Ida forces record 1.5M-barrel drop in weekly crude output
Even the Great Texas Freeze didn’t do as much damage to oil production as Hurricane Ida.
The historic storm, which swept through the Gulf of Mexico almost two weeks ago, drove a record 1.5 million-barrel decline in weekly crude output, according to data from the Energy Information Administration going back to 1983.
Nearly, three-fourths of Gulf of Mexico oil output was still offline as of Wednesday.
The storm is the second major weather event this year that has temporarily forced more than a million barrels a day of U.S. oil output to be shut in, underscoring the increasing vulnerability of energy infrastructure to climate change. In February record-setting arctic temperatures descended across America’s South crippling production across several states, forcing weekly production to drop by as much as 1.1 million barrels day.
Although hurricanes sweep through the Gulf of Mexico every year, Ida is unusual in that the damage it left in its wake has kept so much crude production shut in more than 10 days after it made landfall in Louisiana.
Most in the industry were expecting the offshore platforms to resume production quickly while worrying about the return of refineries to supply customers with fuel, as has been the case in the past.
But the reverse has happened with Ida, with increasingly more Louisiana refiners in the
process of restarting.
Ida’s impact on U.S. oil output will likely show up on EIA data for “multiple weeks,” according to Rob Thummel, a portfolio manager at Tortoise, a firm that manages roughly $8 billion in energy-related assets.
Phillips 66 refinery wrecked by storm may remain idle
Phillips 66 may idle a New Orleans-area refinery that suffered so much damage during Hurricane Ida that repairs may be too costly, according to people familiar with the operation.
Chief Executive Officer Greg Garland is scheduled to visit the Alliance refinery in the suburb of Belle Chasse, Louisiana, next week, said the people, who asked not to be identified because the information isn’t public. Company spokesman Bernardo Fallas said there’s no operational update or timeline for restarting the facility.
The refinery, which can process more than 250,000 barrels of crude a day, was shut on Aug. 28, the day before Isa slammed into southeast Louisiana with ferocious winds and drenching
rains. A 9-foot wall of water punched a hole in the refinery’s protective levee and inundated the plant.
The damages may complicate Phillips 66’s efforts to find a buyer for an asset it was trying to unload before the storm because of “market conditions and the evolving energy landscape.”
Meanwhile, Royal Dutch Shell Plc’s refinery and chemical plant north of the city will remain shut for several more weeks so repairs can be performed, people familiar with the operation said.
Damages from Ida included wrecked pipes and insulation torn away by the winds.
Damaged rig could hammer Noble profit
Noble Corp. said repairing a deepwater oil rig damaged by Hurricane Ida may take the rest of this year and wipe out 16 percent of expected profit.
Noble’s Globetrotter II rig sustained wind damage and took on water after an unsuccessful attempt to sail to calmer waters as Ida rolled across the Gulf of Mexico.
Nine crew members were injured and the vessel is now in port undergoing inspection, Chief Executive Officer Robert Eifler said during a Barclays Plc investor webcast.
Depending on how long the rig is out of commission, the blow to Noble could be significant, given that Globetrotter II represents the company’s second-richest active contract. Royal Dutch Shell has the vessel under lease for about $275,000 a day through early September 2023. If Noble can get the drillship working again by the end of next month, the financial impact won’t be as severe, Eifler said.
Ida slashed U.S. Gulf oil production more than any previous storm before it slammed into southeast Louisiana on Aug. 29. Halliburton Co. said it expects to take a $25 million hit to thirdquarter pretax operating income while Shell declared force majeure on “numerous contracts” while it works to recover from the hurricane’s ravages.