Much of Hurricane-Impacted Energy Production Still Offline

Much of the oil and natural gas production still shut-in after last year's hurricanes in the Gulf of Mexico will stay offline because it would not be economical for companies to rebuild the production platforms, Energy Secretary Sam Bodman told Congress Thursday.

About 255,000 barrels per day in crude oil production and 400 million cubic feet of natural gas output is expected to still be offline in the Gulf of Mexico at the June 1 start date of the 2006 hurricane season, according to the government. That represents 17 percent of pre-hurricane daily Gulf oil production and 4 percent of gas output.

"By and large those production platforms that are out are not going to be put back because it's not economically desirable to reinvest to put those facilities back in place," Bodman told the House Energy and Commerce Committee during a hearing on the Energy Department's proposed 2007 budget.

Bodman said the shut-in production platforms are mostly in old oil and gas fields close to shore.

"They tend to be depleted and it would not economically be viable to reinvest in to rebuild them and the companies haven't done that," he said.

Bodman said energy companies are instead drilling farther offshore in deeper waters and new oil and gas production will eventually replace the lost output.

Separately, Bodman said the three U.S. oil refineries that remain shut due to damage from hurricanes Katrina and Rita will be back on online "within the next couple weeks" or by the end of March or early April at the latest.

The extra production capacity will be needed. The Energy Department predicts strong gasoline demand and high pump prices during the upcoming U.S. summer driving season.