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June 12, 2014

Gulf of Mexico 2014 production shut in by storms seen higher than last year

Graph of shut-in crude oil and natural gas production, as explained in the article text
Source: U.S. Energy Information Administration, Short-Term Energy Outlook, June edition

The National Oceanic and Atmospheric Administration (NOAA) is predicting a relatively mild hurricane season, but even a quiet season like last year can lead to disruptions to offshore crude oil and natural gas production in the Gulf of Mexico. EIA recently analyzed the potential for Gulf shut-in production during the upcoming months, given NOAA's outlook for hurricane activity. EIA's mean estimate of offshore production outages during the current hurricane season totals 12 million barrels (bbls) of crude oil and 30 billion cubic feet (Bcf) of natural gas, more than three and four times higher than last year, respectively.

These estimates are highly uncertain as it is difficult to predict the location and intensity of individual storms. If the actual storm activity in the Atlantic Basin falls within NOAA's predicted range, EIA estimates (within a 70% confidence interval) that Gulf of Mexico outages could total anywhere from 1 to 24 million bbls of crude oil and 2 to 65 Bcf of natural gas. Other possibilities fall outside of this 70% interval. For instance, the likelihood of zero disruptions this season is only about 8%. Conversely, EIA estimates the probability of seasonal outages exceeding 40 million barrels of crude oil or 100 Bcf of natural gas is less than 10%. Even if this were to happen, outages of this size would still be considerably less than those seen in 2005 and 2008, when strong hurricane seasons severely impacted Gulf of Mexico production.

Last season, only one tropical storm—Tropical Storm Karen—had any effect on production in the federally-administered Gulf of Mexico, shutting in 3.1 million bbls of crude oil and 6.7 Bcf of natural gas. EIA's analysis expects that even with a mild hurricane season, there is a 69% probability of production outages exceeding those of last year.

EIA's U.S. Energy Mapping System and Energy Disruptions web pages make it possible to track storm effects on power plants, oil refineries, major electric transmission lines, and other critical energy infrastructure that are in the path of storms. EIA recently upgraded its mapping systems to be accessible from all mobile devices and tablets. This ability to access EIA information from different devices and locations will assist both emergency response officials and the public to plan for and respond to severe weather events that can threaten energy infrastructure in the United States.

Principal contributor: Tyler Hodge