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UPDATE 2-Extensive damage from storm Ida hurts oil industry recovery effort

UPDATE 2-Extensive damage from storm Ida hurts oil industry recovery effort

reuters.com · 09/01/2021 09:38
UPDATE 2-Extensive damage from storm Ida hurts oil industry recovery effort

Storm left coastal roads, docks, ports in poor condition

Lack of access impeding assessments, repairs to oil facilities

Updates with oil prices,

By Devika Krishna Kumar and Liz Hampton

- Energy companies are having a hard time getting workers and supplies to offshore production platforms and refineries to make repairs after Hurricane Ida due to extensive storm damage to onshore infrastructure, executives said.

Some firms are still early in assessing damage from Ida, three days after the storm tore through the U.S. Gulf of Mexico, pushing several feet of water into coastal plants and toppling transmission towers inland. Its 150-mile-per-hour (240 kph) winds were the strongest since Laura hit the state a year ago.

Roughly 1.7 million barrels of offshore oil production is offline, and damage around transportation and support hubs, including Houma and Port Fourchon, could slow efforts to restore production.

Shell RDSa.L said the storm inflicted "significant damage" to a heliport in Houma, Louisiana, used to transport workers to offshore platforms, and said it must establish a new facility before returning workers to production sites.nL1N2Q30VU


Offshore oil producers returned staff to only 10 platforms and two drilling rigs over Monday and Tuesday. Platforms run by BP PLC BP.L, BHP Group BHP.AX, Chevron Corp CVX.N, Royal Dutch Shell RDSa.L and Occidental Petroleum Corp OXY.N were evacuated last week. Offshore facilities in the region contribute 16% of U.S. production.

Port Fourchon, a supply base for offshore energy companies, suffered extensive damage and the main road was not passable on Tuesday. Officials were limiting access to emergency vehicles, saying it could be weeks before roads are fully passable.

Loss of power and mobile phone service has prevented companies from reaching workers needed to conduct damage assessments. Swamped coastal roads and wind-damaged docks also hampered securing workers and supplies, the executives said.

Power restoration has been slow, limiting efforts to restore operations at refineries. Nearly 1 million Louisiana homes and businesses remained without power on Wednesday.

Crude oil prices CLc1LCOc1 fell more than $1 per barrel, reflecting a buildup in U.S. inventories and expectations that storm-cutbacks at refineries would reduce demand. nL1N2Q2306


Some 1.7 million barrels of daily oil processing is offline at seven Louisiana refineries, the U.S. Department of Energy said. Consultancy Rystad Energy forecast losses will continue for seven to 14 days, depending on flood damage.

Gulf Coast refiners Exxon Mobil Corp XOM.N, PBF Energy Inc PBF.N and Royal Dutch Shell PLC halted oil processing at plants in the storm's path, cutting about 9% of U.S. refining capacity.

Power outages in some areas may persist for up to six weeks. Full recovery of processing capacity will depend on how quickly outside power is restored, with some plants taking four weeks to recover.

Ida's economic cost could hit $70 billion to $80 billion, estimated AccuWeather, with much of the losses stemming from the oil industry and supply chain delays.

Due to port delays, more than two dozen oil vessels moored off Louisiana were waiting to load or unload, with the largest bottlenecks near Baton Rouge and Lake Charles. nL1N2Q226D

Energy pipelines that supply export ports and processing plants were knocked out. Kinder Morgan KMI.N said it had not been able to access many of its terminals in Louisiana due to flooding and road closures. Poseidon Oil Pipeline, which brings oil from offshore platforms to Houma, said on Wednesday it could not answer questions about its operations. nL1N2Q226X

(Reporting by Marianna Parraga, Erwin Seba, Sabrina Valle and Liz Hampton; Writing by Gary McWilliams; Editing by Sonya Hepinstall, Christopher Cushing, Emelia Sithole-Matarise and David Gregorio)

((Gary.McWilliams@thomsonreuters.com; +1 469-691-7668;))