EIA: Shale Oil, Gas Production to Offset Possible Gulf Shut-ins

The prevalence of oil production in shale formations has reduced the likelihood that any cuts in production from offshore rig shut-ins in the Gulf of Mexico during the 2014 Atlantic hurricane season will be felt, according to the Energy Information Administration (EIA) this week.

The Gulf of Mexico accounts for about 23 percent of the total U.S. crude oil production, the EIA said. However, an increasing percentage of total production is coming from unconventional formations. So, much of the lost production from shut-ins ahead of an approaching storm or hurricane will be offset by inland activity.

In 2013, Tropical Storm Karen produced the only shut-in of Gulf production, the EIA said. Nearly two-thirds of oil output in the Gulf of Mexico was halted, according to Reuters.

Refining capacity remains an area of vulnerability, however. More than 40 percent of total U.S. petroleum refining capacity, and 30 percent of total natural gas processing plant capacity, are located along the Gulf Coast, according to EIA figures.

The National Oceanic and Atmospheric Administration (NOAA) forecast calls for 8-13 named storms during the 2014 hurricane season, with 3-6 of those becoming hurricanes. About 1-2 of those hurricanes are expected to become major – Category 3 or above – with sustained wind speeds of at least 111 miles per hour (mph). The U.S. Atlantic hurricane season runs from June 1 to Nov. 30.


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