Off Shore Oil Production Hit Hard

We have been hearing that damage resulting from Rita was not as bad as feared, on shore that is. Via The Oil Drum we hear from The Financial Times that off shore damage was devastating.

Hurricane Rita has caused more damage to oil rigs than any other storm in history and will force companies to delay drilling for oil in the US and as far away as the Middle East, initial damage assessments show.

[....]

“Based on what we have right now, it appears that drilling contractors and rig owners took a big hit from Rita,” said Tom Marsh of ODS-Petrodata. “The path Katrina took was through the mature areas of the US Gulf where there are mainly oil [production] platforms. Rita came to the west where there is a lot of [exploratory] rig activity.”

Ken Sill of Credit Suisse First Boston said: “Early reports indicate numerous rigs are missing, destroyed or have suffered serious damage and several companies have yet to report. Rita may set an all-time record.”

The US Coast Guard said nine semisubmersible rigs had broken free from their moorings and were adrift.

And we have this from The Houston Chronicle which would indicate we shouldn't be too surprised.

MOBILE, ALA. - In the days after Katrina, as hundreds of oil-producing platforms remained off line — and some continued to leave a conspicuous trail of petroleum in the Gulf of Mexico — federal officials insisted to Congress that they were doing everything they could to make this infrastructure stable during hurricanes, designing platforms to withstand Category 5 storms.

But federal and industry documents obtained by the Mobile Register show that the latest design criteria for offshore oil and natural gas platforms require only that these structures withstand winds and seas typical of a borderline Category 2/Category 3 storm, well below the Category 4 and 5 winds that affected Gulf oil fields at least four times in the last five years.

Under the latest International Building Code, a model adopted by many states and localities, beach houses on many of the Gulf's barrier islands would be constructed to withstand stronger winds than is required by the design criteria for offshore platforms.

The implications of platform design decisions extend beyond the oil drilling industry, and include the gasoline price spikes since Katrina and the spreading oil slicks emanating from multiple platforms in the Gulf.

Just more of the same from the modern "free market economy"; maximize profits this quarter and let someone else worry about next quarter or next year.