Hurricane Nate shuts down about 90% of Gulf of Mexico oil production
Oil production slowed to a trickle in the Gulf of Mexico this weekend as energy companies turned off the taps and evacuated workers in preparation for Hurricane Nate.
More than 92 percent of crude output was offline in the nation's offshore production hub as of Sunday morning, according to the U.S. Bureau of Safety and Environmental Enforcement. Energy companies also "shut in" nearly 78 percent of natural gas production, the bureau estimated, based on reports from companies.
The storm developed into a hurricane on Friday night and strengthened as it passed through the central Gulf of Mexico, before making landfall near the mouth of the Mississippi River. U.S. producers shut down about 300 of the 737 offshore platforms in the Gulf of Mexico to avoid potential damage.
On Monday, it appeared that much of the vast infrastructure had emerged from the storm unscathed and production at offshore platforms could soon resume. The National Hurricane Center down graded Nate to a post-tropical cyclone as it moved out of the area.
"It's really been a very minor event as far as the energy infrastructure is concerned," said Andrew Lipow, president of Lipow Oil Associates.
"Damage to energy infrastructure including oil production and refining is minimal."
The market should expect to see a decline in U.S. crude stockpiles in next week's closely watched government data, analysts said. Lipow estimates a loss of roughly 8 million barrels of oil output, a "small amount" in the context of total global production.
U.S. oil inventories have been falling, helping to drain global oversupply, but Hurricane Harvey contributed to several weeks of stock increases last month. U.S. crude prices were up 35 cents to $49.64 on Monday, coming off the worst weekly loss for the commodity since June.
National average gasoline prices should continue to fall toward $2.40 a gallon, as Nate only impacted a small portion of U.S. Gulf Coast refining capacity, Lipow said.
Phillips 66's 247,000-barrel-a-day refinery in Alliance, Louisiana, experienced no damage from Nate and is expected to return to normal operations in several days after the company shut it down. Meanwhile, Chevron was carrying out assessments at its Pascagoula, Mississippi, plant, capable of refining 340,000 barrels a day, Reuters reported.
further west have largely restored operations after Hurricane Harvey pummeled southeastern Texas about six weeks ago, shutting down about a quarter of U.S. refining capacity.
About 95,000 customers in Alabama, Florida, Georgia, Mississippi and Tennessee were without power on Sunday evening, according to the Edison Electric Institute, which represents investor-owned utilities.