As a follow up from the previous blog dated October 20^th 2008 regarding the condition of the GOM after Hurricane Ike, final results of the assessment indicate that 60 platforms were destroyed as a result of Hurricanes Gustav and Ike. Some platforms which had been previously reported as having extensive damage were re-assessed and determined to be destroyed. The destroyed platforms produced 13,657 barrels of oil and 96,490,000 cubic feet of gas daily or 1.05% of the oil and 1.3% of the gas produced daily in the Gulf of Mexico.

The precipitous fall of oil and gas prices over the last 60 days has made it increasingly difficult to forecast and project revenue streams for those companies directly and indirectly involved in the oil and gas industry. The notion of setting a price band to establish a trading range for oil, as suggested by Hugo Chavez, may be wishful thinking on his part. The non-socialist countries within OPEC may find that a hard sell to their respective populations, especially those who think oil is priced right at present levels of $50+/- per barrel. Plus getting a consensus and implementing such a strategy would provide the populations with fairly solid footing for a claim of “price fixing”.

Adding the rest of our economic woes i.e. Real estate and related investments imploding, and equity markets losing significant value, we find ourselves in a global state of paranoia/schizophrenia as it relates to the next step. To forge ahead full steam would be Quixotic yet to go so far as to do nothing would likewise prove to be “chicken little’ thinking. Neither of which is prudent, given our circumstances. The trite but true saying “cautiously optimistic” is the mantra in through here, all the while hoping and praying that the solution will be painless and soon.

The world wide, never ending search for “black gold” and natural gas continues to be the bedrock of our global economy. While Wall Street melts down and banks and mortage giants try to defend their incomprehensible actions over the last decade, the energy sector thrives.

Hurricane Ike caused massive destruction to the coastal areas but had little effect on the offshore production with the loss of roughly 1% of the 3800 working rigs and platforms in the Gulf of Mexico. The environmental impact will take longer to assess given the massive size of the storm. The speed with which the industry recovers and continues to drill, even while commodities markets gyrate ad nauseum, emphasizes the mindset that drives us to continue the search for hydrocarbons.

Many market followers believe that OPEC will announce a cut in production to boost, or at least bolster the price of a barrell of oil as it stands today at $74 pbl. Fear of the impact this will have on the global economic recovery will weigh heavily on their decision as to how much production they will cut and the manner in which the news is delivered. The reality remains that oil is at record highs and the industry still appear to be bullish on developing existing fields and searching for yet more plays that are belived to exist domestically and abroad.

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