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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 Monday, September 12, 5:00 pm

According to the Minerals Management Service (MMS), as of 11:30 September 12, Gulf of Mexico oil production was reduced by 860,636 barrels per day as a result of Hurricane Katrina, equivalent to 57.38 percent of daily Gulf of Mexico oil production (which is 1.5 million barrels per day). The MMS also reported that 3.784 billion cubic feet per day of natural gas production was shut in, equivalent to 37.84 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 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 Recovery.

Petroleum
As of the close of trading on Monday, September 12, crude oil prices were down slightly, while petroleum product futures prices were down substantially, compared to the closing prices from Friday, September 9. The gasoline near-month futures price was down by 8.6 cents per gallon from Friday, settling at 187.4 cents per gallon, while the heating oil near-month futures price was down 8.2 cents per gallon, settling at 181.4 cents per gallon. The NYMEX West Texas Intermediate (WTI) crude oil futures price was down $0.75 per barrel from Friday, settling at $63.33.

Currently, there are 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 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.

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 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) inventories was more than compensated for 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.

Natural Gas
The natural gas futures price for October delivery was down $0.23, to $11.03 per million Btu (MMBtu), as of the close of trading today, Monday, September 12. In trading on the Intercontinental Exchange, the Henry Hub spot price was $10.67 per MMBtu, down $0.36 from Friday, September 9. This price is 84 cents 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 decreases today ranged up to $0.63 per MMBtu with an average decline of $0.29 per MMBtu. The overall average decrease in price was $0.16 per MMBtu.

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 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 49 Bcf.

Ports and Pipelines
While the 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 shut down. 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) is expected to be at 100 percent of capacity by the end of this week, after Port Fourchon becomes operational. More than 10 percent of the nation's imported crude oil typically enters via the LOOP.

El Paso reported damage to both its Tennessee Gas Pipeline and Southern Natural Gas system that affects a total of 1.25 Bcf/d in capacity. Approximately 3 billion cubic feet per day was initially shut-in on El Paso's three natural gas pipeline systems in the Gulf of Mexico as a result of Hurricane Katrina. Currently, there are 700 million cubic feet per day (MMcf/d) of production shut-in on Tennessee Gas Pipeline (TGP) and 550 MMcf/d on Southern Natural Gas (SNG). ANR Pipeline has returned to full capacity.

 

 

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, October 12, 2005, 12:00 p.m. Noon (Eastern time).


Previous Versions
September 9, 2005
September 8, 2005
September 7, 2005
September 6, 2005
September 2, 2005
September 1, 2005
August 31, 2005
August 30, 2005
August 29, 2005