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Rita Threatens New Damage To Oil Production After Katrina

MMS noted that 46 oil platforms were destroyed by Katrina and 20 severely damaged.

New York (AFP) Sep 20, 2005
Hurricane Rita threatens to inflict more damage on the US oil and gas infrastructure still reeling from Hurricane Katrina just three weeks earlier, analysts said.

Rita, expected to become a major storm, was tracking a path that could roughly follow that of Katrina in the Gulf of Mexico, in a region where about one-fourth of US petroleum operations are based.

The path, while still uncertain as of Tuesday, could take the powerful new storm toward Texas or possibly Louisiana, where it would likely inflict further damage on the US energy industry.

The US government's Minerals Management Service (MMS) said 55 percent of Gulf of Mexico oil production and one-third of natural gas production is out of service.

MMS noted that 46 oil platforms were destroyed by Katrina and 20 severely damaged.

Three Louisiana refineries remain shut down as a result of hurricane damage - the ConocoPhillips facility at Belle Chasse, with an output of 247,000 barrels per day, Exxon Mobil's Chalmette refinery (187,200 bpd) and Murphy's facility at Meraux (120,000 bpd). In Mississippi, the Chevron refinery at Pascagoula has only partially reopened.

Just the fear of Rita moving into the region sparked a jump of about seven percent in crude oil futures on Monday, while gasoline futures spiked 14.4 percent. There was some pullback in prices Tuesday but the markets remained nervous.

"There are many facilities around Houston, especially natural gas facilities, offshore rigs and underground pipeline systems," said Mike Fitzpatrick, analyst at Fimat USA.

The Houston ship channel has an even higher concentration of refining and petrochemical plants than the Mississippi Delta and is home to Exxon Mobil's huge 557,000 bpd Baytown refinery, the nation's largest.

Just a short distance away is Shell Oil's 340,000 bpd Deer Park refinery complex, the sixth largest in the country.

The Houston channel is a 40-kilometer (25-mile) waterway linking the refineries and petrochemical plants just east of Houston with the Gulf of Mexico. It is ranked as the nation's second-biggest port facility in terms of total tonnage, most of it carried on oil tankers and chemical bulk carriers.

Fitzpatrick said traders are concerned because natural gas "inventories are a bit lower than a year ago."

Crude oil reserves are however above normal levels for the season and members of the International Energy Agency are drawing some 30 million barrels out of strategic reserves to fill any gaps.

Bill O'Grady at AG Edwards noted that the major fears were on natural gas, which is harder to import.

"Even if refineries are disrupted, we still can import (oil) at high prices, but with natural gas, you cannot get it," he said.

O'Grady said that even if Houston sustains a major hit from Rita, it might not have the same impact as Katrina because the risk of flooding is not as significant as in New Orleans, most of which is below sea level.

But it "would still be a disruption," he added.

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