EIA: Energy supplies less vulnerable to hurricane disruption

The US Energy Information Administration says that the surge in the country's crude oil and natural gas production in recent years means that there should be less interruptions to supply if hurricanes disrupt offshore production this summer.

Offshore staff

WASHINGTON, DC – The US Energy Information Administration (EIA) says that the surge in the country's crude oil and natural gas production in recent years means there should be less interruptions to supply if hurricanes disrupt offshore production this summer.

The EIA has published an estimate for hurricane and tropical storm-related oil and natural gas production disruption for theGulf of Mexico, based on the latest forecast from the National Oceanic and Atmospheric Administration (NOAA), which predicts 8–13 named storms, 3–6 hurricanes, and 1–2 major hurricanes. Based on this NOAA prediction, the EIA estimates that as much as 11.6 MMboe and 29.7 Bcf of natural gas production could be disrupted by the 2014 hurricane season.

EIA analysis shows a 69% probability that production shut-in volumes will be equal to, or greater than, the production that was shut in during the 2013 hurricane season. The 2013 season saw 3.1 MMboe and 6.7 Bcf of natural gas production shut down due to storms.

The EIA notes that the actual volume of production that gets shut in during the 2014 hurricane season could differ dramatically from these estimates, depending on the number, intensity, and track of storms that form. However, its estimate provides a rough guide for the hurricane season’s potential impact to US oil and gas production.

Recent storms have affected oil and gas production in the Gulf of Mexico. The impact of a major hurricane, such as Ike or Gustav, is clear, with the majority of production shut down across the Gulf and the resulting decline in Gulf gas production in recent years.

While the effect on US supply of a major hurricane could now be lower than in previous years, due to the declining production in the Gulf of Mexico, the EIA says that this won’t change the potential impact to insurers and reinsurers, particularly with the removal and decommissioning of rigs also being insured.

06/11/2014

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