Nexen Says Some Gulf Fields Will Be Shut Until 2009

By Angela Macdonald-Smith

Sept. 24 (Bloomberg) -- Nexen Inc., a Calgary-based oil and gas producer, said some of its Gulf of Mexico fields will be shut until next year because of damage to platforms from Hurricane Ike.

Production will be ``minimal'' from the Gulf for the rest of this quarter, while output in the fourth quarter will range between 10,000 and 20,000 barrels of oil equivalent a day, Nexen said in a statement distributed on Market Wire. Full-year production for the year will be ``slightly below the low end'' of its forecast.

Nexen normally produces the equivalent of about 30,000 barrels a day in the Gulf and had been restoring that output after Hurricane Gustav passed through the region on Sept. 1. Ike made landfall on Sept. 13, flooding Galveston and forcing the evacuation of 2.3 million people from eastern Texas. About 67 percent of Gulf oil output and 62 percent of gas production is still idled, the Minerals Management Service said yesterday.

Nexen's Green Canyon 6, 50 and 137 deepwater fields are closed after a processing platform owned by a third party toppled and the company said it is ``evaluating alternative production options.'' The Vermilion 321/340 venture suffered ``substantial damage'' to the lower decks of some platforms and won't restart until next year, it said. These fields usually produce the equivalent of 5,600 barrels of oil a day.

Initial assessments of other ventures on the shelf indicate ``minor damage'' to a number of systems, which will require repairs and won't restart until later this year, Nexen said. In the deep water, the Gunnison venture had ``minor damage,'' while third-party facilities were damaged at Aspen and Wrigley. The timing of the restart of these fields, which should be this year, ``is uncertain because of reliance on third-party repairs,'' it said.

``A number'' of fields have been restarted, while others are ready to resume output when allowed, Nexen said in the Sept. 23 statement. The company has insurance for damage by hurricanes, subject to some deductions, it said.

To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net