Recent positive economic indicators combined with the end of an unusually quiet Atlantic Hurricane Season propped-up hope from Gulf Coast oil and gas service companies that E&P budgets for the region just might come out a little higher than had been anticipated.
Then comes Ida – a late-season hurricane/tropical storm – the only storm to threaten Gulf oil and gas interests in 2009. The storm forced the evacuation of about 158 production platforms, or roughly 23 percent of the manned platforms in the Gulf. Ten drilling rigs were also evacuated and about 43 percent of oil production was shut down, while the weakening system wobbled by.
By the end of the day Tuesday, most production was back on track and personnel will be completely returned to their stations by Wednesday. No big deal right?
Well, crude oil demand is not near was it was in 2004, 2005 or 2008 when Category 4 and 5 storms blew through the region, wreaking billions in damage, disrupting production for months and causing gasoline prices to spike at neighborhood pumps. In years past, the mere prediction of a hurricane made drivers in Maine pay more at the pump.
Those past storms are still on the minds of oil and gas production companies when they sharpen their pencils and decide each year where to gamble hundreds of millions of dollars. The Gulf region could have stood a decade or two to allow the Chevrons and BPs of the world a little time to have those memories fade.
While Ida caused little more than a hick-up in production and a few headaches for safety and environmental managers, she did serve as a reminder of the Gulf’s vulnerability. Last year, hurricanes Gustav and Ike cut production by a combined 61.1 million barrels of crude from a region that accounts for about 25 percent of the nation’s crude production and 15 percent of its natural gas production.
Gulf Coast marine operators are hoping the folks deciding on next year’s E&P budgets look past a small storm and once again invest in the region and the industry.