The Impact of Katrina on the Offshore Oil and Gas Industry

Before Hurricane Katrina slammed into Louisiana, Mississippi, and Alabama, it ripped through the heart of the Gulf of Mexico producing area, one of the great oil and gas production regions of the world. For the past six days most of the wells and platforms in that region have been shut in. At the nadir of this production stoppage, approximately 95% and 85% of the oil and gas production, respectively, representing approximately 1.4 million barrels of oil per day (mbpd) and 8.0 billion cubic feet of natural gas per day (bcfpd) were shut in. Cumulative deferred production through September 1 due to Katrina is on the order of 7.5 million barrels and 40 billion cubic feet.

Now, as the industry begins to resume operations, questions naturally arise as to how long it will take to return to normal operations and to what extent the ramp-up may be limited by long-term damage or other factors. To help address these questions, we have prepared a preliminary assessment to provide our clients with a snapshot of the situation for the offshore Gulf of Mexico environment. Undoubtedly, as new information becomes available, we will have to update our views and plan to do so next week, but the following analysis reflects the best information currently available.

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