Half of the Gulf’s Oil Production is Still on Halt
Hurricane Ida’s damage to the Gulf of Mexico´s oil production continues to be a problem, as companies struggle to restart operations and close to half of operations have not restarted.
Two weeks have passed since Hurricane Ida slammed its way into the waters off the coasts of the US and Mexico. A region prone to damage from inclement weather and an area where 45 percent of the US’ production infrastructure lies in the coasts of these waters. Following Ida, only a handful of oil companies were able to re-start online production levels nearing 200,000 barrels a day. Nonetheless, up to two-thirds of offshore operations and about half of crude output remain shut down following the hurricane´s disasters, according to data released by the United States Bureau of Safety and Environmental Protection.
Ida took out almost 21 million barrels of oil, while oil companies are still struggling to assess damages and restart operations, with the equivalent of 1.2 million barrels being the daily cost of inoperative stations. Natural gas has been hit as well, with nearly 1.68 billion Bcf/d, or 75 percent of total production, shut in. Though reconstruction efforts are indeed underway, global oil prices are currently supported by this delay in recovery, and companies have added value to their shares in the process.
Some companies have been quicker in their efforts: Louisiana Offshore Oil Port (LOOP), one of the largest privately-held companies in the industry, has fully restored its international commerce operations. Nevertheless, other companies have not fared as well. For instance, EXXON Mobil Corp. has sought 1.5 million barrels of crude from the Strategic Petroleum Reserve (SPR) to feed its Baton Rouge refinery. Julie King, company spokesperson, said the oil will “help us completely restore normal operations.” Producers bringing operations back on is one of the key factors, if not the main one, holding pipelines from delivering more produce.
As part of the efforts to cope with these interruptions, traders have been granted permission to import sets of crude from China, and are also waiting for additional import quotas from the Asian country’s refineries. Crude, according to analysts from Goldman Sachs Group, will continue to rack up strong demand and growing scarcity.
No confirmed continued menace has been yet confirmed by any climate agency, the Gulf-bordering states of the U.S. are bracing for the coming tropical storm Nicholas, currently making its way through the western side of the Gulf.