sector of the Gulf of Mexico are unavailable. The ripple effects are still playing out as refiners and brokers scour the globe for replacements and the Gulf’s biggest oil producer, Royal Dutch Shell Plc, tells some customers it can’t honor supply commitments.
It will be weeks -- maybe longer -- before normal conditions can be restored off the Louisiana coast and in the warren of oil-processing and chemical plants that occupies a 100-mile (160-kilometer) corridor from New Orleans to Baton Rouge.
“What’s different is this is lasting longer,” Bert Winders, 63, a Baker Huges Inc. health and safety manager, said in reference to how Ida’s disruption compared with previous cyclones. “It’s just demanding on people. Three to five days, they can deal with. But when you start talking two, three, even four weeks, that’s really tough on a family.”
The recovery efforts are being closely watched around the world in large part because of the unprecedented scale and duration of the oil outages. Within days of the hurricane, traders were seizing on arbitrage opportunities created by the disappearance of some U.S. Gulf grades of oil such as Mars blend. For example, crude from Russia’s Ural Mountains is a popular alternative to Mars because they share similar characteristics.
Ida’s drawn-out aftermath offers a chastening glimpse of what may be in store as climate change fuels ever-more furious storms along low-lying coastal regions dotted with heavy industry and vital fuel-making facilities.
Typically, when tropical storms and hurricanes menace the oil-producing region of the Gulf, drillers batten down hatches, shut off the subsea wells funneling oil up to platforms and evacuate crews. When the skies clear, they often can chopper inspection teams back out in a matter of hours or days and resume production shortly thereafter.
When Louisiana was battered by Hurricane Laura last year, offshore crude output bounced back quickly.
Direct Hit
After Ida, that wasn’t remotely possible. The monster storm’s direct hit on Port Fourchon a few hours before sundown on Aug. 29 completely disabled the primary jumping-off point for helicopters and vessels that service hundreds of offshore platforms and rigs.
Even the lone road connecting Port Fourchon to the rest of the state -- Louisiana Highway 1 -- was knocked out of commission by Ida’s massive wall of sea water and the tons of sand it swept ahead.
“When Port of Fourchon is out of service, it breaks a link in the chain,” said Winders, a Louisiana native who’s been working in the oil industry for four decades.
Into Darkness
At the height of the disaster, more than a million homes and businesses were cast into darkness as Ida’s 150 mile-per-hour (240 kph) winds destroyed most of the transmission infrastructure in southeast Louisiana.
But by late Friday, there were still almost 200,000 without power or air conditioning -- a telling illustration of the extent of the destruction. As for Port Fourchon, the area isn’t expected to get full electricity restored until the end of this month, according to utility company Entergy Corp.
Out on the high seas, drilling has returned to just 29% of pre-Ida levels. There were four rigs operating in the U.S. sector of the Gulf as of Friday, well below the 14 plying the waters before the storm, according to data from Baker Hughes, which has been tracking drilling activity since 1944.
Hobbled Refineries
Shell is gearing up to reopen many of the Gulf pipelines that carry crude to shore in the next week, according to a person familiar with the operations, a key step to potentially restoring offshore crude output. Still, a crucial conduit for Mars oil and other grades will remain shut as damage assessments continue, the person said. The company declined to comment.
Further inland, the crippling effects of the cyclone are still being assessed. A New Orleans-area refinery owned by Phillips 66 suffered so much damage and flooding that the company may not even restart it, depending on how expensive it’ll cost to repair.
Shell’s Norco refining and chemical complex north of New Orleans may remain shut for several more weeks because of extensive damage.
Meanwhile, Marathon Petroleum Corp. managed to resume fuel production at its massive Garyville facility on Friday, although five other Louisiana refineries with combined daily capacity to process one million barrels remain shut.
©2021 Bloomberg L.P.
Hurricanes Raise Risk Of Oil Spills In Gulf Of Mexico
As the latest strong storm that passed through the U.S. Gulf of Mexico showed, hurricanes are testing the resilience of offshore oil and gas facilities and pipelines. Hurricane Ida made headlines as it left 1 million customers in the state of Louisiana without power and shut-in as much as 95 percent of the U.S. Gulf of Mexico's oil production just before making landfall in Louisiana on August 29.
Unfortunately, the continued disruption to oil and gas production in the Gulf of Mexico was not the only headline-grabbing consequence of Hurricane Ida. Oil spills also raised eyebrows after offshore oil and gas infrastructure was damaged by the storm.
The oil spills shed light on some of the aging offshore infrastructure that were unable to withstand the forces of nature. It also proved that whichever hurricanes come next could also damage pipelines and platforms.
The damage to facilities and resulting oil spills also underscore what the U.S. Government Accountability Office (GAO) said in a report made public in April: The U.S. Department of the Interior lacks a robust oversight process to monitor and ensure the safety and integrity of some 8,600 miles of active offshore oil and gas pipelines located on the seafloor of the Gulf of Mexico.
The impact of Hurricane Ida on the Gulf of Mexico offshore infrastructure and production is also an argument that environmental organizations could use to call for restrictions on offshore drilling.
Damages And Oil Spills
The hurricane caused damage to platforms while refineries were waiting for power to begin the restart process.
For example, Shell said last week that it had identified damage to its West Delta-143 offshore facilities, which serve as the transfer station for all production from the oil giant's assets in the Mars corridor in the Mississippi Canyon area to onshore crude terminals. As of Wednesday evening, September 8, damage assessment of the West Delta-143 continued, said Shell, which has begun the process of redeploying personnel to its Appomattox platform, and continues to redeploy personnel to the Enchilada/Salsa and Auger assets. However, Appomattox, Mars, Olympus, Ursa, Auger, and Enchilada/Salsa remain shut-in. Around 80 percent of Shell-operated production is currently offline.
Bureau of Safety and Environmental Enforcement (BSEE) data as of Wednesday showed that 1.4 million barrels per day (bpd)—or 76.88 percent—of U.S. Gulf of Mexico production was still offline.
Related: OPEC May Cut 2022 Oil Demand ForecastThere have been as many as 350 reports of incidents that the U.S. Coast Guard has prioritized for further investigation by authorities, as it continued to assess the damage and environmental threats across Southeast Louisiana a week after Hurricane Ida made landfall.
In one of the largest incidents, divers identified a one-foot pipeline as the source of an oil spill after it was displaced by the hurricane and ruptured. The oil spill occurred in Bay Marchand Block 5, off the coast of Port Fourchon, said Talos Energy, which led response efforts to contain and control the release, although none of its assets were the source of the spill. Talos ceased production from the block in 2017, and all its pipeline infrastructure was removed by 2019, the firm said.
"The Company has observed several non-Talos owned subsea pipelines that were likely impacted by Hurricane Ida, including a 12" diameter non-Talos owned pipeline that appears to be the source of the release," it added.
GoM Offshore Pipelines Need Better Regulation
In the aftermath of Hurricane Ida, a recent report from GAO that the U.S. needs updated regulations to improve offshore pipeline oversight and decommissioning looks increasingly topical, as Reuters reminds us in an explainer article.
"Pipelines can contain oil or gas if not properly cleaned in decommissioning. But the Bureau doesn't ensure that standards, like cleaning and burial, are met. It also doesn't monitor pipeline condition or movement from currents over time," the report from the GAO found.
BSEE lacks a robust process to ensure that decommissioned pipelines do not pose risks during and after decommissioning, the GAO added. The BSEE does not thoroughly account for such risks while reviewing decommissioning applications. This has contributed to the BSEE and its predecessors authorizing companies to leave over 97 percent (about 18,000 miles) of all decommissioned pipeline mileage on the Gulf of Mexico seafloor since the 1960s, GAO noted.
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Another fault that the office found was that "BSEE does not monitor decommissioned pipelines left on the seafloor or have funding sources for removal if they later pose environmental or safety risks."
The GAO recommends that the BSEE implement updated pipeline regulations to address those long-standing limitations in its ability to ensure pipeline integrity and address safety and environmental risks associated with pipeline decommissioning. The Interior agreed with this recommendation, the GAO said in the report.
"Hurricane Season and Offshore Drilling Are a Reckless Combination"
In 2020, a year before Hurricane Ida and ten years after the Deepwater Horizon disaster, Oceana, an advocacy group for protecting the oceans, said that "Large hurricanes have the potential to not only devastate coastal communities, but also destroy oil and gas infrastructure, which can lead to more oil spills."
"Hurricane-caused damage to oil and gas infrastructure is a leading cause of oil spills. In 2005, high winds and flooding from Hurricanes Katrina and Rita destroyed more than 100 platforms and damaged over 500 pipelines," Oceana's Sarah Giltz wrote in a blog post in July 2020.
By Tsvetana Paraskova for Oilprice.com
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