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Rita Causes Record Damage to Oil Rigs
By Carola Hoyos, Sheila McNulty, and Thomas Catan
Financial Times, London
Tuesday, September 27, 2005
http://news.ft.com/cms/s/034a384e-2f8a-11da-8b51-00000e2511c8.html
Hurricane Rita has caused more damage to oil rigs than any other
storm in history and will force companies to delay drilling for oil
in the United States and as far away as the Middle East, initial
damage assessments show.
ODS-Petrodata, which provides market intelligence to the offshore
oil and natural gas industry, said it expected a shortage of rigs in
the U.S. Gulf this year.
"Based on what we have right now, it appears that drilling
contractors and rig owners took a big hit from Rita," said Tom
Marsh of ODS-Petrodata. "The path Katrina took was through the
mature areas of the US Gulf where there are mainly oil [production]
platforms. Rita came to the west where there is a lot of
[exploratory] rig activity."
Ken Sill of Credit Suisse First Boston said: "Early reports
indicate numerous rigs are missing or destroyed or have suffered
serious damage, and several companies have yet to report. Rita may
set an all-time record."
The U.S. Coast Guard said nine semisubmersible rigs had broken free
from their moorings and were adrift.
This damage could not have come at a worse time for oil companies
and consumers. U.S. crude futures on Monday fell 37 cents to $65.45
a barrel in midday trading in New York as refineries that were
evacuated before the onset of Rita returned to operation.
Earlier in the day, Ali Naimi, Saudi Arabia's oil minister, said the
market had not taken up the 2 million barrels a day of spare
capacity the Organisation of the Petroleum Exporting Countries
offered last week. Speaking in Johannesburg, he blamed high oil
prices on a lack of industry infrastructure, including rigs and
refineries, rather than oil reserves. Rigs, which are movable and
are used for exploration and development, were in short supply
before hurricanes Katrina and Rita blew through the U.S. Gulf in
late August and September.
High oil prices and the desperate search for new oil supplies needed
to meet rampant demand from the U.S. and China have made rigs
difficult to find and expensive to hire. Rigs cost $90 million to
$550 million to construct, depending on how sophisticated the
structure and how deep the water in which it will drill. A rig
ordered today is unlikely to be ready before 2008 or 2009, analysts
said.
As a sign of just how precious rigs are becoming to the market,
Anadarko, the biggest U.S. independent oil company, this week set a
record by committing to a rig six years in advance; commitments in
the past were made months ahead of time rather than years.
Initial reports from companies are ominous. Global Santa Fe reported
it could not find two of its rigs. Rowan Companies reported four
rigs damaged, with two having moved, one losing its "legs" and the
fourth presumed sunk. Noble has four rigs adrift, with two run
aground one into a Chevron-Texaco platform.
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