Quarantine Bay in Plaquemines Parish and Eloi Bay in St. Bernard Parish are south Louisiana oil fields that lay in the direct path of Hurricane Katrina. For Cox Oil LLC and many other operators in the area, the damage sustained from Hurricane Katrina in the Gulf of Mexico was not completely evident until several weeks after the storm.

The scene

The Eloi and Quarantine Bay fields had originally been developed in the early 1950s and, through several divestments and acquisitions, ended up under the operation of Cox Oil LLC and associated entities. The fields were very mature in state waters, with the majority of production having to be artificially lifted with compressed gas. The oil-to-water ratio averaged 90%.

Production facilities contained large slow-speed compressors and production equipment to separate, meter and store the gas, oil and water. The area was developed over the course of many decades, and therefore had been built in stages. The design of an oil field constructed this way lends itself to inefficiency such as redundancy and massive operational maintenance. It also is very labor intensive to operate, a situation that would have been avoided had the fields been approached in a single development.

The fields, having been produced over the course of more than five decades, were producing at levels that were five to six times less than initial production levels. The inefficiencies were no secret before the storm, but they could not have been addressed without shutting down an entire oil field while redesign and optimization took place. Katrina made that decision unavoidable.

The day after Katrina and in the first weeks following the storm, the first order of business was to immediately address pollution sources emanating from the destroyed facilities. The process to stop and prevent pollution incidents proved to be ongoing throughout the restoration of the production facilities and satellite wells.

Only three of the 12 individual platforms survived the storm surge, waves and wind. All of the tanks, engines and process equipment that had been on the platforms, as well as processed crude oil, were now in the water and constituted a significant pollution source.

The first challenge was locating construction and contracting companies in South Louisiana as employees of those companies were residents of the area and had to deal with personal property damage caused by the hurricane. The second challenge was competition for the equipment with the other operators in south Louisiana that were facing identical equipment needs.

Getting started

The first step in restoring the field to production was to address the pollution sources emanating from the platforms and potential sources for future releases. State and federal agencies required all production equipment to be removed and inventoried to eliminate potential pollution sources.

Fortunately, several contractors, procured at a premium, began the arduous task of finding and recovering lost equipment in the oil field.

There is a science to recovering and salvaging heavy equipment from water. First, equipment is retrieved in a prudent and approved manner with pollution-boom and environmental-response crews on hand in the event that a discharge occurs during the salvage operations. Second is salvaging equipment in a manner that does not further damage the equipment. The objective is to refurbish the equipment and return it to service.

Temporary housing for the labor force in the field and in shore-based operations had to be established. Mobile homes, recreational boat houses, and any other structure or vessel that could support extended housing for the labor force was contracted and committed to on a long-term basis.

Equipment for lifting, handling and storing the equipment as it was received was secured for the shore base. Salvaged equipment, which had been submerged in brackish or saltwater for several weeks, had to be transported in shale barges under water to prevent oxygen from getting to the equipment and corroding it. After, the equipment was safely transported to shore and received, it was inspected and either scrapped or prepared for refurbishing.

Rebuilding

Procurement and transportation of new and refurbished process equipment was the next concern. Both equipment and marine transportation were limited. Crew boats, tugs and barges had to be rented to transport the necessary equipment to the construction site.

It is advisable to have a good bare boat charter agreement and marine survey in place prior to and following any rental of marine vessels. Also, there is no replacement in a major operation for good documentation as it avoids many potential problems. Coordinating the various entities was also critical to minimizing the already costly expenses of transportation and supervision.

Temporary and permanent permits and waivers had to be filed and approved prior to any construction and production restoration. Engineering firms began seeking approval from the appropriate federal, state and local governments to repair old structures, build new structures, and update the production processes and safety and testing equipment. In Louisiana, a royalty suspension was granted in the wake of Hurricane Katrina until production could be restored. The US Coast Guard and other federal regulatory agencies had to be frequently informed of operations and alerted to any pollution releases in the field of operations. An environmental specialty firm was contracted to manage field observation and reporting as well as spill response and pollution cleanup.

Improving

The effort to plan and lay out future facilities included hiring several engineering firms, contractors and consultants. The vast majority of the engineering firms and consultants who had been working for other operators in the area prior to the storm were never released from their contracts following the storm. The firms began developing a plan that considered the current production levels when sizing the production, monitoring and control equipment. The plan also took into account electrical-generation and gas-compression needs. Solutions had to be readily available or based on incorporating process equipment that could be salvaged while taking advantage of modern advancements in production facility equipment.

The challenge of working just offshore South Louisiana is the shallowwater depth. Equipment is specially designed for service in the area. As a result, only a limited amount of “generic” equipment could be used.

Salvaged equipment had to be the correct size, mechanically operational and cost-effective to refurbish compared to new equipment. There was a significant shortage of engines for compressors, pumps and generators. Much of this equipment was secured in regions that were not affected by the hurricane, such as West Texas and New Mexico. The equipment had to be retrofitted for offshore usage.

The redesign of the field-operations facilities focused on consolidating the amount of process equipment needed to reduce platform area required to support the equipment. Reducing the amount of process equipment not only saved money on platform cost, but delivered fuel savings, reducing the amount of fuel needed for process equipment, generators and compressors. Centrally locating a main facility in the field achieved optimization of tank storage, personnel living accommodations and boat traffic in the field. The consolidation of process equipment and tank storage also reduced field emissions and in some cases actually resulted in rendering the Title V permits unnecessary because emissions fell under the threshold.

Using salvaged equipment and implementing modern production equipment advancements were major steps toward optimizing production operations in the fields. Refurbishing salvaged equipment from the field saved money and time. Many of the same pieces of equipment that were needed in the Cox Oil rebuild were required in the rebuild plan of dozens of other operators in the area. The lead time on some pieces of process equipment was several months, in some cases, as long as a year.

One positive result of the rebuild was that replacement generators and compressors have lower emission levels than their precursor equivalents. In addition, safety systems were updated with modern electronic versions of the old “costly” pneumatic systems, which would take much longer to install. Digital metering and satellite communication replaced the paper wheel charts and operator clipboards. The rebuild has positioned the company to recoup some of the economic impact of Katrina by reducing operating costs in the fields.

There were many challenges and captured optimizations during nearly two years of rebuilding and restoring the production in Eloi Bay and Quarantine Bay oil fields. The fields have not yet been restored to full pre-Katrina production and will not be at full production until mid-2008, but, the fields are much more efficient, safer and more environmentally friendly. They will be easier to operate and will be easy to further optimize in the future.