Shell Prepares to Ramp Up Output in Gulf of Mexico

By Fred Pals

Sept. 23 (Bloomberg) -- Royal Dutch Shell Plc, Europe's largest oil company, said it's preparing to step up production at its facilities in the Gulf of Mexico following Hurricane Ike.

Gross production at Shell-operated facilities stands at about 32,000 barrels of oil equivalent a day after 1,210 personnel were returned to offshore facilities, The Hague-based company said today in an e-mailed statement.

``Production ramp-up at remaining facilities will vary, depending on repairs and downstream oil and gas infrastructure readiness,'' Shell said. Production has increased ``slightly'' over the weekend, Shell added in the statement.

Hurricane Ike, the most recent storm to blast through the U.S. Gulf, made landfall in Texas on Sept. 13, cutting off power and damaging some refineries. Ike came less than two weeks after Hurricane Gustav made landfall in Louisiana. The storms flooded parts of the region, snarling oil production and forcing the evacuation of platforms offshore and installations onshore.

U.S. energy producers resumed output for about 23 percent of oil and 34 percent of natural-gas production in the Gulf of Mexico after the storms, the Minerals Management Service said yesterday in a statement on its Web site.

Energy companies reported that 7 rigs and 225 production platforms remain evacuated after this month's storms, the agency added. About 1 million barrels of daily oil production remains shut-in, along with 4.85 billion cubic feet of gas.

The Gulf of Mexico accounts for 26 percent of U.S. oil production and 14 percent of natural-gas output. The Gulf produces 1.3 million barrels of oil and an estimated 7.4 billion cubic feet of gas a day, according to the agency, which is part of the U.S. Interior Department.

Shell's normal average net production in the Gulf of Mexico is 370,000 barrels of oil equivalent a day and the company holds an interest in more than 459 offshore leases, according to Shell's Web site. Production in the Gulf of Mexico accounts for more than 80 percent of the company's overall U.S. production.

To contact the reporter on this story: Fred Pals in Amsterdam at fpals@bloomberg.net