More than 90% of Gulf crude oil offline as Hurricane Ida treks through US Gulf

Oil and gas producers were racing Aug. 28 to shut in the vast majority of volumes in the US Gulf of Mexico as Hurricane Ida continued to whip through the region a day ahead of its projected landfall.

More than 90% of Gulf crude and 85% of natural gas production rapidly came offline as of Aug. 28 ahead of Ida's anticipated Louisiana landfall as a major Category 4 hurricane with maximum sustained winds in excess of 130 mph, according to the US Bureau of Safety and Environmental Enforcement and the National Hurricane Center.

As of Aug. 28 afternoon, more than 1.65 million b/d of crude volumes were shut in, or 90.84% of total production, as well as 1.89 Bcf/d of natural gas production, or 84.87%, according to BSEE. An estimated 279 offshore platforms were evacuated -- 50% of the US Gulf's total platforms.

Historically, offshore production has returned to pre-storm levels 10-14 days after initial declines, placing the week of Sept. 6 as a likely time for production to fully rebound, according to S&P Global Platts Analytics. The reduced supply levels helped trigger spikes in crude oil, natural gas and refined products prices on Aug. 27 at the end of weekly trading, including gasoline and jet fuel prices.

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Shell, which has shut in production and evacuated all crews from most of its eight US Gulf platforms, said Aug. 28 it would resume partial production at its Stones field, which is just west of Ida's projected path. Shell had earlier shut in production from Stones when Ida was expected to travel more westward.

Otherwise, production remains shut in at Shell's Ursa, Mars, Olympus and Appomattox platforms. At the Auger and Enchilada/Salsa platforms, production has also been shut in while crews will be evacuated from them, the Shell said.

Likewise, Equinor said Aug. 28 it had shut down its Titan platform. "All staff are safely evacuated," company spokesperson Ola Morten Aanestad said.

BP confirmed it had evacuated and shut-in its four deepwater Gulf platforms, and Murphy Oil said Aug. 28 it had finished shutting in its volumes. Other Gulf producers, including Chevron and BHP, said they were evacuating personnel and shutting in much of the offshore production.

Ida is expected to "rapidly intensify as it moves over the Southeastern and Central Gulf of Mexico tonight" on Aug. 28, the National Hurricane Center said.

The storm was traveling at 16 miles per hour with maximum sustained winds of 100 mph as a Category 2 hurricane early on the afternoon of Aug. 28, according to the NHC.

The Sabine Pilots, which serve the channel that feeds the biggest US LNG export terminal operated by Cheniere Energy, advised late Aug. 27 that any facilities in the area that want to empty their berths should do so sooner rather than later as Ida approaches Louisiana.

Onshore developments

Platts Analytics said roughly 4.4 million b/d of refinery capacity was in the storm's path, primarily in Louisiana. These facilities accounted for around 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.

"Hurricane Ida is expected to come ashore along the same path as other storms, which did extensive damage to USGC refining and petrochemical facilities. Many plants have been hardened against hurricanes, but disruptions in operations are still very likely due to flooding, power outages and personnel dislocations," Platts Analytics said.

Thus far, Shell said Aug. 28 it was closing its 230,600 b/d refinery in Norco, Louisiana, and Phillips 66 already had shuttered its 255,600 b/d Alliance Refinery in Belle Chasse, Louisiana.

"Shell has initiated a safe and orderly shutdown of its manufacturing facilities in Geismar and Norco, Louisiana, in anticipation of Hurricane Ida," said Shell's statement, also citing its Geismar petrochemical plant.

The NHC warned preparations should be "rushed to completion today" in Louisiana. Utility crews in the state said they had ramped up their personnel to help deal with anticipated power outages.

From a gasoline supply standpoint, inventories in PADD III are adequate now, standing at close to 2.5 million barrels higher relative to the five-year average, Platts Analytics said. Still, if all the facilities in the path are shut, gasoline supplies could be rapidly drained by more than 1 million b/d, and stocks could draw down to the lowest levels seen since February in just one week.

Offsetting this is the likelihood that Colonial Pipeline also could be shut or curtailed, and gasoline exports would be delayed or reduced, Platts Analytics said.

Colonial Pipeline said Aug. 28 it has made preparations for the storm and would continue to monitor its developments.

For petrochemical facilities, shutdowns are expected for both steam crackers and their downstream units. Potentially impacted facilities include roughly 6.5 million tons/year of ethylene capacity, 3.8 million tons of polyethylene, and 1.1 million tons of polypropylene, according to Platts Analytics. Other facilities include 3.6 million tons of PVC and 300,000 tons of MEG. The price implications are, of course, bullish, especially given that the industry has not fully recovered from the February USGC freeze, other outages this summer, and logistical challenges, said Platts Analytics.

Port and LNG movements

Chevron said Aug. 28 it had closed its Fourchon and Empire terminals in Louisiana and all related pipeline systems.

Port closures ahead of the storm will also cut exports of both crude and products from key facilities along the USGC.

The US Coast Guard said the Port of New Orleans is closed to all inbound traffic and may soon restrict all outbound traffic. The New Orleans Bar Pilots began suspending operations "earlier than anticipated," according to a notice from the New Orleans Board of Trade on Aug. 27. Three vessels were expected to depart Southwest Pass early Aug. 28 and one inbound vessel was expected.

The Port of Mobile in Alabama, which includes Pascagoula, Mississippi, and services Chevron's 356,440 b/d Pascagoula Refinery, also is restricting all inbound traffic.

However, LNG facilities in southwest Louisiana -- west of Ida's projected path -- said they were increasingly confidant they would not see significant impacts from the storm.

While Cheniere's Sabine Pass and Sempra Energy's Cameron LNG continued to operate, exports could still be restricted until Ida passes if the channels that feed the terminals shut down. Pilots serving both channels were meeting to assess the situation, according to notices to shippers.