U.S. Oil Losses from Hurricane Ida Among Worst Since 2005

September 8, 2021

Platforms in the Gulf of Mexico - Credit: Mosto/AdobeStock
Platforms in the Gulf of Mexico - Credit: Mosto/AdobeStock

Hurricane Ida's damage to U.S. offshore energy production makes it one of the most costly since back-to-back storms in 2005 cut output for months, according to the latest data and historical records.

Ida's 150 mile-per-hour (240 kph) winds cut most offshore oil and gas production for more than a week and damaged platforms and onshore support facilities. About 79% of the region's offshore oil production remains shut and 79 production platforms are unoccupied after the storm made landfall on Aug. 29.

A cumulative 17.5 million barrels of oil have been lost to the market, with shutdowns expected to continue for weeks. Ida could reduce total U.S. production by 20 million to 30 million barrels, according to energy analysts.

The offshore Gulf of Mexico accounts for 16% of total U.S. oil production and 5% of natural gas output.

"There could be volumes that are offline for a considerable amount of time," said Facts Global Energy (FGE) consultant Krista Kuhl. "It’s just too early to tell."

The losses are reducing U.S. exports at a time when oil prices are trading at about $70 a barrel because of continued curbs by producing-nations group OPEC and market expectations for demand.

About 79% of Gulf of Mexico oil and 78% of natural gas were offline on Tuesday, nine days after Ida hit the Gulf Coast, causing wind and water damages to platforms and refineries, government data showed.

Hurricanes Katrina and Rita in 2005 remain the worst hit to Gulf Coast energy facilities. The back-to-back storms caused production losses that continued for months, removing about 162 million barrels of oil over three months, FGE said.

Production in the U.S. Gulf of Mexico that year dropped 12.6%, to 1.28 million barrels per day (bpd), from the prior year, according to data for the Energy Information Administration (EIA). Total U.S. oil production fell 4.7%, EIA data showed.

Restoring output after Ida will hinge on the time needed to repair a key offshore oil and gas transfer facility. Royal Dutch Shell on Monday said it continued to assess damage to its West Delta-143 offshore platform, which transfers about 200,000 barrels of oil and gas per day from three offshore oil fields. 

(Reporting by Sabrina Valle in Houston and Arpan Varghese in Bengaluru; Editing by Bill Berkrot)



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