Aug. 22 (Bloomberg) -- Transocean Inc.'s Deepwater Nautilus rig should have spent the last two months drilling for oil and natural gas in 8,000 feet of water in the Gulf of Mexico, earning $220,000 a day. Instead, the vessel sat idle in a Texas shipyard.

Workers last week finished the latest round of repairs on the Nautilus after Hurricane Katrina tore the 50,277-ton rig from its moorings and Hurricane Rita grounded it. They also added mooring points to lessen the chance of a repeat. The 2005 storms have cost Houston-based Transocean, the largest offshore driller, about $135 million for repairs, downtime and equipment upgrades.

At least Transocean is done counting. A year after Katrina, the biggest natural disaster ever in the energy business, companies are still tallying the damage done by the hurricanes. The price tag so far, according to two of the world's biggest insurance brokers and a power-industry group, is $17 billion.

``Hurricanes come every year, and we are accustomed to dealing with them,'' said Roger Plank, chief financial officer with Houston oil and gas producer Apache Corp., which had as much as $700 million in damage from 2005's storms. ``But what, as an industry, we are not accustomed to are 100-year storms, and we had two of them last year.''

The billions of dollars spent on rebuilding is money that might have gone to drilling wells and tapping new oil and gas deposits. More supply is needed worldwide to keep pace with demand and control prices. Oil futures touched a record $78.40 a barrel on July 14 in New York and have been higher in the past half year than in the six months after the storms struck.

`Maximum Destruction'

The hurricanes ``couldn't have been pinpointed with more accuracy to cause maximum destruction,'' said Brian Gambill, senior analyst at Manning & Napier Advisors in Rochester, New York, which oversees $13 billion in stock investments.

Katrina in late August and Rita in September tore through the Gulf of Mexico's offshore oil and gas fields with winds of 170 miles per hour (274 kph), toppling production platforms, setting rigs adrift and rupturing pipelines. As of the last government report, on June 19, about 10 percent of oil and gas output was still off line.

As the storms moved ashore, high winds and flooding also damaged gas-processing plants. Seven refineries representing more than 10 percent of U.S. fuel-making capacity sustained damage that kept them shut down for weeks or months. More than 170,000 miles of power lines were downed, knocking out service to about 5 million utility customers.

Still Assessing

``They're still assessing and determining whether something is a complete loss,'' said Caryl Fagot, a spokeswoman for the U.S. Minerals Management Service in Washington, which oversees offshore production. ``The fat lady's still singing.''

Damage estimates will probably rise as new reports trickle in with each field that is restarted, pipeline reactivated or platform that is scrapped, Fagot and insurers said.

Demolition work, the final stage of hurricane recovery, will continue until at least 2010, said Jack Jurkoshek, a spokesman at Oceaneering International Inc., a Houston company that supplies divers and unmanned submarines to the offshore oil industry.

``The amount of the remediation work in the Gulf and the duration is going to be a lot longer than we would have estimated just 90 days ago,'' he said.

Aon Corp., the world's second-largest insurance broker, and Willis Group Holdings, the third-largest, separately estimated damage from Katrina and Rita to oil and gas producers, drillers, pipeline operators and refiners at $15 billion. The Edison Electric Institute, an association of electric companies, estimated damage to power networks at $1.43 billion from Katrina and $500 million from Rita.

Claim Cap Exceeded

The estimates reflect insured and uninsured damage, infrastructure destruction and lost business. Aon didn't track claims of less than $1 million, so its estimate is conservative, said Bruce Jefferis, a managing director at the company's Aon Natural Resources Group in Houston.

Offshore producers suffered the most, accounting for 77 percent of storm costs, according to Aon. Oil and gas producers and pipeline operators had $6.9 billion in damage and almost $4 billion in lost sales, Willis said in a May report. Drillers had costs of more than $1 billion, and refiners were hit with $3.3 billion in damage, according to Willis.

At Oil Insurance Ltd., a self-insurance pool that counts Chevron Corp., Royal Dutch Shell Plc and Apache among its more than 80 members, claims totaled $3.17 billion, said a report issued in July.

Those claims couldn't be paid in full because the group had a $1 billion cap for each storm. After posting an underwriting loss of $225 million in 2005, Oil Insurance lowered its claim cap for this year's storms to $500 million.

Platform or Reef?

Chevron, the second-biggest U.S. oil company, had costs of $800 million in this year's first six months just to remove infrastructure destroyed by the storms. In May, the company created an artificial reef by sinking its $250 million Typhoon production platform, which was irreparably damaged by Rita.

In all, Katrina destroyed 46 offshore platforms and Rita 69, the Minerals Management Service reported. Fifty-two platforms were damaged by the two storms.

Costs to the industry of the damage by Katrina and Rita have been offset by the increase in prices that resulted from the disruption of Gulf of Mexico oil and gas supplies. The region is the largest domestic source of oil and gas for the U.S.

Apache, the second-largest producer in the Gulf's shallow waters, followed the third-quarter hurricanes with record net income in the fourth quarter. For all of 2005, the three largest U.S. oil companies -- Exxon Mobil Corp., Chevron and ConocoPhillips -- earned more than $63 billion combined.

Insurance Rates Rise

Shell, the largest Gulf producer, posted a 4 percent drop in fourth-quarter profit because the storms disrupted output.

Insurers are trying to make up for their losses by raising premiums. Coverage for wind damage to offshore facilities costs three or four times as much as before Katrina, according to Aon. The amount of coverage offered has dropped about 70 percent.

``The harsh reality is that there's just not as much insurance available this year as there was last year,'' said Al Reese, chief financial officer at Houston-based ATP Oil & Gas Corp. ``There are some companies that only got limited coverage or were unable to obtain coverage at all this year. It's very, very scary.''

Another unknown is how much more energy companies will spend to make their rigs, ships, platforms and pipelines less vulnerable to hurricanes.

Upgrades

At a shipyard near Corpus Christi, Texas, workers on Aug. 11 were putting the final touches on the last of four additional mooring lines for Transocean's Deepwater Nautilus. Transocean is spending about $16 million to increase the number of mooring lines on the Nautilus and another so-called semisubmersible rig, the Marianas, company spokesman Guy Cantwell said.

Some producers, such as Houston Exploration Co., have sold Gulf assets to focus on less risky wells.

Apache's Plank said the region's financial rewards justify the risks. The company, which was insured for at least half of its 2005 storm costs, nets at least $1 more per thousand cubic feet of gas produced in the Gulf than anywhere else.

``We get paid every day for taking this risk,'' Plank said.

To contact the reporter on this story: Jim Kennett in Houston at jkennett@bloomberg.net.

Last Updated: August 22, 2006 00:07 EDT