A strengthening Hurricane Ida, bearing high winds and the likelihood of flooding rain as it heads for the Louisiana coast, could damage the energy-heavy Gulf Coast economy and potentially have economic consequences well beyond the region.
The Gulf is not just a significant base for oil and gas companies, but also serves as a critical hub for the nation’s chemical and shipping industries.
Before the hurricane, companies evacuated oil and gas platforms in Louisiana. However, the hurricane’s projected path of flooding and storm surge poses a greater threat to oil and gas refineries and petrochemical facilities.
Nearly 300 offshore platforms, or half of all manned platforms in Gulf of Mexico, were evacuated before the storm. Their production was temporarily halted by the U.S. The U.S. Bureau of Safety and Environmental Enforcement posted the following statement on Saturday: Also, floating rigs were also removed. The agency stated that more than 80% of the gulf oil-and-gas production was halted.
A potentially even more grave concern was the fate for the refineries and petrochemical plant along the Mississippi River, Baton Rouge to New Orleans, in or near the path of a storm’s maximum sustained winds. This storm is expected to make landfall on Sunday at 130 mph (209 km/h).
According to the Energy Information Administration, Louisiana’s 17 oil refineries can process 3.4 million barrels per day. They account for almost one-fifth the nation’s total refining capacity. Many could be at risk from flooding. According to the EIA, Ida could impact local energy supplies — particularly transportation fuel and electricity.
It is not clear if the domestic fuel supply will be affected. The average daily oil consumption in the United States is just under 20 million barrels per day. Analysts disagree on the timing of this prediction, but S&P Global Platts stated that the storm could cause a halt to gulf production at 765,000 barrels per day.
It wasn’t immediately clear how many refineries or petrochemical plants would be closed.
Phillips 66 had stopped production at its refinery in the Mississippi, just south of New Orleans, Belle Chasse, Louisiana. This was due to “the potential storm surge,” according to a company spokesperson Bernardo Fallas. It can produce 250,000 barrels per day.
Exxon Mobil stated that its Baton Rouge refinery produces approximately 520,000 barrels per day. Chevron, however, said that it had closed down operations at the terminals along the Mississippi and Gulf coasts and related pipelines. Shell, Marathon, and Valero have also refineries that are located near the path of the storm.
Peter McNally, a Third Bridge energy analyst, stated that the industry had been through similar events over the past few decades. Nearly exactly one year ago, wind damage caused by Hurricane Laura struck several refineries in Lake Charles west of Ida.
Jeff Masters, a meteorologist who flew missions to hurricanes for the government and created Weather Underground, stated that Ida will move through “the absolute worst place for hurricanes.”
Although refineries and petrochemical plant are designed to withstand strong winds, they may not be prepared for high water. This is becoming a bigger problem with global warming, which has increased rainfall in large storms.
McNally stated that flooding is the biggest concern for the industry. This is what caused so much destruction in 2017’s Hurricane Harvey in Houston.
“Louisiana’s low elevation means that you are more susceptible to flooding. These items are designed to withstand winds, but flooding is more difficult,” he stated.
Sixty percent (60%) of the gasoline that is used on the East Coast comes from the Gulf Coast. Much of this fuel is transported through the Colonial Pipeline which lies in the path of Hurricane Sandy.
Louisiana is responsible for 9% U.S. natural-gas yields, in addition to its oil production. According to the Energy Information Administration, 55% of U.S. LNG exports were made by Louisiana’s two liquefied gas export terminals last year.