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

Introducing the 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 nations oil import. 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 nations oil import. The Gulf coast region provides: The Gulf coast region provides: 47% of the nations oil refining capacity 47% of the nations oil refining capacity 29% of the countrys oil production 29% of the countrys oil production 20% of the natural gas output 20% of the natural gas output

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

….with all its 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 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 In 2004 the devastating Hurricane Ivan destroyed 7 platforms, compared with 115 platforms destroyed in Rita and Katrina

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

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

Damages from Hurricanes Katrina and Rita

Affect on Oil/Gas Production 100% of Gulf oil production (approx. 1.5 million barrel per day) was shut-in during both storms 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 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 90% of manned platforms and 85% of working rigs were evacuated

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 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 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

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

Oil/Gas shut-in

Refineries After Hurricane Katrina, 11% of US refining capacity was shut down 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 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 nations refining capacity The threat of Hurricane Rita shut down almost 30% of the nations refining capacity Nearly 5% of the US oil refining capacity was still offline 5 weeks after Rita hit land Nearly 5% of the US oil refining capacity was still offline 5 weeks after Rita hit land

Shut down of Refining Capacities

Climatic Development Possibility of increase of hurricane activity in the Gulf of Mexico 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) 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 According to the National Oceanic and Atmospheric Administration a continuation of above-normal seasons for another decade or longer is to be expected

Climatic Developments

Sources US department of the Interior, Minerals Management Service report ( US department of the Interior, Minerals Management Service report ( Federal Deposit Insurance Corporation ( Federal Deposit Insurance Corporation ( OCS Bulletin Board System ( OCS Bulletin Board System (