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Daily Report on Hurricane Katrina's Impact on U.S. Energy           


Hurricane Katrina's Impact on the U.S. Oil and Natural Gas Markets


As of Wednesday, September 7, 3:00 pm

According to the Minerals Management Service (MMS), as of 11:30 September 7, Gulf of Mexico oil production was reduced by 861,000 barrels per day as a result of Hurricane Katrina, equivalent to 57.37 percent of daily Gulf of Mexico oil production (which is 1.5 million barrels per day). The MMS also reported that 4.0360 billion cubic feet per day of natural gas production was shut in, equivalent to 40.36 percent of daily Gulf of Mexico natural gas production (which is 10 billion cubic feet per day).

EIA released its monthly Short-Term Energy Outlook on Wednesday, September 7. Because considerable uncertainty remains regarding the specific extent of Katrina's damage, it is difficult to provide a single forecast for the upcoming winter and subsequent months as is typical in Outlook. More detailed damage assessments should be forthcoming over the next several weeks, which should clarify our forecast. For the September Outlook, EIA established three basic scenarios to represent a range of plausible outcomes for oil and natural gas supply over the next several months and through 2006: (1) Fast Recovery, which assumes a very favorable set of circumstances for getting supplies back to normal; (2) Slow Recovery, which assumes that significant outages in oil and natural gas production and delivery from the Gulf area continue at least into November; and (3) Medium Recovery, which assumes a path in between Slow and Fast Recovery. In all cases, return to normal operations, in terms of oil and natural gas production and distribution, is achieved or nearly achieved by December. By the end of September all but about 0.9 million barrels per day of crude oil refining capacity is expected to be back at full rates under the Medium Recovery case.

Petroleum
As of the close of trading on Wednesday, September 7, crude oil prices and petroleum product futures prices were down significantly from closing prices as of Tuesday, September 6. The gasoline near-month futures price was down by 3.3 cents per gallon from Tuesday, settling at 202.2 cents per gallon, while the heating oil near-month futures price was down 9.2 cents per gallon, settling at 196.2 cents per gallon. The NYMEX West Texas Intermediate (WTI) crude oil futures price was down $1.59 per barrel from Tuesday, settling at $64.37.

Two refineries are expected to be back up to full production by the end of Wednesday, September 7 (the Marathon refinery in Garyville, LA and the Motiva refinery in Convent). The Motiva refinery in Norco, LA is still expected to be restarting sometime later this week.

On September 6, DOE released the weekly Gasoline and Diesel Fuel Update. As of September 5, the average weekly retail gasoline price increased to $3.07 (up 45.9 cents from the previous week). Diesel fuel prices increase 30.8 cents to $2.90.

The next Weekly Petroleum Status Report (WPSR), with information on petroleum markets for the week ending September 2, will be published on Thursday, September 8. This will be the first WPSR to reflect post-Katrina data.

Ports and Pipelines
While Colonial and Plantation pipelines are back up and able to run at 100 percent of capacity, supplying the pipelines with products may become an issue as long as some of the refineries that supply product into these pipeline remain shutdown or running at reduced rates. Latest reports indicate that the Dixie pipeline, which supplies propane into the Southeastern portion of the country, may be running as high as 75 percent of its capacity. The Capline, a major crude oil pipeline that supplies crude oil from the Gulf Coast to some Midwest refineries, continues to operate at about 80 percent of its capacity.

The Louisiana Offshore Oil Port (LOOP) was operating with two of its three berths open as of September 7, allowing it to run at about 75 percent of its capacity. More than 10 percent of the nation's imported crude oil typically enters at the LOOP.

Natural Gas
The natural gas futures price for October delivery was down $0.46, to reach $11.20 per million Btu as of the close of trading today, Wednesday, September 7. In trading on the Intercontinental Exchange, the Henry Hub spot price was $11.03 per MMBtu, down $0.53 from yesterday (Tuesday, September 6) but still about $1.16 per MMBtu more than the price on Friday, August 26, before the storm. At market locations across the Gulf region, price decreases today ranged up to $0.88 per MMBtu with an average decline of $0.54 per MMBtu. The overall average decrease in price was $0.55 per MMBtu.

Hurricane Katrina has damaged seven known natural gas processing facilities on the Gulf Coast with a combined capacity of more than 5 Bcf per day, which is the equivalent of at least 9 percent of total national production. Two gas plants operated by Dynegy may be down for three to six months, according to the company. The Yscloskey plant and the Venice plants, together able to process about 3.15 Bcf per day, are reported to have suffered flooding resulting from the hurricane. Enterprise Products Partners says that its Toca plant, which can process up to 1.1 Bcf per day, may be down for a few weeks. It has been reported that gas-processing facilities in the region were not heavily utilized prior to the storm. Although the loss of capacity could delay a recovery of natural gas production in the area later, production so far apparently has been able to be directed to available processing units. In 2003 (the latest year with complete data), almost three-fourths of total U.S. marketed gas production was processed prior to delivery to market.

 

Map of Hurricane Katrina's Path showing oil rigs & refineries.                                           Click to see larger version.
                                                map courtesy of iMapData Inc.

Gulf of Mexico Oil & Natural Gas Facts
Energy Information Administration
Data as of June 2005 unless otherwise noted.

Gulf of Mexico
Total U.S.
% from
Gulf of Mexico
Oil (million barrels per day)
  Federal Offshore Crude Oil Production (4/05)
1.562
5.488
28.5%
  Total Gulf Coast Region Refinery Capacity (as of 1/1/05) 
8.068
17.006
47.4%
  Total Gulf Coast Region Crude Oil Imports
6.490
10.753
60.4%
    - of which into ports in LA, MS and AL
2.524
10.753
23.5%
    - of which into LOOP
0.906
10.753
8.5%
Natural Gas (billion cubic feet per day)
  Federal Offshore Marketed Production (3/05)
10.4
54.1
19.2%

News & Recent Reports
DOE Office of Electricity Delivery & Energy Reliability hurricane situation reports
Department of Interior Minerals Management Service
Coast Guard Hurricane Katrina Incident Management Site
DOE Secretary Bodman's statement on Hurricane Katrina
DOE Secretary Bodman's comments on IEA Stock Release


References
Louisiana Oil Profile
Louisiana Natural Gas Summary
Mississippi Oil Profile
Mississippi Natural Gas Summary
Alabama Oil Profile
Alabama Natural Gas Summary


Related EIA Data Releases
Weekly Petroleum Status Report Released after 10:30 a.m. (Eastern time) on Wednesdays except on holiday weeks (release delayed one day).
U.S. Gasoline and Diesel Prices Released after 5:00 p.m. (Eastern time) on Mondays except on holiday weeks (released on Tuesday).
Weekly Natural Gas Storage Report Released between 10:30 a.m. and 10:40 a.m., (Eastern time) on Thursdays.
Short Term Energy Outlook
Next release, September 7, 2005, 12:00 p.m. Noon (Eastern time).


Previous Versions
August 29, 2005
August 30, 2005
August 31, 2005
September 1, 2005
September 2, 2005
September 6, 2005