Sixth District Energy Updates: Hurricane Gustav

September 4, 2008

The Federal Reserve Bank of Atlanta's Research Department produces updates on the impact of recent tropical cyclone activity on the Gulf of Mexico and the coastal area's energy sector. These reports are developed from a variety of publicly available resources and are updated as events dictate.

photo of power lines
Damage to electric cooperatives in the region was extensive. As of 2 p.m. on September 3, 51 percent of customers in Louisiana and 3 percent of those in Mississippi remained without power. This damage could delay return to operations since refineries and pipeline pumps rely on electricity to operate.
Crews from across the country are being called in to assist in restoring power to the region. Full restoration is expected to take several weeks because of extensive damage and difficulty accessing affected areas.
Full power restoration could take several weeks.

photo of a man pumping gas
Oil and Gas Production
Some 100 oil platforms and five oil rigs were destroyed during hurricanes Katrina and Rita in 2005. However, experts say that major upgrades have happened since then and the infrastructure is much stronger than it was three years ago.
As of Wednesday afternoon, the Minerals Management Service reports that approximately 95.8 percent of the oil production and 91.6 percent of the natural gas production in the Gulf remains shut in, down from 100 pecent of crude and 95.4 percent of gas production that was shut in early Wednesday morning.
Major oil companies began returning workers to offshore facilities on September 3 but cannot begin operating rigs until safety checks are completed.
Twenty-two major natural gas processing plants that were shut down have reported no major damage to their facilities and are expected to resume operations as gas begins to flow. The loss of commercial power is one of the most significant challenges the plants are facing. (September 3)

photo of an oil platform
As of 3 p.m. on September 3, the Department of Energy reported that 13 refineries in the Gulf of Mexico region remain shutdown, representing more than 1 million barrels per day of gasoline output and about 700,000 barrels per day of distillate fuel output.
Even without damage, shut-down refineries can take a week or more to return to normal operations.

photo of a shipping port
Ports and Pipelines
The Capline and LoCap crude oil pipelines, the Centennial product pipeline, and the Louisiana Offshore Oil Port (LOOP) were all temporarily shut down. The Colonial and Plantation pipelines, major avenues for refined products heading to the East Coast, were running at reduced rates, although the Colonial pipeline is reportedly seeing improvements in supply injections into the pipeline.
Temporary generators are supplying power to the Henry Hub, the largest centralized point for spot and futures natural gas trading in the United States. Although initial assessments reveal no serious damage, power to the Hub remains unavailable.
Many pipelines have reported expectations to restore service as early as today.