FACTBOX: Hurricane Francine boosts energy prices despite limited facility damages

Oil and natural gas producers, refiners and power companies were ramping back up and assessing damages Sept. 12 after Hurricane Francine brought torrential rain and power outages across southeast Louisiana.

US Gulf of Mexico production shut-ins reached an expected peak Sept. 12, contributing to higher crude, gasoline and natural gas prices compared to the previous day.

As of around noon CT Sept. 12, the US Gulf had 730,472 b/d of crude oil production offline, or 42% of the region's total output of roughly 1.85 million b/d, and 991,680 Mcf/d of gas, or nearly 53% of total US Gulf production of about 113 Bcf/d, according to the US Bureau of Safety and Environmental Enforcement.

The outages were up from 674,833 b/d, or 39% of the region's crude production, and 907,000 Mcf/d, or 49% of its gas output, on Sept. 11.

The number of shut-in offshore platforms fell to 169 on Sept. 12, or 45.5% of the US Gulf's total, from 171 platforms the day before.

"This is the first hurricane to cause widespread disruptions to the offshore oil and gas industry in years," said Jon Porter, chief meteorologist for private weather service AccuWeather, which estimated total US damages and economic loss at $9 billion. "Our preliminary estimate factors in the cost of offshore platform evacuations and operation interruptions."

Prices

Oil

• The offshore supply losses helped to boost crude prices, with NYMEX October WTI settling $1.66 higher at $68.04/b Sept. 12.
• The impact on spot crude price differentials has been modest so far, suggesting a well-supplied prompt market, and the temporary nature of the outages. US Gulf Coast sour Mars crude remained at a 75 cents/b discount to WTI Sept. 12.
• NYMEX October RBOB settled 2.98 cents higher at $1.9270/gal and October ULSD climbed 2.71 cents to $2.1168/gal.

Natural gas

• Concerns of storm-related natural gas demand destruction eased, supporting a more bullish outlook as traders expect a storage surplus to decline through mid-September.
• Platts, part of S&P Global Commodity Insights, assessed Henry Hub spot gas at $2.14/MMBtu for Sept. 12 delivery and $2.11/MMBtu for Sept. 13, compared with $2.125/MMBtu for Sept. 11 and $2.055/MMBtu and $2.035/MMBtu for Sept. 5 and Sept. 6 delivery, respectively.

Power

• Power prices for delivery Sept. 12 were down from Sept. 11 but flat or up from Sept. 5. For example, MISO Louisiana Hub day-ahead on-peak locational marginal prices averaged $25.40/MWh for delivery Sept. 12, down from Sept. 11’s $27.30/MWh but virtually flat with Sept. 5’s $25.60/MWh, MISO price data collected by Commodity Insights shows.

Trade flows

Shipping

• Texas ports at Houston and Corpus Christi reopened fully to inbound and outbound vessel traffic, with the exception of the Galveston port, which was still restricting inbound traffic Sept. 12. The Cameron and Lake Charles, Louisiana, ports remained shut, according to the US Coast Guard Sept. 12.
• All operations at the Port of New Orleans remains shut, with no vessel movement allowed and additional restrictions on portions of the lower Mississippi River.
• Port Fourchon has moved into a recovery phase Sept. 12, with the port commissioner allowing limited access to tenants assessing damage, a Sept. 12 update from the port's website said.

Oil

• The Louisiana Offshore Oil Port was shut as of a Sept. 11 update, with all marine operations suspended in expectation of the worst of the weather event.

Infrastructure

Oil

• Louisiana refiners that curtailed production ahead of the storm or lost power briefly are expected to return to normal operations in two to three days barring any major damage.
• Calcasieu Refining is restarting its 135,500 b/d Lake Charles refinery and expects to reach full operations over the weekend, according to a spokesperson. The plant shut Sept. 9 out of an abundance of caution.
• ExxonMobil's 522,500 b/d Baton Rouge refinery appeared unscathed by power outages, but had cut production by 20%, according to some news sources. Industry sources said it likely reflected weaker demand for refined products rather than storm impacts.
• Shell reported production losses at multiple locations on Sept. 12, in addition to previous shut-ins that were initiated earlier in the week, the company said in a press release. "Because of downstream issues, we have had to curtail production at Appomattox, Mars, Vito, Ursa, and Olympus," the statement said. "We have begun redeploying personnel to our Perdido asset, while production there and at our Auger and Enchilada/Salsa assets is still shut in. Drilling remains paused at our Whale asset, scheduled to begin operations later this year."

Power

• Entergy utilities in Louisiana and Mississippi had the most customers offline, about 256,000, around noon CT Sept. 12, according to their outage maps.

LNG

• The three operational US LNG export terminals closest to Francine’s path reported no issues from the storm, but total deliveries to the Cameron Parish facilities had fallen to 6.8 Bcf/d Sept. 12, compared to an average of about 8.1 Bcf/d in the first ten days of the month, Commodity Insights data showed.
• Cheniere said production at its Sabine Pass LNG terminal “remained uninterrupted through the duration of the weather event.”
• The Sempra-led Cameron LNG export terminal was set to receive about 850 MMcf/d on Sept. 12, still down from nearly 1.9 Bcf/d on Sept. 10, according to Commodity Insights data, based on nominations for the morning cycle that could later be revised.
• Scheduled feedgas deliveries to Calcasieu Pass were up slightly from the previous day at nearly 1.4 Bcf/d.
• Venture Global said ahead of the storm that it had also taken steps to secure its Plaquemines LNG terminal nearing startup on the Mississippi River south of New Orleans, which was closer to the storm. The facility was scheduled to receive no gas deliveries for a third consecutive day Sept. 12, following six days of consistent small deliveries for the commissioning activities.