Marco, Laura impact oil & gas activities in the Gulf of Mexico; industry already hurt by pandemic

Updated: Aug. 25, 2020 at 9:34 PM CDT
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NEW ORLEANS, La. (WVUE) - The vast Gulf of Mexico. Its warmth this time of year provides fuel for hurricanes and tropical storms. It is also where a lot of expensive oil and natural gas equipment sits along with personnel, so major tropical systems command and deserve attention.

The federal Bureau of Safety and Environmental Enforcement (BSEE) said on Tuesday (Aug. 25) that based on data from offshore operators’ reports personnel had been evacuated from 299 production platforms in the Gulf of Mexico. That is 46.5 percent of the 643 manned platforms on the waterway, according to the agency. Additionally, BSEE said workers were removed from 11 non-dynamically positioned rigs.

Professor Eric Smith of Tulane University’s Energy Institute is an expert on the oil and gas industry.

“They shut in the well, there are sub-surface safety valves below the mud line in the wellbore that they close,” said Smith.

Due to Hurricanes Marco and Laura, production activities were interrupted. Marco was downgraded to a tropical storm as it made landfall, and Laura is headed to the U.S. mainland.

Smith said it will take more than just a flip of a switch to resume offshore activities.

“They come back out and only after they’ve been inspected can they open the valve again, so all of this takes some time and, you know, at the minimum, you lose a week or two of production but if there’s damage that you’ve got to fix you might be losing a month or two of production, so,” said Smith.

BSEE says another 16 so-called dynamically positioned rigs which are not moored to the seafloor were moved off location due to the storms.

Laura could hit hard Southwest Louisiana and affect liquified natural gas operations in that area.

“The LNG tankers and all of that stuff will be affected as well as the Mississippi River shipping in addition to the offshore deep-water activity,” said Smith.

The storms and their impacts are happening as Louisiana’s oil and gas industry is already feeling pain from the pandemic.

Gifford Briggs is President of the Louisiana Oil and Gas Association.

“We as an industry are still hurting very much by the impacts of COVID and the shutdown and then again what started with a war, you know, OPEC and Russia wanting to wage war on U.S. producers,” Briggs said.

But in terms of oil supplies, industry insiders say it does help that Gulf of Mexico activities are being interrupted when not as many people are driving or taking flights.

“Overall demand is down so that’s just a statement of where we are now right now with the overall economy,” said Briggs.

Smith says there is an abundance of oil.

“The good news is right now is that we’ve got plenty of production surplus, so we’ve got a significant amount of oil in storage and as long as that holds out you shouldn’t see any dramatic changes at the pump,” Smith stated.

And while prices at gasoline pumps may not rise significantly due to the storms, Briggs said higher oil prices and long-term stability would prompt more drilling and investment in Louisiana’s oil and gas industry.

“Which is what we need if we’re going to really see jobs coming back,” he said.

BSEE said it received information from 45 oil and gas companies to compile its evacuation and shut-in statistics related to the tropical systems.

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