Drilling rigs hit by Rita

The latest reports from the Gulf of Mexico indicate that Hurricane Rita caused extensive damage to drilling rigs there, perhaps the most damage caused to oil production by any hurricane on record. The damage is so widespread that companies reportedly will be forced to delay drilling not only in the US but as far away as the Middle East.

While Hurricane Katrina mainly affected areas where wells are already in production, Rita appears to have plowed through the core of current exploratory drilling. According to the US Coast Guard, as many as nine semi submersible rigs have slipped their moorings and are adrift in the Gulf. Other companies report rigs adrift or missing, and several companies have not issued damage reports yet.

Noble reported four rigs adrift and two run aground, one of which has run into another company’s platform. Rowan Companies says four of its rigs are damaged - two moved, one having lost its “legs”, and the fourth missing and presumed sunk. Global Santa Fe has said it cannot find two of its rigs.

All this comes at a time when drilling rigs were already in short supply. In the past, companies had to commit to a rig a few months before they needed it. This week Anadarko, the largest independent oil company in the US, committed to a rig six years ahead of its use.