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Offshore Support Journal

Offshore Support Journal

Harvey sees production shut in, ports closed and rigs damaged

Tue 29 Aug 2017 by David Foxwell

Harvey sees production shut in, ports closed and rigs damaged
Hurricane Harvey has caused widespread disruption to production in the offshore oil and gas sector in the Gulf of Mexico (photo: NOAA/GOES)

Hurricane Harvey has seen more than 100 platforms evacuated in the Gulf of Mexico, with around 5.5% of production in the region shut in.

In addition to rigs being evacuated, there has been damage on land to production facilities and refinery capacity and the ability to import and export crude has boosted the oil price, but only a little, in the short term.

Commerzbank said oil prices are reacting differently to the considerable disruption to US oil production and crude oil processing caused by the hurricane. Brent initially climbed to just shy of US$53/barrel (bbl), but rapidly shed these gains again and is currently trading at around US$52/bbl. West Texas Intermediate briefly increased to above US$48/bbl but then fell to around US$47.5/bbl.

“Harvey has had contrary effects on the oil market: US crude oil production in the Gulf of Mexico had to be partly suspended. The Bureau of Safety and Environmental Enforcement estimates the outages at 379,000 barrels per day. As much as 300,000 barrels per day of land-based production capacities may also have been closed. The Eagle Ford shale play in the south of Texas is particularly affected,” Commerzbank said.

“It is not yet possible to predict how long the refineries will remain shut. In response, the US gasoline price reached a two-year high of US$1.78 per gallon. The closure of the Houston Ship Channel and a number of loading terminals in the Houston area is likely to hamper imports and exports of crude oil and oil products. These after-effects of Hurricane Harvey thus look set to substantially distort the upcoming US inventory statistics.”

The BSEE said personnel had been evacuated from five rigs (non-dynamically positioned, DP) rigs, 50% of the 10 rigs of this type currently operating in the Gulf. One DP rig moved off location out of the storm’s path as a precaution. This represents 4.7% of the 21 DP rigs currently operating in the Gulf.

From operator reports, BSEE said it was estimated that 24.49% of current oil production of 1,750,000 barrels/day in the Gulf of Mexico had been shut-in, which equates to 428,568 barrels of oil per day. It is also estimated that approximately 25.94% of natural gas production, currently 3,220 million cubic ft/day, which equates to 835 million cubic ft/day, was shut-in.

The Port of Corpus Christi is closed after a drillship owned by Paragon Offshore broke its moorings and collided with a tug, which sank, before the drillship ran aground. As the hurricane made landfall, the crew of an offshore support vessel, Baldone Offshore’s Gulf Justice, were evacuated from the vessel by US Coast Guard helicopters.

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