Flows on Mars Oil Pipeline Recovered in October After Storms

Every year, the biggest wild card regarding Gulf of Mexico (GOM) crude oil production is the severity of the Atlantic hurricane season. A season generally free of major storms in offshore production areas will likely have only a minimal impact, but a summer and early fall with even just one or two powerful hurricanes along certain paths can cause output to plummet, sometimes for extended periods. In today’s RBN blog, we’ll look at GOM production gains over the years, the degree to which hurricanes and other issues have reduced output in the past, and the new production expected to come online later this decade. 

Crude oil production in U.S. shale and tight-oil plays still hasn’t recovered fully from the demand destruction wrought by COVID-19 in the last year or so. It could be argued, though, that producers in the offshore Gulf of Mexico (GOM) have faced even tougher times as they had to deal with not only pandemic-related staffing issues and project setbacks but the most active hurricane season on record. Offshore GOM production averaged only 1.65 MMb/d in 2020, a 13% decline from the previous year and the lowest since 2016. By August, production fell to less than 1.2 MMb/d, the lowest for that month in seven years. Many new projects were delayed as well, but things may finally be looking up, with first oil from a number of projects coming later this year or in early 2022 and final investment decisions (FIDs) on two major projects expected soon. Today, we discuss the wild ride that GOM producers experienced in 2020 and whether better days can be expected in the future.

As the Atlantic hurricane season churns out storms that regularly threaten the U.S. Gulf Coast, it can be easy to forget that the East Coast — an important refining center and refined-products market — is not immune from their impact. A dozen years ago this month, Superstorm Sandy roared ashore in New Jersey, wreaking havoc with storm surges and fierce winds that stretched for 1,000 miles. While the East Coast lacks the Gulf Coast’s concentration of energy infrastructure, it is home to the critical New York Harbor (NYH) market. In today’s RBN blog, we will examine how storms have affected the refining sector on the East Coast.