Shutdowns of oil platforms, refineries and pipelines along the Gulf Coast drove energy prices sharply higher today. That all but guarantees a surge in pump prices in the days ahead. Oil prices jumped by more than $3 to top $70 a barrel. The buying frenzy reflects uncertainty and fear about the full extent of the damage Hurricane Katrina inflicted on key energy infrastructure. Tom Kloza, who directs the Wall, New Jersey-based Oil Price Information Service, says some gasoline is priced as high as $2.85 a gallon in Gulf Coast wholesale markets. Retail costs are typically 60 cents higher, meaning motorists there could very well see pump prices top $3 a gallon.
Oil & Gas Journal Editor Bob Tippee says traders are waiting for more complete damage assessments of the energy infrastructure.
Tippee says even the hurricane may not be enough to spur construction of more refineries.
Tippee says telling consumers that high gasoline prices are caused by supply and demand doesn't always wash.
The Louisiana Offshore Oil Port--LOOP for short--did not suffer major damage as a result of Hurricane Katrina. And a port official says the flow of oil could resume within "a matter of hours'' once its power supply is restored. A LOOP spokesman says that while both offshore and onshore operations remain suspended, the major hurdle to resuming operations appears to be lack of power. The port is a crucial link between imported crude oil and domestic refineries. LOOP is a major U. S. entry point for foreign and domestic crude and the Gulf Coast's only port able to offload crude from the biggest tankers.
At least eight Gulf Coast refineries in the path of Hurricane Katrina have shut down or reduced operations. The Energy Department says that represents about 2.3 million barrels of daily refining capacity. Katrina affected some of the Gulf's largest refineries, including the Baton Rouge, Louisiana facility of Irving-based Exxon Mobil. The unit had been operating at reduced capacity, but has resumed normal operations. Damage appears to be minimal, but Bob Slaughter with the National Petrochemical and Refiners Association in Washington says that assessment could be premature. Those shut down completely included the St. Charles refinery of San Antonio-based Valero. The company says it could be one to two weeks before that refinery can resume production. Others shut down completely included: a Chevron unit in Pascagoula, Mississippi; Motiva facilities in Convent and Norco, Louisiana; the ConocoPhillips Alliance Refinery; a Marathon refinery in Garyville, Louisiana; a Chalmette refining facility; and the Meraux refinery of Murphy Oil.
More than 92 percent of the Gulf's oil output and 83 percent of its natural gas production was offline due to evacuations of offshore rigs and platforms as the storm approached. The Minerals Management Service reports 57 oil and gas companies evacuated a total of 615 platforms and 96 drilling rigs, shutting-in more than 1.3 million barrels of oil production and almost 8.3 billion cubic feet of gas production in the Gulf. A J. P. Morgan report released today says Katrina has already forced a production halt in about 630,000 barrels of crude a day from the Gulf of Mexico, some 12 percent of daily output. Analysts say that figure is likely to rise significantly in the coming days, once damage assessments are made. Analysts say that even if Katrina did less harm than feared, its effects would tighten the availability of already scarce refined products like heating oil and gasoline.
Houston-based Rowan Companies conducted an initial aerial survey of its 22 drilling rigs in the Gulf of Mexico and found that the rig Rowan-New Orleans is missing. The company says it may have capsized and sunk offshore Louisiana. Diamond Offshore Drilling says its jack-up drilling rig Ocean Warwick could not be found. GlobalSanteFe says it has accounted for its five rigs.
Stone Energy Corporation says it may be able to bring its facilities back on line within the next 24 to 48 hours. Hurricane Katrina forced the independent oil and gas company to suspend all of its offshore drilling and production activities in the Gulf of Mexico back on Sunday. Officials expect to conduct a flyover soon to determine damages to stone energy pipelines, rigs, and other facilities. Stone Energy also plans to return personnel to its fields in the Western Gulf of Mexico region as early as today. Stone Energy produces an average of 240 million cubic feet of natural gas daily.
At least two Air Force bases are reporting damage caused by Hurricane Katrina. Other military services are still totaling the costs of the big storm. Floodwaters up to four feet deep cover housing, training facilities and an industrial area at Kessler Air Force Base in Mississippi. Homestead Air Force Base in Florida has flooding and downed trees. Army officials are on their way to Camp Shelby in Mississippi, where power is out and there is word of flooding and a number of fallen trees. The Navy is still evaluating the damage to Pensacola Naval Air Station in Florida, and Naval Station Pascagoula in Mississippi. Two Navy frigates, moved from Pascagoula before the storm hit, are still out at sea. There are no reports of any injuries at military facilities.
Casino Row on U. S. 90 in Biloxi, Mississippi has taken a beating. The CEO of Treasure Bay Casino says it's a ''total loss.'' He says it will cost more than $100 million to replace it. At least two of the floating casinos were washed over U. S. 90, which is a major four-lane street that follows the beach. An AP reporter says the casinos' barges are in tatters, adding, "you can see inside them.'' There's a ditch on U. S. 90 that's filled with water and slot machines. As for hotels nearby, they were damaged but not destroyed. The area is being plagued by looting. The owner of the Super Eight Motel in Biloxi says "people are just casually walking in and filling up garbage bags and walking off like they're Santa Claus.''
The cost of Hurricane Katrina keeps going up. Two risk assessment firms say insurance losses from the storm that hit the Gulf Coast may reach $25 billion. That's compared to initial assessments yesterday which began at $17 billion and $12 billion from the same firms. That means Katrina could prove more costly than record-setting Hurricane Andrew in 1992. That storm caused about $15.5 billion in insured losses. Adjusted for inflation, Andrew's cost would be nearly $21 billion today. The figures do not cover property that isn't insured. They also don't cover damage to oil operations offshore.
Some gas stations are out of regular unleaded fuel, after drivers lined up to beat price increases that are expected to follow Hurricane Katrina. One retailer in Greenville, North Carolina sold 1,500 gallons of gas in 90 minutes yesterday. Other stations put signs and plastic bags over pumps signaling they had run out. The Pantry Convenience store chain with 1,300 stores in the southeast is asking customers to restrict driving. The chain said about 90 percent of its supply comes from the Gulf of Mexico. In Sioux Falls, South Dakota up to 15 cars lined up at a gas station yesterday. One man said gasoline costs him one-fourth of the $598 he receives each month in social security disability benefits.
Kinder Morgan Energy Partners is revising its integrity management plan under orders of the U. S. Department of Transportation. The DOT Pipeline and Hazardous Materials Safety Administration ordered the Houston-based company to address a recent increase in incidents along its hazardous liquids pipeline system. The agency issued a Corrective Action Order requiring KMEP to "address integrity threats along the entire 3,900-mile Pacific Operations unit."
Goddard Investment Group has sold the ten-story 2200 West Loop South for $25 million to CCD Acquisitions of Dallas. The company also sold the three-story 17171 Park Row for more than $5 million to Park Row-Houston Investment of New Jersey. Goddard acquired the 53-story Heritage Plaza on Bagby last month for around $130 million from ING Clarion.
DataCert has moved from its Timmons location near Greenway Plaza to two floors of the the Lakes on Post Oak in the Galleria area, nearly tripling its office space. The Houston-based software firm provides electronic invoicing and cost management services.
Houston-based Kinesix Software has formed a partnership with Beijing, China's Shengzuo Software Technology to enter China's $3 billion-a-year software market. The companies have a facility in Beijing for customizing Kinesix's interface technologies for Chinese end-users in the mission-command and process-control industries. The firms are enabling Chinese businesses in aerospace, process control and biotechnology to manage massive volumes of streaming data.
A specialty contractor has acquired an Arlington company that specializes in the repair and reconstruction of damage caused by wind storms, fires and floods. Pittsburgh-based PDG Environmental, a contractor that provides asbestos abatement, mold remediation, disaster restoration and other services, has acquired Flagship Services Group. PDG has not released terms of the deal, but it says the company's combined revenues could reach $80 million.
Drug-maker Glaxosmithkline will eliminate about 150 jobs and outsource much of its computer-server operations to Dallas-based Affiliated Computer Services. That's what the companies said today. Under the five-year, $100.5 million contract, the Dallas firm will manage Glaxosmithkline's 5,000 internal servers and oversee data centers in two U. S. locations and two British locations.
The Texas School of Business is the latest campus to join METRO's U. PASS Program, which provides students at member universities, colleges and technical schools unlimited METRO transportation. Institutions commit to purchase the unlimited-use passes for each student at a cost of $1 per week. More than 21,000 U.PASSes have been distributed to Houston-area campuses since the program began in December 2003.