Hurricane Ida Aftermath Complicates Oil Industry Recovery

Hurricane Ida Aftermath Complicates Oil Industry Recovery

(RepublicanPress.org) – Hundreds of thousands of Americans continue suffering the effects of Hurricane Ida nearly two weeks after it hit Louisiana as a Category 4 storm. Experts knew it would take widespread electrical outages and flood damage to contend with for weeks.

Similarly, economists predicted the storm would impact oil and gas production, but hoped it would be short-lived and have a nominal impact on the economy aside from a temporary rise in gasoline prices.

Now, the true devastation of the hurricane is finally revealing itself.

Hurricane Ida Continues Devastating US Oil and Gas Production

According to the US Department of Energy, Ida initially shut down about nine refineries scattered along the shorelines facing the Gulf of Mexico. That complete disruption reduced the nation’s total refining capacity by about 13%. On September 8, The Wall Street Journal (WSJ) reported that about 80% of oil and gas production in the region remains idle. As a result, roughly 12% of United States oil and gas production is inactive.

The Gulf of Mexico-based production accounts for about 5% of America’s natural gas output and 17% of its oil. BP, Chevron Corp., and Royal Dutch Shell all have expansive operations in the Gulf and experienced falling stock prices approaching half a percentage point. Exxon Mobil Corp. operates in the region, as well, and experienced a recent rise of 0.07%.

The Bigger Picture

The US Bureau of Safety and Environmental Enforcement (BSEE) is actively monitoring Gulf of Mexico oil and gas production activities in the wake of Hurricane Ida. As of September 9, it reported that workers haven’t returned to a total of 71 offshore production platforms, representing the shut-in of nearly 13% of the 560 manned platforms operating in the Gulf.

The work stoppage is concerning because offshore platform operations are difficult to relocate, as is frequently the case with drilling rigs.

The BSEE also reported that workers remain evacuated from four non-dynamically positioned rigs, which account for nearly 37% of the rigs that operated in the Gulf of Mexico before Hurricane Ida’s arrival. Likewise, two dynamically positioned rigs remain unmanned, representing roughly 13.3% of the structures operating off Louisiana’s coastline. On the bright side, those rigs aren’t anchored to the bottom of the Gulf and companies can move them eventually, weather conditions permitting.

The long-term impact of Hurricane Ida remains a mystery at this point. However, consumers can expect to continue to see rising gasoline prices until refinery production fully engages.

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