Hurricane Isaias Spares U.S. Energy Infrastructure

Written by Daniel Graeber for IIR News Intelligence (Sugar Land, Texas)

Summary

A late-season hurricane in the Gulf of Mexico largely spared oil and gas installations, though a hefty amount of crude oil was shut-in because of the storm.

Energy operations along the U.S. Gulf Coast are slowly returning to normal in the wake of Hurricane Isaias, a late-season storm that peaked at Category 3 status last week. Industrial Info Resources through its breaking-energy news service had monitored the storm in depth last week.

At its peak on Friday, the U.S. federal government reported that about 71%, or 1.4 million barrels per day, of offshore oil was temporarily shut-in because of the storm and 59%, or 1.2 million cubic feet per day, in natural gas was impacted. By Monday, the figure for just crude oil was down to about 30%. The Gulf of Mexico is a marginal natural gas producer.

SPR Barrels Offered to BP and Exxon

Despite the minimal impact, the federal government responded nonetheless with an emergency exchange of crude oil from the Strategic Petroleum Reserve (SPR).

"With this emergency exchange, the Energy Department is acting swiftly to help maintain refinery operations, limit disruptions to fuel supplies, and ensure American families and businesses continue to have access to affordable, reliable, and secure energy" said U.S. Secretary of Energy Chris Wright.

To help make up for Gulf of Mexico crude production outages, the Department of Energy offered up to 2 million barrels of crude oil from SPR for BP and Exxon Mobil Corporation, which will return the barrels next year. The SPR is running dangerously low because it's already been tapped via international efforts in order to offset the supply-side disruptions stemming from conflict in the Middle East. Federal data for the seven-day period ending Oct. 2 show 283 million barrels left in the SPR. It was designed to hold as much as 714 million barrels.

Few onshore installations were directly impacted by the hurricane, however. Among those impacted, Industrial Info Resources was able to confirm that W&T Offshore Incorporated was forced to shut down parts of its Mobile Bay onshore natural gas treatment facility because of the storm.

Meanwhile, the Middle East conflict continues to take a harsh economic toll.

Calculations from London oil broker PVM on Monday found that U.S. consumers have paid an additional $72 billion for just gasoline alone between March and September.

Over the 12-month period to August, the energy component of the Consumer Price Index was up 16.3%, compared to all items, which rose 3.4% annually to August.

The price for Brent crude oil, the global benchmark, was trading at around $106 per barrel on Monday, the highest since Sept. 24. Markets brushed off a controversial U.S.-Russian agreement on diesel supplies, with traders instead focusing on attacks in the Middle East.

The United Kingdom Maritime Trade Operations Center reported three separate incidents for shippers moving in and around the Persian Gulf during the weekend. Operations at Saudi Arabia's international airport were suspended on Monday following airstrikes from the Houthi rebel group in Yemen.

By the Numbers

• 283 million: Barrels of oil left in the Strategic Petroleum Reserve
• 70%+: The percentage of offshore oil that was impacted by Hurricane Isaias

Key Takeaways

• Hurricane Isaias peaked at Category 3 and caused relatively minor damage to U.S. energy infrastructure.
• The Middle East conflict is creating long-lasting U.S. consumer woes, data show.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, Industrial Info Resources is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).