Waterjetting 36b - Katrina anniversary and the power of water

When I began to write these posts, I wrote about the difference between overall jet force and the focussed effects of a very high-pressure but small diameter jet. At the time I made reference to the relatively low pressure, but huge flow rate effects when Katrina hit New Orleans.

I specifically wrote about the damage to the Lower Ninth Ward when the levee collapsed and a wall of water, carrying a barge, suddenly flooded into the neighborhood. Though there was little water pressure, perhaps 20 or 30 psi, the volume of flow and the fact that it applied that pressure over the full face of a building, resulted in sufficient force to destroy the buildings and leave only the concrete slab, if that.

I was part of a survey group that went through the area after the Hurricane and made several hours of video which I summarized in a short review. On the occasion of the anniversary it is, perhaps appropriate to put this up. This comes with the sound, as I recorded it at the time. It begins in the Lower Ninth Ward, and then goes back to the start of the trip.

After visiting one of the smaller breaches in the city, we drove down the Delta to the point where the boats went out to service the rigs, and where the hurricane had come ashore as a more powerful force. Yet it was the water damage that was prevalent, as can be seen from those buildings that had survived because they were on stilts and thus out of the storm water.

We then returned to the Lower Ninth Ward, mainly near the breach. This is where the barge went through the breach, obviously at some speed, since it was carried beyond the main channel of the flow and then dropped onto the school bus as the flood waters passed further into the ward.

As I mentioned there are hundreds of photos and hours of video that we shot, but this gives some sense of the disaster.

Hurricane ISAAC and the Gulf Coast

The political world is waiting patiently for Tuesday, when the Republican National Convention is officially getting under way, after a postponement due to the nearby passage of what remains Tropical Storm ISAAC. The question that begins to arise, however, is as to whether the political news will be swamped by the consequences of ISAAC’s arrival.

Figure 1. The current prediction for the path of Tropical Storm ISAAC, as it skirts Florida, on its way to the Gulf Coast.(National Hurricane Center)

It has been some 7 years ago that the three hurricanes of 2005, DENNIS, KATRINA and RITA, did a number on Gulf oil production. We have, in the interim, perhaps become a little complacent about the impact of a major hurricane on Gulf oil production. It was DENNIS which did such damage to the Thunder Horse platform back in July of 2005, that it took several years to bring it back into operation. (video here ). DENNIS shut in some 1 mbd, but for only a short time.

Figure 2. The Thunder Horse platform after Hurricane DENNIS in July of 2005. (Youtube )

However it was followed by KATRINA and RITA, so that, between the three of them they covered not only the swath of the ocean that included most of the drilling platforms in the Gulf, but also, as they moved inland, a significant number of the refineries on which the nation has come to depend.

In the seven years since then, the lack of significant hurricane impact on the Continental United States has led to some complacency as to the vulnerability of the country to the hurricanes that have, from time immemorial, threatened these shores.

But it is worth just a quick reminder that the impact is not just seen in damage on shore, grievous though that may become. (I was on a survey team that was one of the early groups that went down the delta after KATRINA). Already platforms are being secured:

The Bureau of Safety and Environmental Enforcement says 39 production platforms and eight drilling rigs have been evacuated as of Sunday. That's about 6.5 percent of the 596 manned platforms and 10.5 percent of the 76 rigs operating in the Gulf of Mexico. . . . . . . The bureau says operators estimate that about 24 percent of the current daily oil production and 8 percent of natural gas production has been cut off.

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The paths of the storms are somewhat different. KATRINA came in more directly from the south:

Figure 3. Path of KATRINA in 2005 (Central Florida Hurricane Center).

The path of ISAAC is currently anticipated to be more direct, as shown in Figure 1, but there are several things to bear in mind, as we move into this week.

Figure 4. Platforms along the Gulf of Mexico (FOX 4)

Firstly it was not only the platforms themselves that caused the problems in the United States after the hurricane season of 2005. There are a lot of refineries around the NOLA area that were damaged at the time, and which have not moved since.

Figure 5. Refineries around New Orleans in the region of the KATRINA hurricane track.

Hopefully between then and now the relevant refinery will have got all the switchgear that gave them problems back then out of the basement and into a less flood-threatened location.

As far as the people that live in the region are concerned, there are two additional worries. The first is that there is some thought that the hurricane may strengthen beyond a level 2, and KATRINA was only at a level 3 when it hit in 2005. The second is the direction in which the storm is approaching. While KATRINA had the full length of the delta over which to lose power, if ISAAC swings in from the East then it will pose a greater threat to the levees because it will impact Lake Ponchartrain.

If the storm tracks west of New Orleans, a storm surge into Lake Ponchartrain could push water against the city’s still-fragile levee system. If the storm makes landfall east of New Orleans, northerly winds on the west side of the storm could still create wave and water problems for the Crescent City. A landfall east of New Orleans could also bring a devastating storm surge onto the Alabama-MIssissippi coast.

. As a precaution rigs and platforms have been put into a protective posture, which has reduced daily oil production by 24% and natural gas production by 8%.

Until the full nature of the threat develops, however, it is thought that the refinery fire in Venezuela may have greater impact, although it is being reported that the damage there was constrained to just two storage tanks. (Not that this is as big a concern to the United States as it used to be:

In the first five months of 2012, the United States imported just over 50,000 bpd of fuel from Venezuela, down from nearly 290,000 bpd in 2005, according to data from the U.S. Energy Information Administration.

And for the people of New Orleans and particularly those in the ninth ward, I hope that this time they have not dredged next to the levees, nor have they left any of the barges less than totally secured.

And, lest the Democratic Party start to feel too superior, there are rumors of another Tropical Depression that might make it more interesting in Charlotte, in early September.

OGPSS - Gulf of Mexico production, and hurricanes

The summer brings back Hurricane season, with the threat that such storms bring to the oil and gas well operations in the Gulf of Mexico. And the National Oceanic and Atmospheric Administration (NOAA) has noted that

The Atlantic basin is expected to see an above-normal hurricane season this year, according to the seasonal outlook issued by NOAA’s Climate Prediction Center . . . . 3 to 6 major hurricanes (Category 3, 4 or 5; winds of 111 mph or higher)

The lessons of this vulnerability were, perhaps, more than most years, evident in 2005. The first sign of problems came with the arrival of Hurricane Dennis in July. It was a storm which severely damaged the BP deep water Thunder Horse drilling platform.

Thunder Horse after Hurricane Dennis (Prof Goose)

As that season wore on, the vulnerability of the platforms in the Gulf, and the refineries that border it, were exposed in more intensity with the passage of Hurricanes Katrina and Rita. These threats and their analysis were one of the factors that helped, in that formative year, to bring an audience to the pages of The Oil Drum. The Gulf is now home to thousands of wells, which, as the evidence from the Deepwater Horizon disaster last year reminded us, has moved further and further away from shore. That vulnerability is perhaps illustrated by a map, showing the path of Hurricane Rita through the oil platforms off the Texas and Louisiana coasts.

Path of Hurricane Rita through off-shore Gulf production facilities (The Oil Drum) (Each dot is a production unit)

Back in the 1930’s and ‘40’s it was the very gradual deepening of the seabed in the Gulf, that allowed the first oil drillers to venture, through the swampy regions of the Mississippi Delta and then on out into the waters of the Gulf. There had been some drilling from piers out in California and similar constructions were also tried along the Louisiana shore, as the prospects for success tempted companies away from the coast. However, as they did so the rigs faced the challenge, as they do today, of surviving in regions where Hurricanes are not uncommon. The industry was helped in this development since there were no major hurricanes that moved through the regions of most intense drilling, from the first wells in 1945 until 1964 when Hurricane Hilda arrived. And even when that hurricane struck on October 3rd, it only damaged three locations, at Eugene Island and Ship Shoals 149 and 199, with a total of some 11,869 bbl of oil being spilled due to the storm.

Gulf of Mexico showing regional features (Geoexpro)

The first pier-based platform had been built out into the Gulf of Mexico at McFaddin Beach, south of Port Arthur, Texas after having been approved by the Secretary of War, on July 8, 1937. The pier was a mile long, with three rigs at the far end, but it only drilled dry holes and was destroyed in a hurricane in 1938. More widely recognized was the first well to be drilled out of sight of land. This was the Creole platform near Cameron, which was a mile out-to-sea, an hour-an-a-half trip by shrimp boat at the time. The water was only 18 ft deep and the well, initially drilled by Pure Oil and Superior Petroleum, (later Kerr McGee, and then Anadarko) sat some 15-ft above the water level. Initial production was 600 bd from a depth of 9,400 ft. It was damaged by a hurricane in 1940, but survived and produced more than four-million barrels since through directional drilling.

Kemnac Rig 16 drilling the first offshore well in the Gulf of Mexico (Kerr-McGee via Penn Energy)

As was the case with California there was initially some controversy over who owned the rights to minerals off-shore and in 1953 Congress passed the Submerged Lands Act, which gave the rights to the states for the first three miles offshore, (the range of a smooth bore cannon at one time) and then the Outer Continental Shelf Lands Act which gave the rights for the more offshore land to the Federal Government. This settling of the disputes encouraged further drilling and while there were already 70 rigs, drilling at depths up to 70 ft of water, the years after 1953 saw the development of a variety of different rigs for drilling in ever deeper water. Designs to cope with hurricanes also progressed, so that by the time of Hurricane Flossy in 1956 rigs were relatively safe. It was followed by Audrey in 1957, ranked as the sixth deadliest hurricane in US history, which came ashore at Cameron, and killed 416 people, but caused $16 million in damage offshore, with no fatalities.

Path of Hurricane Flossy in September 1956. (Note I have referenced the web pages showing the storm paths under the Hurricane name in that which follows).

Technology was, however, allowing rigs to work in ever deeper water, 100 ft of water in 1957, 225 feet by 1965, and 300 ft in 1969. With this increase in range came increased production, which had reached 2 mbd, but it also exposed more rigs to the threat from larger storms. Hilda, formed in 1964, caused $100 million in damage and effectively destroyed 18 platforms,; Betsy in September 1965 had the distinction of financially impacting a future President of the United States.

On September 9th, the day Hurricane Betsy struck, MAVERICK was located 20 miles off the Louisiana Coast in 220 ft of water. The following day an inspection showed Zapata’s three other rigs were undamaged, but the MAVERICK had vanished. This was the largest single loss that the domestic offshore drilling industry sustained in this or any other hurricane. . . . . .The MAVERICK loss was a substantial one for Zapata. This was our newest rig and one of our very best contracts. . .

(George H.W. Bush, “My Life in Letters and Other Writings.”) (The insurance check was for $5.7 million).

Camille in 1969 was the largest storm to hit the USA in the 20th century. It did about $100 million in offshore damage, including sinking three up-to-date rigs designed to survive those storms. (Camille was a Category 5). Onshore the damage exceeded $1 billion. This was the hurricane that taught the industry that they had to design rigs that could not only withstand waves more than 70-ft high, but has also to consider that the seabed itself might move under the force of the storm.

Fortunately such storms have proved to be relatively rare, and the “three strikes” of Dennis, Katrina and Rita in 2005 have not been repeated since. Yet the industry remains highly vulnerable to such storms. As the second figure shows, the Gulf has become increasingly filled with production platforms. In 2008 this region was hit by hurricanes Gustav at the start of September and Ike two weeks later. Even though these were weaker storms their impact was significant.

Effective August 2008, there were more than 3,800 production platforms in the Gulf, ranging in size from single well caissons in 10 feet of water up to a large, complex facility in 7,000 feet of water. The MMS estimates about 2,127 production platforms were exposed to hurricane conditions from Gustav and Ike, carrying winds greater than 74 miles per hour.

Final results of the agency’s assessment of destroyed and damaged facilities from these two storms indicate that 60 platforms were destroyed. These included some platforms that had been reported earlier to have extensive damage.

In comparison, 115 platforms were destroyed by the Rita-Katrina wallop in 2005.

The platforms designated as destroyed following Gustav and Ike produced 13,657 barrels of oil and 96,490,000 cubic feet of gas per day, or 1.05 percent of the oil and 1.3 percent of the gas produced daily.

Part of the reduction in damage came from lessons learned from Katrina/Rita.

Mobile Offshore Drilling Units (MODUs) that previously had to have eight mooring lines were now required to have 12 and, in some cases, 16 mooring lines,” Angelico said. “In ’08, 18 moored MODUs were in the path of hurricane force winds, and two went adrift, which represented 15 percent of the rigs out there. In Katrina and Rita, 63 percent of the rigs went adrift.’

There are additional impacts from these storms. The Gulf continues to produce about 27% of the nation’s oil, and 15% of the natural gas. Those fuels must be brought ashore and, in the case of oil, refined. Refineries lie inshore all along the Gulf Coast, and if flooded can take months to be brought back on line. Given the growing reliance that the country places on production from these regions makes us all vulnerable to the season.

Outer Continental Shelf (OCS) Crude and Condensate as an annual volume and percentage of national production. (BOEMRE)

Last October OCS crude and condensate production averaged 1.52 mbd, which comprised 28% of the estimated US production.

Offshore Natural gas production as an annual volume and percentage of national production (BOEMRE)

Last October natural gas production averaged 5.6 bcf/day which was 8.9% of estimated national production.

There is a significant production from smaller, older wells, while the new fields are found in deeper waters further into the Gulf, and so that is where I will venture next time.

Deepwater Oil Spill - The Admiral on casing and connections, and an update or two

I am following a number of different events this week, and so today is as much a set of updates, as anything. Firstly the oil in the Gulf.

For the first 12 hours on June 21 (midnight to noon), approximately 8,410 barrels of oil were collected and approximately 5,015 barrels of oil and 25.3 million cubic feet of natural gas were flared.

On June 20, total oil recovered was approx. 23,290 barrels:
• approx. 14,570 barrels of oil were collected,
• approx. 8,720 barrels of oil were flared,
and approx. 48.3 million cubic feet of natural gas were flared.

Total recovery was slightly down on June 20 due to shut-ins from a lightning storm in the area of the Enterprise and Q4000 heading changes to accommodate wind shifts.

One of the concerns in the Gulf relates to the arrival of a hurricane, and the National Hurricane Center is showing the development of an area of low pressure that could cause problems later in the week. It has changed from yellow to orange in the past day.

National Hurricane Center


Admiral Allen held a telephone conference call today. In this he mentioned that the deeper relief well has now reached 10,677 ft. They intend sending electrical pulses down the casing of the existing well (WW), which will induce an electro-magnetic field that will help locate it and allow the relief well (RW) to be steered towards it. This will start about now, and will allow a much more accurate estimate of position than they now have. The RW operation is currently scheduled for the second week of August

Given concerns over the integrity of the borehole, Admiral Allen specifically noted (in response to a question from the AP) that during Top Kill they had evaluated the highest pressure that they could use in injecting mud, without impacting the integrity of the casing. When they reached that pressure, without being able to kill the well, then they stopped the operation. But that did not damage the wellbore, and though there may be a problem with the wellbore near the top there is no way to check it, and thus they will rely on the bottom-up filling with mud. This will exert less pressure on the casing, and if, at that time, there is a casing failure it will be with the well full of mud, and thus of less consequence. It is also why they don’t want to cap the well at the surface now. They are capturing the oil and gas, and the RW will be able to perform a safer kill.

Apparently the vents on the top of the LMRP cap are still open, and the 23,000 plus bd that is being produced does not count the amount that is still being vented. However they are bringing in another vessel so that they can tap into the kill line out of the BOP (they are currently only producing through the vent and the choke lines). That will allow an increase in volume collected to a capacity level of 53,000 bd sometime next week.

Following the tests on unbolting with the ROVs the new plan is to unbolt the current cut riser segment and then bolt the new cap onto the top of the BOP. That will then produce through 4,000 ft-long flexible risers (rather than the current rigid pipe) and should be in place by the middle of July. (With a capacity at that time in the 60,000 to 80,000 bd range). This will give the flexibility of totally sealing the end and directing the flow up the risers. BP has been tasked to put instruments that will measure flow into the new cap. The current intent is to carry this change through in the next 7 – 10 days.

He noted that there is no sign of ongoing erosion, and that the BOP is tilting at an angle of 10 - 12 degrees.

In regard to the fielding of the suction barges he said that the Coast Guard had carried out a safety inspection and found some safety issues with electrical grounding, and the barges were kept in port until those had been fixed. Which they now have been, and the barges are being used.

Two different procedures are also now being described for connecting between the RW and the WW. In one option the RW will intersect the well, and break through the rock wall of the well. Then a path will be milled through the casing to inject mud to fill the well, before pumping in cement, at the bottom of the WW to totally kill production.

If there are problems with the connection, and it is not a good intersection, then perforating charges will be used to penetrate between the two wells and provide the pathways for the mud and then the cement. This process also allows the area around the bottom of the RW to be separated from the main well with a packer, if it is needed, as extra protection.

To complete the updates for the evening: The Solar Car race had a slight change in order as they reached the Topeka checkpoint: (The times taken to get there from Broken Arrow are, in hours and minutes)

1) Michigan 7:25
2) Minnesota 7:50
3) Bochum 8:05
4) Calgary 8:41
5) Missouri S&T 9:21
6) Stanford 9:50
7) Koahsiung 10:31
8) New Paltz 11:44
9) Kentucky 12:30
10) Northwestern 13:22

Iowa and Texas-Austin are still in the race. After getting to Topeka the teams rested, and then tomorrow will leave Topeka and head, via Jefferson City, to Rolla, where they will rest on Wednesday evening.

And for those who wonder about the volcanoes in Iceland, the areas of concern are, at least for the last few days, relatively quiescent.

Deepwater Oil Spill - the Hurricane season

Five years ago shortly after Kyle invited me to help him start The Oil Drum, Hurricane Dennis, a category 4 hurricane, struck the Gulf of Mexico. It formed on July 4th, 2005 and dissipated on July 13th. This was the first hurricane that TOD had covered, and the focus, naturally, was on the impact which it would have on oil production. This was significant, as the MMS reported.

Hurricane Dennis forced the evacuation of a total of 445 rigs and platforms, according to a Monday report from the U.S. Minerals Management Service, which was released a few minutes before the end of the regular trading session. The evacuations prompted the shut-in of 96.2% of daily oil production in the Gulf of Mexico, as well as 62.4% of daily natural-gas production, according to the MMS.

The update was the main reason for the rally, said Phil Flynn, a senior analyst at Alaron Trading. "People were surprised that Dennis shut in 1.4 million barrels of daily oil production [in the Gulf]," he said, emphasizing that that was a bigger loss of oil than many expected.

In that first post, the path of the Hurricane was simplified to:
Which, you may note covered the Eastern part of the Gulf, with the black spot being the location for the Thunder Horse platform.

Thunder Horse after Hurricane Dennis

Hurricane Katrina, a category 5, formed on August 23rd (it appeared on TOD on the 24th and daily thereafter) and dissipated on August 30th. Much of the damage that has been discussed related to the severe damage that the area around New Orleans, and all the way down the Delta suffered. At the same time the MMS reported

These evacuations are equivalent to 78.75% of 819 manned platforms and 67.16% of 137 rigs currently operating in the Gulf of Mexico (GOM). Today’s shut-in oil production is 1,427,969 BOPD. This shut-in oil production is equivalent to 95.20% of the daily oil production in the GOM, which is currently approximately 1.5 million BOPD.

Today’s shut-in gas production is 8.798 BCFPD. This shut-in gas production is equivalent to 87.99% of the daily gas production in the GOM, which is currently approximately 10 BCFPD.

Hurricane Katrina not only knocked out rigs in the Gulf, it also had a severe impact on refineries on shore.

Path of Katrina through the onshore refineries.

The price of gasoline rose rapidly and transiently there were gas shortages. It was the first time TOD had problems with traffic swamping the server. As for the rigs in the Gulf

In terms of exploration, more than half of the 231 offshore rigs (excluding inland barges) currently working in the US Gulf of Mexico were in Katrina's path. A total of 48 rigs lay within the most adversely affected areas where winds were at hurricane force, blowing in excess of 74 MPH. Another 69 rigs were located in waters that experienced tropical storm force winds of 36 to 74 MPH. In total, 117 rigs, valued at a combined total of over $7 billion, had to weather the storm.

As of Monday afternoon at 3pm, the US Coast Guard has reported that at least one, possibly two, deepwater rigs have lost their moorings and are floating freely in the Gulf.

58 rigs were damaged or displaced of which 30 were lost. By Sept 2nd gas was, in places, at $4 a gallon.

Hurricane Rita, a category 5, was formed on September 17th and dissipated on September 24th, 2005. The rigs in the Gulf had not recovered from Katrina,but Rita swung further west moving through the offshore rigs to come ashore at the Texas border.

The effect of Rita onshore hit more refineries.


The impact of any hurricane in the Gulf on Gulf oil production and thereby on the national oil supply can be visualized with this map showing the locations of the rigs along the coast, from back in 2001. It has not changed that much since, except that there are more rigs out in the Deepwater.

Rig density along the Gulf coast in 2001 (after National Geographic)

Now I mention all this because the gas shortages, and loss of production from the Gulf lasted through most of the fall of 2005. In order to help with supply the National Petroleum Reserve was opened and 11 million barrels of oil sold. It has since been replaced.

This year is already predicted to be a more than usually severe one for hurricanes, with 2 or 3 likely to make landfall in the United States. Which leaves me more than a little concerned, and while there are many different concerns (I was on a survey team that went to NOLA after the disaster, and then down the Delta, and have no wish to ever see such devastation again), two are becoming more pronounced.

The first is as much political as anything, and it relates to the growing creation of the petroleum industry as villain du jour by the Administration and the main stream press. This is not meant in any way to excuse BP or whoever is ultimately found to have caused this disaster, (and I won’t mention the different treatment of banking relative to the oil industry) but there are ongoing consequences both of current actions and attitudes and the potential increasing level of regulations and reviews that are being developed. They are all likely to negatively impact the resilience of the industry in bouncing back from hurricane damage, and in motivating, and even allowing, parts of that recovery to be as fast as it was last time. As a result, any significant hurricane in the Gulf this year may accelerate the return to $4 gas, and for a longer time than the last.

And in that regard, I do remain worried that the powers that be shut down the Top Kill as fast as they did. Yes there were some problems, and I noted some potential ones, but at least it might have ended with killing the well. That won’t now be possible until the relief wells get there sometime in August. And in the meanwhile the well remains vulnerable to storms in the Gulf.

Not that BP have not been making provisions for emergency disconnection of the vessels catching the oil from the leak, and potentially for storing some of the oil. As Kent Wells explained last week. The current solution involves a new connection at the BOP, which won’t be put in place to the end of June.


This will include a new collection tool that is currently being fabricated, made from 10-inch thick steel.


In addition there will be a new floating riser, with a flotation can to hold it some 300 ft below the surface, down below the level of the waves. Unfortunately if it has to be disconnected, then for the time that the Hurricane keeps rigs away, the well will be spilling oil.

And in that regard, my last post on the oil flow through the current cap noted that they had increased production up to 10,000 bd. I had assumed that they had closed most of the ports on the cap to achieve this flow, but it turns out that so far they have only closed one. As BP noted yesterday:

We may leave some of the LMRP cap valves open to ensure system stability - one is currently closed.

The closing of one of the ports on the cap is now reported to have increased flow by 1,000 bd

On June 6, a total of 11,100 barrels of oil was collected and 22 million cubic feet of natural gas was flared. Optimization continues and improvement in oil collection is expected over the next few days.

If all were carrying the same flow (and if of the same size and driving pressure this is a reasonable assumption) then the flow will rise to 14,000 bd when all the ports are closed, and there will still be leakage under the cap to be reduced.

Given that the Enterprise can only handle 15,000 bd at most, this is one of the reasons why the ports remain open and that the system to draw off additional oil through the choke and kill lines is being accelerated.

Oil up, gas down, and Hurricane season is here

I had meant to include the weekly plot of gasoline demand in the last post, that began by talking about the hybrid, but somehow the post drifted into a different direction and I ended up not including it. The graph, from this week’s TWIP, showed that gasoline demand is really remaining fairly constant at a rate slightly above last year(and in about the same relatively flat condition), though you might want to recognize the significant difference in price. This time last year was about the time that price peaked.
Gas demand over the past year (EIA TWIP)
Gas prices over the last two years (EIA TWIP)

The question on where it goes from here does depend on the way the global economy goes, though as you gather, in the case of gasoline, with the spread between supply and demand now controlled by OPEC, I expect that there will be a slow but steady increase.

Natural gas, on the other hand is another story. The Natural Gas Weekly (NGW) report is out today, and shows the slow but apparently inexorable decline in prices is continuing.

Natural gas prices against oil prices (EIA Natural Gas Weekly)


This steady decline in gas prices, which may well continue if there is the influx of LNG at year end, has the potential to significantly hurt the developing production of natural gas from the gas shales. As I previously noted, Chesapeake may well be able to produce from these formations at less than$4 a tcf, but once the price gets down to $3 or so, then I suspect that those bets are off.

The NGW is not very comforting in that regard, noting that

At $3.41 per MMBtu on Wednesday, July 29, prices at Henry Hub were $9.17 per MMBtu, or 63 percent, below last year’s level at this time. Current spot prices at market locations in the lower 48 States average about 62 percent below year-ago levels.

As a result there has been a further increase in storage injection, significantly above the 5-year average figures. The NGW blames this on the unseasonably cool temperatures:

Relatively mild temperatures in each of the Census Divisions in the lower 48 States during the week ended July 23, 2009, likely contributed to the above-normal level of injections into storage. Based on the National Weather Service’s degree-day data, temperatures in the Lower 48 States during the week were, on average, more than 2 degrees cooler than normal and 4 degrees cooler than last year’s levels.

Whether this has anything to do with the lack of sunspots, and the consequent slight drop in received sunlight is a topic for another day. (If the colder weather continues into the winter, then the drop in demand for air conditioning may be compensated by the increased need for heat). Though the stubborn refusal of the global temperature to follow the steadily increasing curve that has been predicted by the AGW models is becoming remarkable.

That difference with prediction is also evident from the subject of the TWIP front page this week, which dealt with the amount of oil from the Gulf of Mexico (GOM) that gets shut in each season due to hurricanes.

Impact of Hurricanes on GOM production (EIA TWIP)

The slow decline in overall production is partly because of the loss of smaller and older producers following recent major hurricanes – production too small to justify the redrilling of wells, and also it is because the fields near the coast are well defined and exploited, and are in overall decline. But the risks from hurricanes are clear, when the platform locations are examined.

6357 oil platform locations in the GOM

The question that the TWIP asks relates to the likelihood of there being strong and frequent hurricanes through the platform-intense regions this season. So far, with the cooler relative sea temperatures there has not been the activity of more damaging years, but the TWIP quotes NOAA as predicting a slightly higher than normal season, with a consequent transient outage of 4.5 million barrels over the season. However the recent identification of this as being an “El Nino” year may change that prediction, though we won’t know until next week, August 6th to be precise.

Whether storms are increasing in severity has been a subject of debate, following such a prediction in “An Inconvenient Truth” , but the data apparently does not show that there has been an increase in storm energy but rather the reverse.

Historic trends in Cyclone Energy (Ryan Maue )

And, as far as oil and gas production from the Gulf is concerned it is only going to take one strong hurricane with the wrong path and, as historic experience has shown, production can be really impacted. (It took years to get the Thunder Horse platform back into commission after it was damaged by Hurricane Dennis in 2005, and the 250,000 bd of oil and 200 mcf of gas production temporarily lost).

The season is yet young, and we’ll just have to wait to see what transpires.