While it's likely that news and damage reports related to Hurricane Rita will continue to come in over the next few days, it looks like the combination of a weaker-than-expected storm and a deviation from the original projected path spared a lot of the U.S. energy infrastructure. Although I want to emphasize that almost all information at this point is preliminary, it doesn't appear that the storm inflicted the major blow predicted.
There were about 21 refining facilities representing more than a quarter of U.S. refining capacity in the projected path of the storm. Fortunately, the storm missed Houston, and the damage reports released so far look manageable. Port Arthur seems to have taken a hit, with damage to both Valero's (NYSE:VLO) and Motley Fool Income InvestorTotal's (NYSE:TOT) facilities. At this point, it appears that both companies believe it will take two to four weeks to repair the refineries and bring them back online. Others companies, including Exxon Mobil (NYSE:XOM), Motiva (partly owned by Royal Dutch Petroleum), and CITGO, reported minor damage.
Following standard procedure, companies operating drilling rigs and energy platforms in the Gulf evacuated their folks out of harm's way. As a result, oil production in the Gulf essentially stopped and natural gas production was severely curtailed. Assuming that companies continue to follow standard operating practice, they will evaluate the structures for damage and then start bringing crews back to the facilities that are safe.
As for those facilities, there were 40 or so drilling rigs and more than 500 platforms in the path of the hurricane. According to information at Rigzone, drillers Todco (NYSE:THE), Rowan (NYSE:RDC), DiamondOffshore, and Pride had the most drilling rigs at risk, while Apache (NYSE:APA), BP (NYSE:BP), Newfield, Forest Oil, and Devon had the largest number of platforms at risk.
I haven't seen much in the way of direct damage reports from the operators, and I would expect those to start coming out Monday as companies send crews out to assess the damage. According to a Coast Guard report on Sunday, there were at least eight rigs adrift. Transocean has already reported that its Deepwater Nautilus broke free from a towing bridle, and Chevron reported severe damage to the not-so-ironically-named Typhoon energy platform.
Unless really unexpected damage reports start rolling in on Monday and Tuesday, it looks like a lot of the fears (and the run-up in oil prices) ahead of Rita were mostly unfounded. Given the devastation that Katrina caused and the potentially far-reaching effects of even more disruption to the energy sector, we should consider ourselves lucky that it wasn't worse. That said, our thoughts are very much with those who were in the path of Rita and bore the brunt of this storm.
For more information:
- In the Wake of Katrina: Drillers
- In the Wake of Katrina: A Broader View
- In the Wake of Katrina: Refiners and Others
Total is an Income Investor selection. To learn more about finding top-notch income-producing stocks, try a free trial subscription to our Motley Fool Income Investor newsletter service.
Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).
