On Sunday, August 29, Hurricane Ida made landfall near Port Fourchon, Louisiana, as a Category 4 hurricane. As a result of the hurricane, 96% of crude oil production and 94% of natural gas production in the U.S. federally administered areas of the Gulf of Mexico (GOM) were shut in, according to estimates by the U.S. Department of Interior’s Bureau of Safety and Environmental Enforcement. At least nine refineries shut down or reduced production. As a result, we reduced our forecast for crude oil production and refinery runs in our September Short-Term Energy Outlook (STEO).
We revised down our estimate for U.S. crude oil production in the GOM in August by 0.2 million barrels per day (b/d) from the August STEO to 1.5 million b/d in the September STEO. We reduced our forecast of production in the GOM for September by 0.5 million b/d from the August STEO to 1.2 million b/d in the September STEO. We expect that disrupted GOM crude oil production will return through September, increasing to our previously forecast levels in October. Last year, the GOM accounted for 15% of U.S. crude oil production.
According to our Weekly Petroleum Status Report, gross inputs into Gulf Coast refineries fell by 1.6 million b/d from the week ending August 27 to the week ending September 3. Although some refiners have resumed operations or begun the process for restarting, we expect refinery runs will average 713,000 b/d lower in September than they would have without the disruptions.
Repairs to any infrastructure required to resume refinery operations, however, could potentially take longer, making the forecast highly uncertain. We forecast that average crude oil inputs into refineries later this year will be mostly unchanged from our previous August STEO forecast.
From August 27 to September 3, our Weekly Petroleum Status Report data indicate crude oil inventories in the Gulf Coast fell by 2.6 million barrels and U.S. crude oil production fell by 1.5 million b/d. Over the same period, crude oil imports into the Gulf Coast fell by 247,000 b/d to 787,000 b/d. U.S. crude oil exports, which are mostly exported from the Gulf Coast, fell by 698,000 b/d over the same period.
On September 14, Hurricane Nicholas made landfall as a Category 1 storm about 50 miles south of Houston. As a result of power outages, Colonial Pipeline (which runs from Houston up the East Coast of the United States) shut down two product pipelines. Trade press reports indicate that Colonial has resumed normal operations on both lines. The Houston Ship Channel was closed to traffic on September 13, but normal operations are expected to resume September 15.
Principal contributor: Matthew French
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