Hurricane Isaac
The production shut in as of 11:30 AM Monday is
shown in the table below.
Hurricane Isaac Shut
In Production
August 28,
2012
|
|
Location
|
Amount
Shut In
|
Pre-Event
Production
|
Percent
(%)
Shut In
|
|
Crude Oil
(B/D)
|
1,287,275
|
1,380,000
|
93.3%
|
|
Natural
Gas (MMCF/D)
|
3,002
|
4,500
|
66.7%
|
The
market seems unperturbed about the crude oil and natural gas, but is
concerned about refineries. Let's start with crude oil: By 2009, Gulf
of Mexico production mare than recovered from the hurricane effects of
2005 and 2008. Since the BP blowout and the ensuing moratorium on
drilling, oil production in the Gulf of Mexico is down over 300,000 b/d
to 1.38 million b/d. There is 1.08 million b/d shut in as of midday on
Monday.
Because of the increased onshore production the impact of this event
will be less than previous shutdowns.
In
the last major shutdown, total U.S. production dropped from 5 million
barrels per day to 4 million b/d. In this shutdown, even with a million
b/d off line total domestic production is above 5 million b/d.
The Louisiana Offshore Oil Port (LOOP) suspended tanker unloading at
the terminal at 10:00 am EDT August 27. While the LOOP and onshore port
closures will disrupt imports the total will still be the same just
later this week or early next week. The EIA has a nice map
of Gulf of Mexico oil and gas assets with and overlay of the expected
path of Isaac.
Products and Refining
The greater risk is reflected the price of gasoline. While
crude oil prices declined in the face of the storm gasoline prices
spiked. Crude oil stocks are above normal but gasoline stocks are low.
The East Coast which is the delivery point for NYMEX gasoline contracts
(New York Harbor) trades has exceptionally low stocks.
Furthermore, several refineries closed in the Northeast increasing the
demand for gasoline and distillates from imports and other regions.
The refineries down or shutting down as of Monday morning have a total
capacity of 1.3 million b/d.
|
Refinery
|
Location
|
Capacity
(B/D)
|
08/28/2012
|
|
Operating
Capacity
|
Shut
Down* |
Normal |
|
Mississippi |
|
|
|
|
Chevron
|
Pascagoula
|
330,000
|
|
330,000
|
|
Alabama |
|
|
|
|
Shell
|
Saraland
|
80,000
|
|
80,000
|
|
Louisiana
|
|
|
|
|
Alon
|
Krotz
Springs
|
80,000
|
|
80,000
|
|
Chalmette
Refining
|
Chalmette
|
192,500
|
192,500
|
|
|
ExxonMobil
|
Baton
Rouge
|
502,500
|
|
502,500
|
|
Marathon
|
Garyville
|
490,000
|
|
490,000 |
|
Motiva
|
Convent
|
235,000
|
235,000 |
|
|
Motiva
|
Norco
|
233,500
|
|
233,500
|
|
Phillips
66
|
Belle
Chasse
|
247,000
|
247,000
|
|
|
Placid
Refining
|
Port
Allen
|
57,000
|
57,000
|
|
|
Valero
|
Meraux
|
125,000
|
125,000**
|
|
|
Valero
|
Norco
|
205,000
|
205,000
|
|
|
Total
|
|
2,777,500
|
1,061,500
|
1,461,000 |
*Shut down or shutting
down.
** Shutdown unrelated to storm.
|
In
addition to refinery shutdowns in the Gulf, Venezuela's main refinery
is down after an explosion. The government says no processing units
were damaged and that they can restart two days after the fire is out.
The pictures show storage tanks on fire. The damage could be
minimal, but at this point we do not know. If the damage prevents a
start up, then Venezuela will have to go into the market for gasoline
and diesel. Restarts are not easy under the best conditions.
The Amuay refinery had the capacity to refine 645,000 b/d. At least 48
people lost their lives in the explosion. Two tank fires have been
extinguished, but a third is still burning. If this the refinery is not
up soon, Venezuelans will be standing in line for gasoline as well
aschickens.
The impact of the refinery outages is evident in product prices and
most notably gasoline ahead of the Labor day weekend. The spike in
gasoline prices is putting some upward pressure on crude oil.
Crude is getting some downward pressure from indications that there may
be another SPR release despite high oil inventories. An SPR release
ahead of an election? The last time that happened Al Gore was running
for President.
Natural Gas
In 2008, Gustav and Ike caused Gulf of Mexico production to drop over 5
Bcf / day and some onshore production was also curtailed. This time so
far only 2 Bcf / day is off line and the industry couldn't cut 5 Bcf / day if it wanted too.
Before the storm production was less than 4.5 Bcf. With the dramatic
increase in onshore production, now near 65 Bcf / day compared to 53 at
the time of Gustav, hurricanes are almost irrelevant to natural gas
prices. If there is a hurricane related price increase, it will be due
to damage to onshore natural gas plants or compressor stations.
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