[BabyPeanut]

The LOOP news page: Loop
Down as of 10:00 AM (no time zone specified) Thursday.

[Eli]

We are in for gasoline shortages in the US.

Jeb Bush is warning people in Florida to conserve fuel. I think that if the storm surge and wind does not take out the refineries the flooding form the projected 25 inches! of rain will.

$this->bbcode_second_pass_quote('', '"')We, in all likelihood, are going to have significant shortages of gasoline, and I would urge people to recognize this -- not to hoard, not top off every tank that they have," Bush told reporters in the state Capitol. "We have a plan in place that we're dealing with to bring supply back to our state."

[Leanan]

Of course, this means people are now rushing to the gas station to top off every tank they have.

[Cool Hand Linc]

Here's a little data on this subject too. More to the riggs and platform data: MMS
This is updated daily.

Hurricane Katrina/Hurricane Rita
Evacuation and Production Shut-in Statistics Report as of Thursday, 22 Sep 2005
Next Report will be issued on Friday, 23 Sep 2005 at 1:00 PM CDT
For information concerning the storm click on www.mms.gov

This survey reflects 68 companies’ reports as of 11:30 a.m. Central Daylight Time.
Districts
Lake Jackson
Lake Charles
Lafayette
Houma
New Orleans
Total Platforms Evacuated 605
Rigs Evacuated 87
Oil, BOPD Shut-in 1,379,000
Gas, MMCF/D Shut-In 6,594.95
*These statistics are reflective of evacuations and shut-in production from Hurricanes Katrina (remaining) and Rita*
These evacuations are equivalent to 73.87% of 819 manned platforms and 64.93% of 134 rigs currently operating in the Gulf of Mexico (GOM).

Today’s shut-in oil production is 1,379,000 BOPD. This shut-in oil production is equivalent to 91.93% of the daily oil production in the GOM, which is currently approximately 1.5 million BOPD.
Today’s shut-in gas production is 6.594 BCFPD. This shut-in gas production is equivalent to 65.95% of the daily gas production in the GOM, which is currently approximately 10 BCFPD.
The cumulative shut-in oil production for the period 8/26/05-9/22/05 is 28,483,502 bbls, which is equivalent to 5.202 % of the yearly production of oil in the GOM (approximately 547.5 million barrels).

The cumulative shut-in gas production 8/26/05-9/22/05 is 131.757 BCF, which is equivalent to 3.610% of the yearly production of gas in the GOM (approximately 3.65 TCF).
These cumulative numbers reflect updated production numbers from all previous reports. The reports only represent input received by 11:30 a.m. CDT. If a company does not report by 11:30 a.m. it is not included in the special information release, but it is included in the cumulative shut-in production. This may result in an apparent increase in the cumulative report amount.

Shut-ins for oil and gas production are standard procedures conducted by industry for safety reasons. Once facilities have been inspected and all standard checks have been completed the production for these facilities will be brought back on line.

The MMS will continue to update the shut-in statistics at 1:00 PM CDT each day until these statistics are no longer significant.
MMS, part of the U.S. Department of the Interior, oversees 1.76 billion acres of the Outer Continental Shelf, managing offshore energy and minerals while protecting the human, marine, and coastal environments. The OCS provides 30 percent of oil and 21 percent of natural gas produced domestically, as well as sand used for coastal restoration. MMS collects, accounts for, and disburses mineral revenues from Federal and American Indian lands, and contributes to the Land and Water Conservation Fund and other special use funds, with Fiscal Year 2004 disbursements of about $8 billion and more than $143 billion since 1982.
Securing Ocean Energy & Economic Value for America-U.S. Department of the Interior

[Yavicleus]

Rita vs. Oil infrastructure as of Sept 22: Rita

plus more info: Katrina

[BabyPeanut]

$this->bbcode_second_pass_quote('', '[')url=http://www.businessweek.com/ap/financialnews/D8CPUC001.htm?campaign_id=apn_home_down&chan=db]Chevron shuts down two oil flow stations (link)[/url]
The Associated Press/LAGOS, Nigeria
By DANIEL BALINT-KURTI
Associated Press Writer
SEP. 23 7:24 A.M. ET Chevron has shut down two oil flow stations and Shell has evacuated workers amid threats from a separatist group in Nigeria's oil-rich delta, the companies said Friday.

"I can confirm that we shut down Robertkiri late yesterday, following information it was under imminent threat," said Chevron Corp. spokeswoman Edith Azinge in Lagos. She said Robertkiri usually produces 19,000 barrels per day.

A separatist militia group threatened oil installations after the government arrested its leader and said it would charge him with treason, a capital offense. The group has given the government until Saturday to release its leader.

[seahorse2]

Plug the problems posed by these two hurricanes into the following report done by ICF which discusses a serious refinery "capacity crunch" as the world heads toward 2010 and beyond.
One of the issues facing the world is a lack of refinery capacity. Boone Pickens often says the world has a maximum refinery capacity of about 84mbpd. With the hurricane damage, I've delved a little more into this issue. A quick search on the net found a report by ICF Consulting.

ICF says the following in a report on refinery capacity issues:
(1) "over the next roughly 5-year period, that the ability to meet forecast demands for oil will be driven by refinery capacity issues, not crude availability"
(2) This refinery "capacity crunch will change the istorical playing field for internation crude and product supply and trade, and create strong and sustained margins for refiners, higher prices and potentially supply shortfalls for consumers"
(3) "ICF Consulting has examined recent global demand forecast date from the (IEA) from 2000 through 2020 and compared it to the current and estimated growth in refining capacity . . . The IEA estimates that the global oil demand in 2010 will be about 90 million barrels per day, an increase of nearly 8 million barrels per day over the 2004 number. This increase is about 30-40 world scale refineries, and the net impact on the marketplace, even if that much refinery capacity could be made operational by 2010, would simply be maintaining today's high margins and volatility . . . for the refining capaity to keep pace with this increase . . . it would need an additional 13.9 million barrels per day capacity to be built between now and 2010. This would be 50-70 refineries of world scale size."
****side note - keep in mind ICF just projected a need for an additional 13.9 mbpd in refinery capacity but as of 2005, only an additional 250K is in the pipeline for development****

"Since that publication, there have been some noteworthy announcements . . . however, even with these announcements, it is clear that the number of new refineries needed, or major expansions, is significant, and, more critically, these additions should right now, already be in the engineering phase to be operational by 2010 . . . the need for timely investment in capacity to sustain the demand outlook is compelling."
*** side note, so much for the optimistic CERA report of an oil glut by 2010, without addtional refinery capacity being added by 2010, any extra oil projected by Cera is of no use ****
"As capacity growth lags demand, small events can have a grossly magnified effect. This leads to increased upward pressure on prices, refining margins, and volatility"

****This was published before the Katrina and Rita Hurricanes. But the truth of this prediction that "small events have a grossly magnified effect" is evident from the U.S. refineries knocked off line, even temporarily.
"With IEA predicting another 17.6 million barrels per day demand by 2020, the refinery capacity need will grow even more"
****Whose budgeting for this?*****

"The magnitude of the need for additional capcity over the next 5 years is, however in stark contrast to the relatively few significant projects currently underway to expand global refining capacity. In cases where industry is evaluating or has announced capacity increases since the Oil and Gas Journal survey was released, the location of those projects are planned for China and the Middle East, and none are in the engineering stage"
***side note, so much for refinery capacity meeting the demand needs by 2010, maybe ole Boone Pickens is right***

"Moreover, the tighter product specifications in the United States versus the emerging Far East region will make it more cost effective for refiners with export capability in the Middle East, or even Europe, to manufacture and ship product to China or India. Where the product goes will depend on who is willing to ante-up and pay for the volume, and the ramnifications for both the 'winner' and the 'loser' in that battle are significant"
****note - this sounds like the beginning of a bad movie. In fact, it is the same thing Michael Klare has been saying concerning "resource wars." ***

"Conclusions:
Barring a radical and immediate innitiation of major refinery projects, there will be a competition for available supply as the decade draws to a close. The 'winning' bidders will pay a premium for products which could make today's prices look very reasonable; the 'losers' may be required to slow down economic growth. The overall effect of both may be that global economies will suffer until refinery capacity gets back in alignment with demand . . . The overall refining capacity crunch looks like it will be difficult to reverse given the long lead times necessary for construction . . . All these factors lead ICF Consulting to believe that the global oil product market will remain tight in the near future . . .it is more important than ever to look at the fundamentals and determine a long-term strategy to reduce or slow down the growth of petroleum demand, and to prepare for the future . . .
**note - how can any of us add to that last statement***

[DerelictOverlord]

Seahorse, With that information it almost seems as though the majors are throttling production on purpose in the face of depletion. In this manner they can maintain high refined product margins and not count on the price of crude. This could stretch the peak out in to the future a little farther in an effort to maximize profits which is what they are legally required to do. Since you dally in the markets some, does that make sense?

[seahorse2]

I only dabble in the markets and am not qualified or in a position to know. But, your suggestion makes some sense based on the full report. The ICF report notes that in the 80s energy shortfall, there was too much refinery capacity, and thus, no new refineries were built. So, I think its fair and probably true that no new refineries have been built bc they were burned in the 80s. The question is, why aren't there plans to build any now in light of higher prices and margins? As the report points out, it wouldn't be as profitable to build them in the U.S. because of all the fuel standards. The problem is, no refineries are being built anywhere. Why? I'm not sure. It may be a concerted effort if the refineries are owned by all the oil majors. I don't know who owns the refineries. What hurts this theory is why would the Chinese not be building any refineries? Chinese oil industry is all state owned. They need lots of cheap oil to sustain their growth. There doesn't seem to be an economic incentive not to be building lots of refineries right now. This makes me believe that, as Pickens believes, they don't believe there's lots of oil out there to bring on line, otherwise, they would be building the refineries or at least have them in the engineering stage.

[jeffvail]

Another excellent article on the disruptions in Nigeria, more alarming than the first. From John Robb of Global Guerrillas:

Nigerian Disruption Grows

~Jeff

www.jeffvail.net

[ChadP]

I'm wondering what will happen to LOOP and other southern LA oil support systems in all this... it looks like it will take a stronger hit than it did during Katrina.

[BabyPeanut]

The worst damage appears to be to natural gas production.

[ChadP]

$this->bbcode_second_pass_quote('BabyPeanut', 'T')he worst damage appears to be to natural gas production.

[LadyRuby]

$this->bbcode_second_pass_quote('seahorse2', 'T')he question is, why aren't there plans to build any now in light of higher prices and margins? As the report points out, it wouldn't be as profitable to build them in the U.S. because of all the fuel standards. The problem is, no refineries are being built anywhere. Why?

[LadyRuby]

One potential problem for natural gas is one of the few LNG terminals appears to be right about where the meat of the hurricane hit, at the Port of Lake Charles. The Trunkline LNG terminal: FERC

[Pops]

If the current forecasts are correct and Rita does a big, slow, wet U-turn over TX and LA back to the gulf I expect the current guesses at damage to be way off.

And what is the potential for it to then reform?

[seahorse]

Ladyruby, Thanks for the article. I'm interested in anything that can be found on refineries. Obviously, the hurricanes effect the refinery equation. Hopefully, you can post you article on the Refinery thread in the peak oil forum section also.

I don't think the projects mentioned in the article you post change the ICF opinion. First, the ICF article mentions several of these Arab and Chinese projects that are basically in the "think tank" stage, but notes the problem is there are significantly lead times to getting these refineries built and operational and notes that none of these are even in the engineering stage. The article does give dates for a couple of refineries to come on line, but you will note they are 2009 and 2010, so again, this only confirms the ICF report. Also, note the ICF report says the world needs about 9 mbd in extra refinery capacity by 2010 to meet estimated world demand. The projects mentioned, even if all are completed by 2010, fall well short of his projected need for new refinery capacity.

[LadyRuby]

Yes, I don't doubt that the additional refinery capacity will still fall well short of needs.

[LadyRuby]

Map of location of LNG terminal, and


and natural gas pipeline from Lake Charles: Energy

[dunewalker]

From AP: "Valero Energy Corp. said it will take two weeks to a month to repair and restart its 255,000-barrel-per-day Port Arthur refinery, which sustained significant damage to two cooling towers and a flare stack."