Shell Adjusts its Forecasts for 3Q21

Hurricane Ida’s toll on oil production in the Gulf of Mexico has pushed Shell to announce a hit to their 3Q21 numbers, with an estimated drop in production of 5 to 8 percent.

Several companies with operations in the US side of the Gulf shut down operations late in August when Ida made its way as a tropical storm. During the earlier days, as reported by MBN, upwards of 90 percent of production had been affected, and by the time other storms menaced the region in late September, about 16 percent of the infrastructure was still offline. Today, Shell is warning that the Ida effect will be seen in a 5 to 8 percent drop in operations for 3Q21.

The announcement is part of a greater report expected to be published on Oct. 28. Shell is estimating the impact of Hurricane Ida in their 3Q21 upstream production to be 90,000 barrels per day of oil equivalent, for a total output of 2.03 to 2.10 million barrels per day of oil equivalent. The company highlighted the grave damage several of their offshore platforms withstood during the hurricane season, beginning in late August, as well as informing that some of their Ursa and Mars production is expected to remain offline well into 2022.

Shell’s grim announcement also revealed their “dampened hopes” of boosts to their finances by virtue of gas prices, stating, with regards to their upstream segment, that “adjusted earnings is not expected to be significantly impacted by the prevailing strong gas price environment.” Furthermore, the economic recovery of the company was also tarnished and set back by Ida, following affectations to both the Deer Park refinery and Geismar petrochemical facilities.

Refinery utilization for Shell fell between 70 to 74 percent from 76 percent in 2Q21. Nonetheless, an increase in margins was observed, with growth in 3Q21 totaling US$5.7 billion, compared to 2Q21 levels of US$4.17 billion. “Hurricane Ida in the US Gulf of Mexico had an impact on our operations and is expected to have an aggregate adverse impact of around $400 million on Adjusted Earnings and CFFO in the third quarter 2021,” said Shell.

For a change, Shell’s integrated gas division is deemed a provider of stability, with production rising anywhere from 5 to 13 percent in the unit, to a range of 890,000 to 950,000 barrels per day. Liquefaction figures, on the other hand, were down 4 to 10 percent, according to the company.