U.S. Oil Output Drops by Most on Record After Hurricane Ida
(Bloomberg) -- Even the deadly Texas freeze didn’t do as much damage to oil production as Hurricane Ida.
The historic storm, which swept through the Gulf of Mexico almost two weeks ago, drove a record 1.5 million-barrel decline in daily crude output, according to weekly data from the Energy Information Administration going back to 1983. Nearly three-fourths of U.S. Gulf oil output was still offline as of Thursday.
The storm is the second major weather event this year that temporarily shut more than a million barrels of daily U.S. oil output, underscoring the increasing vulnerability of energy infrastructure to climate change. In February, record-setting arctic temperatures descended across the American South, crippling the industry and halting 1.1 million barrels of daily production, according to weekly government tallies.
Although hurricanes sweep through the Gulf every year, Ida was unusual in that so much crude production remains shut more than 10 days after the storm made landfall in Louisiana. Although offshore platforms usually resume production after storms faster than onshore refineries, the opposite has been true this time around.
Underscoring the severity of the damage from Ida, Royal Dutch Shell Plc declared force majeure on “numerous contracts.” On Wednesday, Shell also said damage assessments at its West Delta-143 facility, which serves as a transfer station for all production from the vital Mars crude corridor in the Gulf, were still ongoing.
Ida’s impact on U.S. oil output will likely show up on EIA data for “multiple weeks,” according to Rob Thummel, a portfolio manager at Tortoise, a firm that manages roughly $8 billion in energy-related assets.
West Texas Intermediate crude future were down 2% to $67.91 a barrel at 2:24 p.m. in New York, compared with a $69.74 settlement on Aug. 27 -- the final trading session before Ida slammed into Louisiana.
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