As of Thursday, September 8, 4:00 pm
According to the Minerals Management
Service (MMS), as of 11:30 September 7, Gulf of Mexico oil
production was reduced by 901,726 barrels per day as a result
of Hurricane Katrina, equivalent to 60.12 percent of daily Gulf
of Mexico oil production (which is 1.5 million barrels per day).
The MMS also reported that 4.020 billion cubic feet per day
of natural gas production was shut in, equivalent to 40.20 percent
of daily Gulf of Mexico natural gas production (which is 10
billion cubic feet per day).
EIA released its Short-Term
Energy Outlook on Wednesday, September 7. Because considerable
uncertainty remains regarding the extent of Katrina's damage,
EIA established three basic recovery 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
As of the close of trading on Thursday, September 8, crude
oil prices and petroleum product futures prices were somewhat
mixed compared to the closing prices from Wednesday, September
7. The gasoline near-month futures price was up by 1.6 cents
per gallon from Wednesday, settling at 203.8 cents per gallon,
while the heating oil near-month futures price was down 3.3
cents per gallon, settling at 193.0 cents per gallon. The NYMEX
West Texas Intermediate (WTI) crude oil futures price was up
12 cents per barrel from Wednesday, settling at $64.49.
Currently, there are six refineries that are shut down, but
two of them are expected to be back up and running by the end
of this week. This would leave four refineries (ChevronTexaco
located in Pascagoula, MS; ConocoPhillips located in Belle Chasse,
LA; ExxonMobil located in Chalmette, LA; and Murphy located
in Meraux, LA) that would be 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.
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 increased 30.8 cents
As of September 2 (the
most recent data available), the end of the first week following
Hurricane Katrina, U.S. commercial crude oil inventories (excluding
those in the Strategic Petroleum Reserve) fell by 6.4 million
barrels from the previous week. At 315.0 million barrels, U.S.
crude oil inventories remain well above the upper end of the
average range for this time of year. Total motor gasoline inventories
declined by 4.3 million barrels last week, putting them below
the bottom end of the average range. Distillate fuel inventories
decreased by 0.8 million barrels last week, and are above the
upper end of the average range for this time of year. A slight
increase in high-sulfur distillate fuel (heating oil), was more
than compensated by a decline in low-sulfur distillate fuel
(diesel fuel) inventories. Total commercial petroleum inventories
dropped by 14.9 million barrels last week, and are near the
upper end of the average range for this time of year. Total
product supplied over the last four-week period has averaged
over 21.3 million barrels per day, or 1.5 percent more than
averaged over the same period last year.
The natural gas futures price for October delivery was up $0.15,
to reach $11.35 per million Btu as of the close of trading today,
Thursday, September 8. In trading on the Intercontinental Exchange,
the Henry Hub spot price was $10.92 per MMBtu, down $0.11 from
yesterday (Wednesday, September 6) but still about $1.05 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 $1.15 per MMBtu with an average decline of
$0.07 per MMBtu. The overall average decrease in price was $0.05
During the first week of production shut-ins owing to Hurricane
Katrina, net additions to underground storage were significantly
below normal. Working gas in storage as of September 2 totaled
2,669 Bcf, which is 3.7 percent above the 5-year average inventory
level for the week, according to EIA's Weekly
Natural Gas Storage Report (released today September 8).
The implied net injection to storage was 36 Bcf, which was slightly
less than half of the 5-year average net injection of 71 Bcf
for the week and about 55 percent lower than the net injection
of 80 Bcf during the report week last year. According to the
Minerals Management Service, shut-ins as of September 2 totaled
Ports and Pipelines
While Colonial and Plantation petroleum product 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 pipelines 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 95-100 percent
of its capacity. The Capline, a major crude oil pipeline that
supplies crude oil from the Gulf Coast to some Midwest refineries,
is now operating at nearly 90 percent of its capacity, according
to operator Shell Oil Corporation.
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 via the LOOP.
Pipeline damage has been reported by at least two companies.
Tennessee Gas Pipeline has reported that it has found damage
and leaks on both a 36-inch and a 26-inch diameter line. Damage
also was found on multiple natural gas lines in the South Timbalier
area, according to the company. Inspections are continuing.
Enbridge Inc. has reported damage to its Mississippi Canyon
Corridor natural gas pipeline system, which can transport up
to 800 million cubic feet a day from offshore.