Sixth District Energy Updates: Hurricane Gustav

September 5, 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
•  The damage to the Entergy Corp. system is extensive and the largest to have ever occurred in the Baton Rouge area.
•  In Louisiana, 42 percent of customers remained without power as of 1:30 p.m. on Sept. 4. Power has been restored to almost 275,000 customers in the state since Wednesday morning.
Full electricity restoration is expected to take several weeks.

photo of a man pumping gas
Oil and Gas Production
•  Thursday afternoon, the Minerals Management Service reported that approximately 95.2 percent of the oil production and 87.5 percent of the natural gas production in the Gulf remained shut in, down from 100 percent of crude and 95.4 percent of gas production that was shut in early Wednesday morning.

photo of an oil platform
•  The Department of Energy reported that 12 refineries in the Gulf of Mexico region remain shutdown at 2 p.m. on Sept. 4, while another six refineries had reduced their crude oil throughput.
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

Preliminary reports indicate that Port Fourchon, which services over 75 percent of the Gulf of Mexico's deepwater oil production, has sustained minor damage, and the port authority will begin operations in the next couple of days.

Port Fourchon may not be able to receive power for four to six weeks, and debris may leave one of the port's channels impassable for as long as a week, according to the port's director, Ted Falgout.

The ports of New Orleans, Panama City, and Lake Charles are among those that have reopened.

Damage to the coastal electricity transmission system is delaying power from reaching the Louisiana Offshore Oil Port (LOOP) and its offshore facilities. LOOP officials will start up generators once transportation and communications logistics improve.

Operations at the Henry Hub remain limited as temporary generators maintain operations. Sabine Pipeline's force majeure, which allows companies to avoid penalties for failing to fulfill delivery contracts, remains in effect for points along the mainline that require additional inspections.

The Colonial pipeline, a major avenue for refined products heading to the East Coast, is prepared to run at a higher rate once refineries return to normal operations and more supply becomes available.

Natural gas pipelines continue to assess damages to facilities along their systems. Some offshore production has commenced and pipelines have started flowing at reduced levels. There have been no reports of any major damage to the pipelines; however, nine pipelines remain shut in.