Oil companies have temporarily shut down nearly 91 percent of crude production in the Gulf of Mexico as Hurricane Ida barrels toward the Louisiana coast, threatening the nation’s largest concentration of oil and gas facilities.
More than 1.6 million barrels per day of oil production has been halted in the Gulf, surpassing cuts seen during Hurricane Katrina in 2005, according to the Interior Department. The U.S. Gulf of Mexico produces 1.8 million barrels of oil per day, about 17 percent of the nation’s oil production and is second only to shale production in Texas.
Ida is expected to make landfall in Louisiana Sunday as the first major hurricane of the year to significantly impact the nation’s largest concentration of refineries, petrochemical plants and offshore platforms. The storm is expected to land as a Category 4 hurricane with winds of at least 130 miles per hour, causing storm surges, torrential downpours and widespread wind damage and power outages. Sunday is the 16th anniversary of Hurricane Katrina.
"Hurricane Ida is expected to come ashore along the same path as other storms, which did extensive damage to U.S. Gulf Coast refining and petrochemical facilities,” S&P Global Platts Analytics said Saturday. “Many plants have been hardened against hurricanes, but disruptions in operations are still very likely due to flooding, power outages and personnel dislocations."
Oil companies have evacuated offshore workers from 279 production platforms, nearly half of the 560 platforms operating in the Gulf, according to the Interior Department. Workers have been evacuated from all 11 stationary drilling rigs operating in the Gulf, and 11 of the 15 mobile drilling rigs in the Gulf have been moved from the storm’s track, the department said Saturday.
BHP, BP, Chevron, Equinor, Exxon Mobil, Murphy Oil said they shut in production and evacuated their Gulf platforms. Royal Dutch Shell said it shut in production, halted its Auger and Enchilada/Salsa platforms and evacuated crews from its Ursa, Mars, Olympus and Appomattox platforms.
OFFSHORE: Historic 2020 hurricane season wreaked havoc on offshore drillers
Refiners and petrochemical operators in Louisiana also began closing plants ahead of the Ida. Phillips 66 said it closed its Alliance refinery in Belle Chasse, Louisiana, which has a refining capacity of 255,600 barrels per day. Shell said it shut down its Norco refinery in Louisiana, which has a refining capacity of 230,600 barrels per day, as well as its Geismar petrochemical plant. Chevron said it closed its Fourchon and Empire terminals and pipelines in Louisiana.
Nearly 4.4 million barrels per day of refining capacity is in the path of Ida, according to Platts Analytics. This includes Louisiana’s 17 refineries, which have a total refining capacity of 3.4 million barrels per day, representing about a fifth of the nation’s total capacity, according to the Energy Department.
The Louisiana and Mississippi refineries in Ida’s path account for 1.5 million barrels per day of gasoline output, 1.2 million barrels per day of distillate fuel oil production and 350,000 barrels per day of aviation fuel supply, according to Platts Analytics.
A number of gasoline stations in Louisiana ran out of fuel as millions of residents in Ida’s path evacuated the region. On Saturday afternoon, 7.5 percent of gasoline stations in New Orleans and 8.4 percent of stations in Baton Rouge were out of gasoline, according to Gas Buddy, a website that tracks fuel prices and demand.
Gasoline shortages in Louisiana are expected to rise as Ida knocks out power and damages fuel facilities. In Houston however, gasoline supplies should not see much of an impact and prices should not rise more than a few cents, according to Patrick De Haan, head of petroleum analysis for GasBuddy.
Liquefied Natural Gas facilities operated by Cheniere Energy, Cameron LNG, and Freeport LNG said they remain confident they will remain open since they are located west of Ida’s path.
NOAA’s Climate Prediction Center is forecasting another busier-than-normal Atlantic hurricane season this year, with 13 to 20 named storms.
The 2020 Atlantic hurricane season, the second most-active on record, forced offshore oil producers to curtail about 110,000 barrels per day. That’s the most since the 2008 hurricane season, which saw curtailments of nearly 140,000 barrels of oil a day, according to S&P Global Platts.
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