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Nearly 185,000 b/d of US Gulf oil production returns as Ida recovery continues

Highlights

Shell declares 'force majeure'

Chevron restarts production at two platforms

Another SPR release to ExxonMobil

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About 185,000 b/d of US Gulf oil production returned Sept. 10 from a day prior as the recovery from Hurricane Ida began to pick up some momentum, even though nearly two-thirds of Gulf oil volumes and three-quarters of natural gas output remained offline, according to the US Bureau of Safety and Environmental Enforcement.

While most of the US Gulf production remains shut in 12 days after Category 4 Ida made landfall south of New Orleans near Port Fourchon, Louisiana, the biggest Gulf producers have redeployed much of their offshore personnel and begun preparing for production restarts. Also, more critical onshore terminals are returning to service.

About 1.208 million b/d, or 66.4%, of crude oil production remained offline on Sept. 10, of the roughly 1.8 million b/d of pre-storm production, BSEE said. That compared to 1.392 million b/d, or 76.5%, offline on Sept. 9.

The return of natural gas is taking a little longer though, with about 1.685 Bcf/d, or 75.5%, of natural gas still shut in.

Only about 12% of the Gulf's platforms and rigs remained evacuated Sept. 10 out of more than 560 total in the US Gulf.

However, because of the duration of the outages, Shell spokesperson Curtis Smith said the company declared a force majeure emergency on Sept. 9 because of the "numerous contracts that we anticipate will be impacted by the damage," specifically citing damaged West Delta-143 platform facilities that serve as the transfer station from Shell's Mars corridor Gulf production to onshore oil and gas terminals.

"We are now beginning the process of redeploying personnel to our Mars asset, and continuing redeployment to our Enchilada/Salsa, Auger, and Appomattox assets," Shell said in a late Sept. 9 statement. "These assets, along with Ursa and Olympus, remain shut in."

Likewise, Chevron said Sept. 10 it has sent crews back to all six of its operated platforms and restored partial production at its Jack St. Malo and Blind Faith platforms.

"Our other facilities that were shut-in for Ida are ready to produce once pipeline export routes resume operations," Chevron said in a statement.

Critically, Chevron also said its Fourchon terminal is back up and running in a reduced capacity.

"It is ready to receive barrels from connecting pipelines when Gulf of Mexico assets have restarted," Chevron added. "Empire terminal has commercial power, and we are currently conducting the necessary tests prior to starting up operations."

POWER AND PRICES

Much of the return of the onshore infrastructure depends on the restoration of electricity.

While the Greater New Orleans metro area is mostly restored, close to 95% of Lafourche, St. Charles and Terrebonne parishes remain without power, including refining or port hubs in Port Fourchon, Houma and Norco, said Louisiana utility Entergy.

Those areas are expected to receive power "no later than" Sept. 29, Entergy said.

Port Fourchon officials said that water was not restored on Sept. 9 as planned, but that water service is now expected by early next week. Port tenants are continuing to assess their damage. The US Coast Guard set Port Fourchon as "port open with restrictions." Vessel traffic is limited to daylight operations only in Belle Pass and Port Fourchon's waterways, port officials said in a Sept. 10 statement.

Port Fourchon also is the home of LOOP's onshore facilities, which includes a booster station and Clovelly Dome Storage Terminal. LOOP, the only deepwater port in the US capable of loading VLCCs with crude, had suspended deliveries ahead of Ida.

LOOP said Sept. 9 its "supply chain is functioning" now as the offshore oil port continues to work with shippers to receive and deliver crude oil to regional refineries.

As for crude prices, Louisiana grades have softened a bit after spiking shortly after Ida to one-year highs.

On Sept. 10, the value for October Mars was heard talked at a 20 cents/b premium to WTI, down from a $1.50/b premium two days prior.

Light Louisiana Sweet differentials also were trending lower. On Sept. 10, LLS was heard talked at a $1.75/b premium to WTI, tumbling from its assessed value of WTI plus $2.35/b on Sept. 8.

"The next few weeks will be interesting as more details come out as to when production comes back and when refineries comeback," one crude trader said.

REFINERIES RETURNING

The DOE authorized the release of 1.5 million barrels from the SPR for a second crude oil exchange with ExxonMobil in just more than a week during the aftermath of Ida.

The post-Ida SPR draws now total 3.3 million barrels as of Sept. 10, including 3 million barrels to ExxonMobil's 520,000 b/d Baton Rouge Refinery, which is restarted and fully operational again, as well as 300,000 barrels to the nearby, 75,000 b/d Placid Refining facility in Port Allen, Louisiana.

The onshore oil refineries are getting back up and running more quickly than the offshore oil production from the US Gulf of Mexico, so the White House tapped the SPR to help supply more of the Louisiana oil refining network in order to avoid more widespread fuel shortages.

About 2.2 million b/d in Louisiana oil refining capacity came offline because of Ida, but only about 1 million b/d remained offline as of Sept. 10 with that number expected to fall to just more than 800,000 b/d with the ongoing startup of PBF Energy's 190,000 b/d Chalmette Refinery.

New Orleans-area refineries restarting after Ida as power begins to return

New Orleans-area refineries restarting after Ida as power begins to return

Owner

Location

Capacity (b/d)

Status

Louisiana

Citgo

Lake Charles

418,000

operating

ExxonMobil

Baton Rouge

520,000

operating

Marathon

Garyville

578,000

operating

Placid Refining

Port Allen

75,000

operating

Phillips 66

Westlake

260,000

operating

Phillips 66

Belle Chasse

255,600

power restored/repairs underway

PBF Energy

Chalmette

190,000

restart in progress

Shell

Norco

227,400

no power/damage assessment

Valero

Meraux

125,000

power restored

Valero

Norco

215,000

no power/damage assessment