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Bulk of oil, gas production remains offline as E&Ps anticipate platform inspections

Highlights

About 95% of oil, 93.5% of gas output still down

Port Fourchon likely key to Gulf exit/entry traffic

Shell says three platforms confirmed to be in place

E&P operators were busy Aug. 30 inspecting their US Gulf of Mexico platforms for potential damage or making arrangements for flyover visuals in the wake of Hurricane Ida's strike along the Louisiana Gulf Coast a day earlier.

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But the bulk of US Gulf production remained offline Aug. 30, as for many companies it may take time to assess damage from Ida, which made landfall southwest of New Orleans as a strong Category 4 storm, packing winds of 150 mph and gusts even higher.

On Aug. 30, 1.72 million b/d of the Gulf's crude oil production, or 94.6% of the region's roughly 1.8 million b/d, remained shut in. That compared with nearly 95.7% a day earlier, the US Bureau of Safety and Environmental Enforcement said in its daily update.

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The same day, 2 Bcf/d of natural gas output was shut in, or 93.5%, compared with 93.8% the previous day. The Gulf's pre-storm gas output was about 2.2 Bcf/d.

In all, 288 platforms remain evacuated in the US Gulf, or 51.43% of the region's total, BSEE said. That was unchanged from Aug. 29.

Shell said late Aug. 29 the US Coast Guard flew over its producing platforms in the area earlier in the day for a "general assessment" and found "visual confirmation" that its operated Mars, Olympus and Ursa platforms remained on location.

However, the company has five other US Gulf assets: Stones, Auger, Enchilada/Salsa and Appomattox. It has scheduled its own flyover for afternoon Aug. 30 to assess Mars, Olympus and Ursa and other assets that were in the path of the storm, the major said in a statement.

BP, Chevron, BHP, Murphy Oil and Equinor all have confirmed production shut-ins prior to Ida's strike.

Near-direct hit at Port Fourchon

One important potential impact from the storm is that Port Fourchon took a near-direct hit. The area is an important hub of supplies and equipment, and a transportation point of entry and exit to and from the Gulf.

If there are major damages to roads or other infrastructure, that could affect E&P companies' fly-outs, analysts said.

Port Fourchon "serves as a critical supply and logistics hub for offshore oil and gas production [and] is also where the Louisiana Offshore Oil Port (LOOP) is located," Wells Fargo analyst Roger Read said.

The actual terminal is about 20 miles offshore and likely escaped damage because it has its own power supply, Read said. But he added that "the onshore portion including the Clovelly Hub pump and storage facilities could be more at risk. Self-generated power, local power supply and even roads likely sustained significant damage from Hurricane Ida."

"Prior storms have come near, but none have directly struck the port or hub areas," he said. "We believe this should be watched closely for implications of returning US crude oil production, imports and exports to normal."

Feedgas apparently avoids major disruption

The power and industrial sectors have seen the greatest impact from Ida as LNG feedgas appears to have avoided any significant disruptions, S&P Global Platts Analytics said late Aug. 29.

"While it is too early to assess if any significant damage occurred to offshore platforms, offshore production has historically bounced back to pre-storm levels roughly 10 days after initial declines are observed," Platts Analytics said in a Spotlight report.

The storm has left more than 850,000 customers without power in Ida's path so far, a number that is likely to grow as the storm continues northeast over Louisiana and Mississippi, Platts Analytics said.

"Due to the lower production levels at a time when demand destruction had not occurred yet, Henry Hub prices rallied on Aug. 27, gaining nearly 30 cents to settle at $4.34/MMBtu," the report said. "As power and industrial demand are likely to remain depressed to start the week of Aug. 30, downward pressure on regional prices is likely early in the week, especially if offshore production is able to rebound faster than normal."