With the next storm season looming, the U.S. energy industry is stretched thin as it struggles to rebuild Gulf of Mexico output from the ravages of hurricanes Katrina and Rita amid surging prices, officials said.
With oil supply and demand in tight balance, segments of the energy service and supply sector are having difficulty keeping enough workers on the job to move equipment and finish restoring platforms and pipelines in the key producing region.
The big thing is to keep crews working steadily, as many oil workers deal with rebuilding their own homes and neighborhoods that were hit hard by Katrina and Rita last autumn, said Ken Wells, president of Offshore Marine Services Association, headquartered in the New Orleans area.
With the existing work force going through what everyone's gone through down here, companies have had to be very flexible about giving employees ample resources to help get them through their problems, Wells said, adding many workers are trying to keep in touch with families displaced by the hurricanes and dispersed throughout the country.
Of the 55,000 people who work in the Gulf energy sector, the majority live along the coastlines of Texas, Louisiana, Mississippi and Alabama which got hammered by the hurricanes last August and September.
There are about 4,000 offshore platforms in the Gulf and dozens of refineries onshore. The area accounts for 30 percent of U.S. oil production and 20 percent of natural gas output, and much of the infrastructure was damaged by the hurricanes.
As Hurricane Katrina made landfall on August 29, 2005, 95 percent of oil and 89 percent of natural gas production in the region was shut down, prompting prices to briefly pass $70 a barrel for the first time.
And less than a month later, Hurricane Rita forced shut all oil production and 80 percent of gas output in the Gulf.
According to the U.S. Minerals Management Service's most recent figures, 23 percent of U.S. Gulf crude production and 14 percent of the gas output is still off-line. About 5 percent of the region's refining capacity is still down.
Oil prices, meanwhile, have surged again. They settled up 98 cents at $70.30 a barrel on Monday, within sight of last August's $70.85 record.
In the first few months after the hurricanes, OMSA's member companies, which operate vessels that ferry supplies and people to and from offshore sites, lost entry-level deckhands to higher-paying reconstruction work onshore. But that has leveled off, Wells said.
Much of the work done offshore, such as fixing production platforms or laying pipeline on the ocean floor, requires specialized skills, so onshore rebuilding is not sapping all the workers, said Denise McCourt, director of the general membership segment for the American Petroleum Institute.
I would say that in some arenas we are competing for work force that is being pulled to do all these other things, but the other thing is that we're competing, for example, to get parts, she said. The challenge for our industry is to get the parts made and have the skilled labor force that does that kind of work.
That includes making such specialized items as helicopter pads and living quarters for platforms.
Wells also said the Coast Guard, its own coastal resources stretched thin in the aftermath of the storms, faces a backlog in dealing with certification for mariners sorely needed offshore as the June 1 start to the hurricane season looms.
Its New Orleans regional exam center, the busiest one in the country, was flooded by Katrina and thousands of certification files on seamen were destroyed, he said. Officials are working out of temporary offices.
There are companies that have vessels tied to the dock because they can't find mariners, which is really ironic given the need, Wells said.