Status report on Oil Infrastructure post Hurricanes

1. Status report on Oil Infrastructure post Hurricanes A presentation by Leigh Phillips Biehl & Co., L.P.

2. Introducingthe Gulf of Mexico • The energy infrastructure of the Gulf of Mexico includes offshore oil and gas production, drilling rigs, platforms, an extensive work of pipelines, oil refineries and the LOOP (Louisiana Offshore Oil Port), which handles almost 11% of the nation’s oil import. • The Gulf coast region provides: • 47% of the nation’s oil refining capacity • 29% of the country’s oil production • 20% of the natural gas output

3. And then came the Hurricane Season 2005…. • The Gulf of Mexico’s offshore platforms suffered severe damage by two Hurricanes within a period of 4 weeks in August and September 2005 • It is estimated that 3,050 of the Gulf’s 4,000 platforms and 22,000 of the 33,000 miles of Gulf pipelines were in the direct path of Hurricanes Katrina or Rita

4. ….with all it’s consequences • The overall destruction caused by Hurricanes Katrina and Rita is the greatest natural disaster to oil and gas development in the history of the Gulf of Mexico • In 2004 the devastating Hurricane Ivan destroyed 7 platforms, compared with 115 platforms destroyed in Rita and Katrina

5. Facts about Hurricane Katrina • Category 5 hurricane Katrina destroyed 46 platforms and damaged 20 more • 100 damaged pipelines and 211 minor pollution incidents are publicly known to date • 36 of the damaged 100 pipelines were of large diameter (10’’ up) and 12 of the 36 pipelines have resumed service

6. Facts about Hurricane Rita • Category 4 hurricane Rita destroyed 69 platforms and damaged 32 more • 83 damaged pipelines and 207 minor pollution incidents are publicly known to date • 28 of the damaged 83 pipelines were of large diameter (10’’ up) and 10 of the 28 pipelines have resumed service

7. Damages from Hurricanes Katrina and Rita

12. Affect on Oil/Gas Production • 100% of Gulf oil production (approx. 1.5 million barrel per day) was shut-in during both storms • 94% of gas production (10 billion cubic feet per day) was shut-in during Hurricane Katrina • 90% of manned platforms and 85% of working rigs were evacuated

13. Affect on Oil/Gas Production • So far 396,000 barrels of oil daily and a daily amount of abt. 1,804 cubic feet gas remain kept enclosed • It is expected that approximately 255,000 barrel of oil a day and 400 million cubic feet of gas a day will not be restored to production before the 2006 hurricane season

14. Affect on Oil/Gas Production • Cumulative shut-in production for the period August 26, 2005 – March 8, 2006: • Oil: 134,522,189 bbls, which is equivalent to 24.57% of the yearly production of oil in the Gulf of Mexico (approximately 547.5 million barrels) • Gas: 672.694 BCF, which is equivalent to 18.430% of the yearly production of gas in the Gulf of Mexico (approximately 3.65 TCF)

15. Oil/Gas shut-in

16. Refineries • After Hurricane Katrina, 11% of US refining capacity was shut down • The shut down capacity was reduced to 5% on September 16, 2005 by bringing several refineries back online • The threat of Hurricane Rita shut down almost 30% of the nation’s refining capacity • Nearly 5% of the US oil refining capacity was still offline 5 weeks after Rita hit land

17. Shut down of Refining Capacities

18. Climatic Development • Possibility of increase of hurricane activity in the Gulf of Mexico • Experts explain that certain climatic phenomenon favor increased tropical storm activity in multi-decadal cycles (20-30 years) • According to the National Oceanic and Atmospheric Administration a continuation of above-normal seasons for another decade or longer is to be expected

19. Climatic Developments

20. Sources • US department of the Interior, Minerals Management Service report (www.mms.gov) • Federal Deposit Insurance Corporation (www.fdic.gov) • OCS Bulletin Board System (www.ocsbbs.com)