From: H. Josef Hebert, Associated Press
Published September 14, 2005 12:00 AM

Officials in Gulf of Mexico Area Say They're Worried about Winter Natural Gas Shortages

BATON ROUGE, La. — It may take months to resume full natural gas production after Hurricane Katrina, top Bush administration officials said. They're worried about shortages in the coming cold weather because, unlike with heating oil and gasoline, the country lacks the ability to make up the difference with imports.


"There are concerns about the supply of natural gas," Energy Secretary Samuel Bodman said Tuesday, a week after an agency in his department predicted that natural gas prices in some parts of the country will be 71 percent higher than they were during the last cold season.


Bodman and Interior Secretary Gale Norton took a helicopter tour of the Gulf of Mexico to observe the damage to oil platforms and flew over the Louisiana Offshore Oil Port, the terminal in deep waters miles (kilometers) offshore where huge oil tankers drop their cargos.


Evident that the recovery of the region's oil production facilities is incomplete, at least half a dozen tankers were anchored near the port waiting to disgorge their cargos. The facility, known as the LOOP, returned to full operation just this past weekend.


Norton said 90 percent of the Gulf oil platforms "will be capable of production by the end of the month." But she emphasized that widespread damage remains at onshore facilities that will hamper production beyond then.


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Bodman and Norton visited one of the Strategic Petroleum Reserve facilities from where the government is providing oil to several refineries to compensate for supply losses. They then went to an ExxonMobil refinery near Baton Rouge, Louisiana, which escaped damage from the hurricane but has needed government oil to continue production.


Bruce March, the refinery's manager, said about 20 percent of its crude is coming from the government stockpile. The refinery, the second largest in the country, scaled back production briefly after the hurricane hit two weeks ago but is again in full production, March said.


Norton said that 58 percent of Gulf oil production remains shut down, as does 38 percent of the region's natural gas production.


Both Cabinet members are worried about coming supplies of natural gas. About one-third of the Gulf's natural gas production was disrupted by the hurricane.


Bodman said "there is less known" about the extent of damage to underwater natural gas pipelines, and it is uncertain when those facilities will be up in full operation. He said it could be several months before the region's natural gas system recovers.


While the loss of oil production is being made up from government reserves and foreign supplies, there is no such backstop for natural gas.


"We don't have an international market" that the country could rely on for additional supplies as it does with oil, Norton said.


Last week, the Energy Information Administration estimated that natural gas prices would soar this winter because of the hurricane, including increases as much as 71 percent in parts of the Midwest.


Bodman and Norton met with senior executives from two dozen energy companies Monday night in Houston. The executives said they needed government help to arrange housing for thousands of employees as they struggled to return the Gulf's oil and gas system to full operation, he said.


Source: Associated Press


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