Houston’s oil and gas companies took a break from Tropical Storm Nicholas this week, but are still grappling with damage from Hurricane Ida.
In the Gulf of Mexico, nearly 30% of oil production and 40% of gas production are still offline weeks after Ida’s landing, according to the US Department of the Interior.
While other hurricanes have caused more lasting damage, Ida’s impact is unprecedented in the short term, according to Aaron Brady, vice president of Energy Oil Market Services at IHS Markit.
“If you look at the cumulative impact on outages, it’s actually the biggest production impact over that period of time we’ve ever seen,” Brady said. “If you watch Katrina and Rita in 2005, it had a bigger impact over time because it put production on hold for months and months, whereas (with Ida) I don’t think it will last that long. . ”
Before Ida hit Louisiana as a Category 4 hurricane on August 29, Gulf Coast companies shut down more than 90 percent of their production. All workers were evacuated from offshore platforms before the storm.
Nicholas – who briefly achieved Category 1 hurricane status – was another story. Nicholas made landfall on September 14, mostly putting Ida’s recovery efforts on hold, but not making the damage worse.
Meanwhile, it could still be weeks before some facilities resume operations after suffering damage from the Ida wind. The Interior Ministry’s Office of Environmental Security and Enforcement wrote last month that inspections were underway.
“Once all standard checks are completed, production from undamaged facilities will immediately be brought back on line,” the office wrote. “Facilities that are damaged (by Ida) may take longer to come back online. ”
More than 17 million barrels of oil were lost in the market due to Hurricane Ida, and overall U.S. production could drop to 30 million barrels this year, according to Reuters. When Katrina and then Rita swept the region in 2005, over 160 million barrels were lost in three months.
However, some experts believe the impacts of Nicholas and Ida’s recovery are unlikely to cause any major disruption in supply.
“Fortunately, in terms of the global market, it’s not a big deal right now,” said Ed Hirs, a University of Houston scholar. “Mainly, of course, due to the COVID pandemic and declining demand around the world. “
The pair of storms are unlikely to have too much of an impact on prices, Hirs said, but natural gas has suffered a small bump that could last until the end of the year.
“We are currently seeing natural gas prices above $ 5, and this is mainly because we have temporarily lost 5% of US production and are trying to compensate for storage,” Hirs said. “We’re a bit behind in storage as we go into winter after a hot summer and a cold winter before that.”
But hurricane season isn’t over, and while Ida and Nicholas largely ignored Houston, Hirs said the real concern was a hurricane causing a major storm surge.
A final study of a coastal barrier project to protect against this kind of surge has been published by the Army Corps of Engineers, but is still more than a decade from reality. IAnother hurricane is likely to strike before that date.
“A 15 to 20 foot storm surge up the Houston Sea Channel – which would damage petrochemical plants and oil refineries for many months,” Hirs said. “It’s our huge risk here.”
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