Hurricane Rita has caused more damage to oil rigs than any other storm in history and will force companies to delay new drilling for oil. When the storm turned north, away from Galvaston, it plowed through the heart of the offshore Gulf oil patch, after Katrina had cut a path through the eastern edge of the field.
Based on what we have right now, it appears that drilling contractors and rig owners took a big hit from Rita,” said Tom Marsh of ODS-Petrodata. “The path Katrina took was through the mature areas of the US Gulf where there are mainly oil [production] platforms. Rita came to the west where there is a lot of [exploratory] rig activity.”
High oil prices has been increasing the demand for oil rigs, which are movable and are used for exploration and development. Rigs were in short supply before hurricanes Katrina and Rita blew through the US Gulf in late August and September. A rig ordered today is unlikely to be ready before 2008 or 2009.
Rita and Katrina have created yet another bottleneck in the oil and gas industry by taking out so many rigs. The markets, having absorbed this information, are moving higher again, after the first sigh of relief that Rita had missed Galvaston temporarily drove prices down.