Hurricane shutdowns bite U.S. oil and gas output

As crews began returning to U.S. Gulf of Mexico offshore facilities on Thursday following Hurricane Zeta, companies are feeling this year’s repeated oil and gas production halts.

Eight named storms entered the U.S. Gulf of Mexico this year, most becoming major storms that required offshore facility evacuations or temporary shutdowns.

Erik Milito, president of the National Ocean Industries Association (NOIA), said: “It has been a difficult and challenging year because of the number of storms. U.S. offshore Gulf of Mexico oil production likely will end the year down by about 200,000 barrels per day (bpd) from where it started”.

The most recent Hurricane Zeta cut 4 million barrels over four days, halting up to 85 per cent of daily offshore Gulf of Mexico oil production and nearly 58 per cent of its natural gas output. It and other storms led to pipeline and onshore processing facilities to close, hurting even wells that could stay open.

It is worth noting that weak energy prices dropped U.S. Gulf of Mexico output in July to 1.65 million bpd, before the series of storm-related shutdowns. Milito did state that some of the lost output would recover in the coming weeks.

According to a Reuters article, well closings will hit results at Hess which forecast a decline of 25,000 bpd in the current quarter on top of an about 19,000 bpd loss in the prior quarter on offshore maintenance and hurricane shut-ins.

W&T Offshore earlier forecast fourth-quarter oil and gas production would fall below analysts’ forecasts even though its platforms did not suffer major damage from repeated storms. The shut-ins also added about $5 million to its costs.

In addition to shutdowns at two platforms, Shell said on Thursday that other Gulf of Mexico output was hurt by disruptions away from its platforms. It also was restarting an onshore crude-oil processing unit knocked offline by power disruptions from the storm.