U.S. Energy Companies to Restore Oil and Gas Production Post-Hurricane

U.S. Energy Companies to Restore Oil and Gas Production Post-Hurricane


The Atlantic hurricane season proved fatal to the U.S. soil, both physically as well as economically. Due to the rising wind speed and high waves, many oil fields were emptied. The continuous approaching storms forced many oil companies to shut down operations in the U.S. Gulf Coast. These continuous storms were declared the biggest threat in the Atlantic Ocean in the last 15 years. However, with storms long gone, the production of oil and gas in the U.S.-regulated northern Gulf of Mexico is set to make its recovery with energy companies resuming their operations and increasing the intensity of the projects.

Energy companies in the United States moved ahead in restoring the production of oil and gas in the regulated northern Gulf of Mexico on 12th October, three days after Hurricane Delta made landfall. With the damage caused by the storms while operations were inactive, shut offshore crude oil, production dropped to 69.4% or 1.28 million barrels per day, on 12th October from 91% or 1.68 million barrels per day, a day earlier (11th October).

Bureau of Safety and Environmental Enforcement announced that a total of 47% or 1.28 billion cubic feet per day, in offshore natural gas production was shut as of midday on 12th October. On 11th October, around 62% or 1.68 billion cubic feet per day, was shut.

Companies like Royal Dutch Shell Plc, Chevron Corp, and BP Plc are also sending their workers offshore to their offshore platforms with the aim of restarting production. The Louisiana Offshore Oil (LOOP), on 12th October, also resumed offloading its tankers at the terminal in the Gulf, south of the Louisiana port. Since the LOOP is the only U.S port where larger tankers can be docked, it will facilitate the growth of oil and natural gas production in the region.

Total SA restarted its unit at its 225,500 barrel-per-day refinery in Port Arthur, Texas, on 12th October. The refinery was earlier closed on 9th October due to a power outage caused by Hurricane Delta. ExxonMobil also made sure that its 500,000 barrels-per-day refinery in Baton Rouge, Louisiana, has also begun working normally.

However, Phillips 66 did not experience any amount of disruption in the power supply by the Hurricane Delta in its manufacturing complex at Lake Charles, Louisiana, because the 260,000 barrels-per-day producing refinery was shut since 25th August due to extensive damage caused to the electrical power infrastructure by Hurricane Laura. Phillips 66 now plans to restart its operations in its manufacturing unit at Lake Charles by 18th October.
  
Colonial Pipeline, whose 5,500-mile pipeline system moves products from the Gulf coasts to the terminal up till the New York Harbour market, has also resumed its operations on Line-1 on the evening of 10th October but did shut down Line-2 on the same day.

From 6th October till 13th October, an aggregated total of 10.9 million barrels of crude oil production and 10.4 billion cubic feet of natural gas output from the Gulf manufacturers has been shut due to the Hurricane Delta.

The energy companies faced a significant loss due to the repeated encounters with storms, leading to halted operations and disturbance in the supply and demand chains as well as the production lines. The storms caused physical damage with high waves and wind speed to several manufacturing complexes and refineries, leading to massive power disruptions and property damage. However, with the clearing of the storm, the energy companies are recovering their lost revenues by sending workers offshore and increasing their productivity. The production of oil and gas in the Gulf is estimated to fully recover from the storms by the next year. However, it will take some time for them to recover from the adverse impacts of the COVID-19 pandemic.