Katrina’s Gulf of Mexico Wreckage May Spark $100 Oil

Sept. 1 (Bloomberg) — As Hurricane Katrina slammed through the Gulf of Mexico, energy companies evacuated offshore workers and shut about 91 percent of the region’s oil production, or 1.37 million barrels daily.

“There isn’t the global spare capacity out there to replace this loss if it continues for a prolonged period,” says Bart Melek, a senior economist at BMO Nesbitt Burns in Toronto. “Already the market is tight as a drum, and if anything else happens, say instability in the Middle East, I wouldn’t preclude $100 oil at all.”
Katrina ripped drilling rigs from moorings, damaged production platforms and curtailed pipeline shipments, idling 11 percent of U.S. refining capacity and leaving oil supplies vulnerable to another crisis. A shortage of aircraft and workers is hobbling efforts by energy companies such as Exxon Mobil Corp. and BP Plc to assess damage to the 819 staffed production platforms and 137 drilling rigs off Louisiana and Texas.

“This hurricane caused catastrophic devastation,” the U.S. Coast Guard said in a statement on its Web site. Five oil rigs from the West Delta Platform are missing, one submersible rig is grounded, two mobile offshore drilling units are adrift, two semi- submersibles are listing, and the Mars platform owned by Royal Dutch Shell Plc is severely damaged, the statement said, without providing further details.

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