As of Friday, September 16, 4:00 pm

Hurricane Katrina in Perspective (see figures below)
While the peak crude oil production loss from Hurricane Katrina was similar to Hurricane Ivan last year and even less than Hurricane Dennis earlier this year, the pace of restoration is expected to be much more similar to Hurricane Ivan than any of the other recent hurricanes. For example, while the peak daily loss in crude oil production during Hurricane Dennis was slightly more than suffered following Hurricane Katrina, within a week of the peak loss, crude oil production following Hurricane Dennis was back to normal while it will likely be months before crude oil production is back to normal following Hurricane Katrina.


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Shut-in Statistics (as of 11:30 September 16). According to the Minerals Management Service (MMS), Gulf of Mexico (GOM) oil production was reduced by 842,091 barrels per day as a result of Hurricane Katrina, equivalent to 56.06 percent of daily GOM oil production. The MMS also reported that 3.384 billion cubic feet per day of natural gas production was shut in, equivalent to 33.84 percent of daily GOM natural gas production.

Petroleum
Prices. As of the close of trading on Friday, September 16, the gasoline near-month futures price was down by 11.4 cents per gallon from Thursday, September 15, settling at 178.5 cents per gallon, while the heating oil near-month futures price was down 7.7 cents per gallon, settling at 183.5 cents per gallon. The NYMEX West Texas Intermediate (WTI) crude oil futures price was down $1.75 per barrel from Thursday, September 15, settling at $63.00, the lowest settlement price since August 5.

Refineries. Four refineries (ChevronTexaco, located in Pascagoula, MS; ConocoPhillips, located in Belle Chasse, LA; ExxonMobil, located in Chalmette, LA; and Murphy Oil, located in Meraux, LA) remain shut down, and expectations are that these refineries, which represent about 5 percent of total U.S. refining capacity, could be shut down for an extended period.

Recent Weekly Releases. On September 12, DOE released the weekly Gasoline and Diesel Fuel Update. As of September 11, the average weekly retail gasoline price decreased to $2.95 (down 11.4 cents from the previous week). Diesel fuel prices decreased 5.1 cents to $2.84. As of September 9 (the most recent data available), the end of the second week following Hurricane Katrina, U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) fell by 6.6 million barrels from the previous week. U.S. crude oil inventories remain above the upper end of the average range for this time of year. Total motor gasoline inventories rose by 1.9 million barrels last week, putting them at the bottom end of the average range. Distillate fuel inventories decreased by 1.1 million barrels last week, and are above the upper end of the average range for this time of year.

Natural Gas
Prices. The natural gas futures price for October delivery was down $0.20, to reach $11.14 per million Btu as of the close of trading Friday, September 16. In trading on the Intercontinental Exchange, the Henry Hub spot price was $11.25 per MMBtu, up $0.01 from Thursday, September 15. This price is $1.45 above the average spot price of $9.80 per MMBtu for the week ending Friday, August 26, before the storm. At market locations across the Gulf region, price changes ranged from a decrease of $0.35 per MMBtu to an increase of $0.30. The average change was a decrease of $0.08 per MMBtu. The overall average decrease in price in the Lower 48 States was $0.16 per MMBtu.

Recent Weekly Release. On September 15, EIA released the Natural Gas Weekly Update and reported that natural gas spot prices increased across much of the Lower 48 States since the prior Wednesday, September 7. The largest increases tended to cluster in the Midwest, Northeast, and Midcontinent regions. Working gas in storage increased to 2,758 Bcf as of Friday, September 9, which is 3.7 percent above the 5-year average inventory level for the report week. The implied net injection of 89 Bcf is 3 percent above the 5-year average of 86 Bcf.

Processing. Discovery Gas, a pipeline company, has announced plans to reverse flow to offer processing services to customers that have been affected by the damage to the Venice and Yscloskey processing plants, which may be out of service for several months. The Discovery Gas system has a gas processing plant at Larose, Louisiana, with a capacity of up to 800 million cubic feet a day (MMcf/d). Onshore processing services are specifically targeted for Tennessee Gas Pipeline and Columbia Gulf for gas flow into the Northeast. The offer could impact flow into Tennessee and Columbia beginning Friday, September 15. According to Discovery, customers affected by the damage to ExxonMobil's Grand Isle, Louisiana, plant could also use the processing services at Larose. Discovery Gas is offering pipeline capacity for producers with gas stranded from the hurricane. The pipeline was flowing 280 MMcf/d on Thursday, which is 80 percent of its pre-Katrina volumes.