After making landfall on August 29 as a Category 4 Hurricane, Ida brought widespread power outages, shut-in almost all offshore production, and significantly disrupted refinery/industrial operations throughout Louisiana.
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Just over a month later, the Southeast fundamentals have nearly recovered fully, however, prices continue to strengthen in both the spot and forwards markets.
On the supply side, nearly all US offshore production was shut in as the storm moved through the Gulf of Mexico dropping from just over 2.5 Bcf/d in early August to a low of just 190 MMcf/d on Sept. 1.
Historically, offshore production is able to return to pre-storm levels roughly two weeks after the initial declines. With Ida, however, additional disruptions onshore delayed the recovery with offshore production levels breaking over 2.4 Bcf/d for the first time on Sept. 30, more than 30 days after the first declines.
The prolonged recovery was driven by a combination of factors onshore including damaged helicopter pads, which delayed crews from reaching platforms for inspections, power outages, and processing issues, limiting what could flow from the platforms to onshore facilities.
Absent any additional hurricane disruptions, offshore production is forecast to remain steady at just over 2.5 Bcf/d for the foreseeable future, averaging 2.5 Bcf/d through the rest of 2021 and 2.6 Bcf/d in 2022.
On the demand side, power and industrial demand experienced the largest impacts as Ida passed over a heavy concentration of industrial facilities, including refineries and processing facilities.
Even if the facilities did not sustain physical damage from Ida, the delay in returning power to the southeast portion of Louisiana, delayed any timely return of those facilities with some still struggling to return today.
A large portion of the industrial facilities in Louisiana are supplied by intrastate pipelines so visibility is relatively limited, however, total Louisiana sample demand declined by over 1 Bcf/d following Ida to a low of just 600 MMcf/d.
Sample demand has returned recently, averaging 1.4 Bcf/d the past week, 200 MMcf/d below pre-storm levels. However, some of the sample consists of power demand so with cooler weather currently compared to early August, not all is likely to be recovered.
Because so much of the industrial demand is met by intrastate pipeline gas, following Ida and the facility shutdowns, interstate receipts from intrastate pipelines jumped from normal levels of 200-400 MMcf/d to nearly 1.9 Bcf/d.
As industrial facilities restarted, those receipts have ticked lower with current levels sitting at 600 MMcf/d, leaving 200-400 MMcf/d of industrial demand that is assumed to still be offline.
Looking out to the upcoming winter, total Southeast industrial demand is forecast to remain in line with previous years, averaging 6.7 Bcf/d November to March. However, there is an upside risk to this forecast as the global gas price spike has forced the shut-in of several fertilizer plants in Europe.
The cheaper prices in the US compared to Europe or Asia this winter, places more upside risk to elevated industrial demand this winter to help backfill those global outages.
A version of this Spotlight from S&P Global Platts Analytics was first published Sept. 30.