The Gulf of Mexico: Oil and Gas Industry Continues to Recover From Katrina

• It appears increasingly likely that the Gulf of Mexico has suffered as much as a 17-18% decrease in medium-to-long-term oil capacity due to lost and damaged platforms, especially in the Mississippi Canyon area. This will result in a loss of 250,000 barrels per day, 1.25% of total US demand for crude oil.
• Loses to medium- and long-term gas capacity will also be experienced, but based on assessments to date, the loses will be a much lower share of pre-Katrina gas production than what is likely for oil.
• There is an important caveat. Inspection and testing of offshore pipelines and gathering systems continue and unpleasant surprises remain a possibility. In a related vein, the caution due to the uncertain status of subsea infrastructure is likely the primary reason for the measured ramp-up in both oil and gas production observed to date.

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