FACT BOX: Hurricane Ida bears down on USGC production, refining

More than half of total US oil and gas production came offline in the Gulf of Mexico ahead of Hurricane Ida by Aug. 27, and Louisiana's refining and petrochemical operators were bracing for the heavy winds and the storm surge of a major hurricane.

Ida was upgraded from Category 2 to a Category 4 hurricane with maximum sustained winds of 130 mph on Aug. 29, according to the US National Hurricane Center.

The US Bureau of Safety and Environmental Enforcement said Aug. 27 that about 58.5% of the US Gulf's crude oil, or 1.065 million b/d, was already was shut in, as well as 48.8% of the region's approximately 2.2 Bcf/d of natural gas production, or about 1.088 Bcf/d. Ida is expected to become the first major hurricane of 2021 to significantly impact oil, gas and refining operations.

Close to 4 million b/d of operating refinery capacity is in the path of Ida as well, primarily in Louisiana. Ida's wind speed will play a major role in how hard it strikes at the heart of USGC refining centers, said Rick Joswick, head of oil pricing and trade flow analytics at S&P Global Platts Analytics.

Joswick said if the hurricane came in with the 120 mph winds forecast earlier, it would be "a major factor." Category 4 hurricanes have winds of at least 131 mph.

PRICES

Oil

**NYMEX September RBOB settled up 1.88 cents at $2.2742/gal Aug. 27.

**NYMEX September ULSD climbed 2.60 cents to settle at $2.1092/gal.

**ULSD assessed at a 4.55 cent/gal discount to front-month NYMEX ULSD, the highest level since March 26.

**NYMEX October WTI settled $1.32 higher at $68.74/b.

Natural gas

**Henry Hub prices gained 14 cents to settle at $4.34/MMBtu for the weekend, the strongest spot price since the severe winter storm in mid-February.

**Henry Hub forwards saw strong support during Aug. 27 trading, with the prompt contract gaining 15 cents to $4.33/MMBtu.

**Winter strip pricing increased by 10-13 cents as the January 2022 contract broke above $4.50/MMBtu.

**Day-ahead on-peak power for delivery Aug. 30 was bid at $50/MWh and offered at $85/MWh on the Intercontinental Exchange, about $26 higher than the $41.50/MWh that power for delivery Aug. 27 settled at Aug. 26.

TRADE FLOWS

Oil

**Louisiana Offshore Oil Port (LOOP) said it was executing its storm plan, although Clovelly Hub receipts and deliveries remained normal as of Aug. 27.

**Ports along the Gulf Coast were open but restricted, according to the US Coast Guard.

Natural gas

**As of late Aug. 27, there were two tankers at Sabine Pass, one at Cameron LNG and one at Freeport LNG, according to Platts cFlow.

**Pilots who serve the channels leading to the liquefaction facilities reported fairly normal operations, though that was likely to change as Ida moved closer.

**About a dozen LNG tankers were in the Gulf, some awaiting orders and others with captain's destinations set for US facilities.

INFRASTRUCTURE

Oil

**Crews were evacuated from 89 production platforms, or 15.89% of the 560 manned US Gulf platforms, BSEE said.

**BP said Aug. 27 it continued to shut in production and evacuate crews from its four US Gulf platforms.

**Shell shut in production and evacuated Ursa, Mars, Olympus and Appomattox assets, and shut in Auger and Enchilada/Salsa facilities, while relocating Stones' Turritella FPSO.

**Chevron shut in production from its operated Gulf of Mexico platforms. Chevron's largest-producing fields nearest Ida's path are Blind Faith, Big Foot, Tahiti and Jack/St Malo.

**Louisiana's 17 refineries have aggregate capacity of 3.4 million b/d, representing about 20% of the nation's total refinery capacity, according to US EIA data.

**Mississippi has a total refinery capacity of 394,000 b/d, according to EIA.

**Phillips 66 closed its 255,600 b/d Alliance Refinery in Louisiana.

**Chevron shut in production from its operated Gulf of Mexico platforms, and closed its Fourchon and Empire terminals and pipelines in Louisiana.

**Murphy Oil, BHP, ExxonMobil and Equinor shut in and evacuated all of their offshore platforms.

**Louisiana's 17 refineries have aggregate capacity of 3.4 million b/d, representing about 20% of the nation's total capacity, according to US EIA data.

**Mississippi has a total refinery capacity of 394,000 b/d, according to EIA.

**These refineries accounted for 1.4-1.6 million b/d of gasoline output, 1.1-1.3 million b/d of distillate production, and 300,000-400,000 b/d of kerojet supply, Platts Analytics said.

**ExxonMobil said Aug. 28 it was shutting some refinery units and equipment at its Baton Rouge, Louisiana, facility ahead of Hurricane Ida.

**Colonial Pipeline said it was prepared and executing its storm plan.

Natural gas

**Cheniere Energy, Cameron LNG and Freeport LNG -- all west of Ida's path -- remained confident that could remain open.

**For petrochemicals facilities, more shutdowns are expected for both steam crackers and their downstream units, Platts Analytics said.

**Potential impacts include roughly 6.5 million t/year of ethylene capacity, 3.8 million tons of polyethylene, and 1.1 million tons for polypropylene, according to Platts Analytics.

**Other facilities include 3.6 million tons of PVC and 300,000 tons of MEG.

Power

**Midcontinent Independent System Operator declared a state of Conservative Operations for its MISO South Region, including Entergy, Cleco, and other electric utilities in Arkansas, Louisiana and Mississippi.

**Cleco, a large utility serving Louisiana, said it had secured the help of an additional 2,000 workers to assist in restoring service that the storm may disrupt.

**Entergy on Aug. 28 said it should be able to deploy roughly 16,000 workers, including from outside the region, to help restore power knocked out by the storm.

**Customers in the direct path of Ida could lose power for more than three weeks, said Entergy.