Oil producers in the U.S. Gulf of Mexico have shut down about 324,000 barrels per day of crude oil production as a result of Tropical Storm Harvey, which initially made landfall as a Category 4 hurricane Friday (Aug. 25), according to industry analyst IHS Markit. Also, natural gas producers have stopped about 0.61 billion cubic feet per day of natural gas production in the Gulf.
“Perhaps the biggest issue in terms of recovery is the interconnected nature of the Gulf energy industry,” according to IHS Markit. “Even if crude production can recover quickly without lingering damage, producers will have trouble moving their crude if refineries remain offline or if ports are slow to reopen, or if key pipelines remain down. Likewise, refiners that are undamaged may have difficulty sourcing crude if the ports remain closed.”
Uncertainty remains as to the amount of damage to offshore platforms and flooding damage to onshore oil production. Also uncertain, is how Eagle Ford production was impacted, but possibly 300,000 barrels per day of production was shut down before the storm hit. Eagle Ford produces about 1.3 million barrels per day or 14% of all U.S. crude oil output.
The port of Corpus Christi was damaged but looks to resume operations by Sept. 4. It’s a key port for exporting U.S. light crude including WTI and Eagle Ford. Ports of Houston, Galveston and Freeport are also closed, but no timeline has been set on when they might reopen. They are important for moving imported crude to refineries in the region and for exports. So far this year, the United States has exported more than 900,000 barrels per day, and nearly all exports come from the Gulf.
For refineries, 3.3 million barrels of distillation capacity is offline, up from 2 million barrels per day on Tuesday. Another 2.2 million barrels per day is either idle, operating at reduced rates or under imminent threat. The affected facilities account for more than 30% of U.S. refining capacity.