Hurricane Ida’s devastation to U.S. offshore energy production makes it one of the costliest hurricanes since back-to-back storms in 2005 cut production for months, new data and historical records show.
At least 78% of Gulf of Mexico oil and gas production capacity remained shut down on Tuesday, nine days after “Ida” struck the Gulf Coast. Offshore oil wells in the U.S. Gulf of Mexico produce approximately 1.8 million barrels of oil per day, accounting for 16% of the total daily production in the United States.
The hurricane also caused U.S. energy companies to cut the number of oil and gas drilling rigs for the first time in five weeks, Baker Hughes data showed on Friday.
Currently, a total of 99 oil and gas production platforms have been evacuated, down from the original 288. “The entire region is still struggling to replenish supplies,” said Tony Odak, chief operating officer of Stone Oil Distributor, which supplies fuel to the offshore industry. Refining Plants are slowly recovering, but too much infrastructure needs to be brought back online and inspected.”
The U.S. Department of Energy said five Louisiana refineries remained closed on Monday , their refining capacity is approximately 1 million barrels per day, accounting for approximately 6% of total U.S. operational refining capacity.
In addition, all three refineries in the Baton Rouge area and one refinery near New Orleans have begun restarting, with a refining capacity of 1.3 million barrels per day. day. However, they will not be able to produce at full speed for several days.
Operations at the Louisiana Offshore Oil Port (LOOP) Marine Terminal also remain limited and repairs are ongoing.
The Gulf Coast region is still struggling with power outages after Hurricane Ida left more than 1 million people without power last week. The U.S. Department of Energy said that as of Monday morning, there were still about 573,000 power outages caused by Ida, including 568,000 in Louisiana.
Hurricane Ida may not be the deadliest or most destructive weather disaster ever to hit the United States, but its initial impact on Gulf of Mexico oil supplies was greater than any in history All other storms are bigger.
Oil production loss is the worst in 16 years
In the ten days since the first production platforms were evacuated, IDA caused a production loss of 16.8 million barrels. This is 32% more damage than Hurricane Katrina and 42% more than Hurricane Gustav/Ike during the same period.
So far, the market has lost approximately 17.5 million barrels of oil. The shutdown is expected to continue in the coming weeks. Energy analysts say IDA could reduce total U.S. oil production by as much as 30 million barrels this year.
Output disruptions caused by the 2005 storm ultimately delayed more than 160 million barrels of production in the Gulf of Mexico. At that time, hurricanes Katrina and Rita caused disruptions that continued into the following year. It is impossible to assess how long production in the Gulf of Mexico will be delayed by IDA.
According to the U.S. Energy Information Administration (EIA), production in the U.S. Gulf of Mexico fell 12.6% from the previous year to 1.28 million barrels per day. Total U.S. oil production fell 4.7%.
The impact of Hurricane Ida is currently benefiting oil prices to a certain extent. Oil prices fell on Monday after Saudi Arabia sharply lowered the price of crude oil to Asian customers.
Saudi Aramco notified customers on Sunday that it would reduce the official selling price (OSP) of all grades of crude oil in October to Asia, its largest sales market, by at least US$1/barrel. According to a Reuters survey of Asian refiners, the price cut was larger than expected.
Bjornar Tonhaugen, head of oil markets at Ruizhid Energy, said: “The Saudi giant’s reduction in selling prices to Asia in October shows that it believes that the supply and demand relationship has changed slightly, and traders have to follow it. This route.”
In addition, Saudi Arabia’s move to cut prices for Asian buyers raises the possibility of fierce competition among oil producers, while the resurgence of the new crown epidemic continues This casts a shadow on the demand outlook. Saudi Arabia cut the price of its oil to Asia next month just days after OPEC+ kept its decision to increase production unchanged, a move that caught traders off guard as they viewed the kingdom as aiming to increase competition and retain market share.
Ole Hansen, head of commodity strategy at Saxo Bank, said: “Saudi Arabia’s price cuts for Asia were larger than expected, and investors speculated whether it was fighting for market share or whether it was anticipating weak demand. , so we implement price reduction in order to maintain competitiveness.”</p
