Eight months after Hurricane Katrina shattered America's largest energy hub, Royal Dutch Shell, the top oil producer in the Gulf of Mexico, said today that it had completed the repairs on its Mars platform ahead of schedule and would resume production soon.
Mars, the biggest offshore structure in the gulf, was among the hardest hit by the storm that struck on Aug. 30. Production should restart next month and Mars is expected to return to its pre-storm level of 140,000 barrels of oil and natural gas a day by the end of June. Initially, the company estimated repairs might last well into the second half of the year.
The announcement from Shell comes as oil futures in New York rose above $70 a barrel this week and might provide traders with a small measure of comfort that large volumes of oil will soon be returning to the market. Mars accounts for about 5 percent the Gulf of Mexico's output.
Crude oil for May delivery touched a new trading high of $72.40 a barrel earlier today, exceeding the previous record of $70.85 a barrel that was reached after Hurricane Katrina.
Mars was directly in the path of the storm and suffered extensive damage from its 175-mile-an-hour winds and 80-foot waves. A 1,000-ton drilling rig, sitting on top of the platform, was toppled by the storm and shattered the upper decks and living quarters, forcing Shell to shut down the platform.
The repairs also included fixing two vital underwater pipelines linking Mars to shore that were crushed by a drifting anchor. Replacing those involved an industry-first repair job performed by a pair of robotic submarines at a water depth of 2,700 feet.
More than 500 people participated in the repairs at sea and logged 600,000 man-hours of work. To house everyone close to platform, Shell chartered a six-story high floating hotel from the North Sea and linked it to Mars via a pontoon.
The company estimated the costs associated with the hurricane, including the evacuation and displacement of its employees and the repairs to its assets, was between $250 million and $300 million. Shell owns 71.5 percent of Mars. BP owns the rest.
While the next hurricane season officially begins on June 1, Mars still accounts for a substantial slice of the region's shut production. More than 22 percent of the gulf's oil production, or some 334,000 barrels a day, remains closed off because of storm-related damage, according to the latest statistics from the federal Minerals Management Service.
Daily natural gas production is also down by 27 percent, or 1.3 billion cubic feet. Since August, nearly 150 million barrels of oil and 730 billion cubic feet of natural gas were lost to both Hurricane Katrina and Hurricane Rita.