Today's Trends: Current Gas Production to Offset Hurricane Disruptions

Strong momentum in domestic U.S. production growth and a declining share of Gulf of Mexico production in the U.S. supply mix should cushion the effect of any hurricane-related disruptions of production on the U.S. natural gas market, according to a recent report by Barclays Capital.

A destructive hurricane could certainly lift prices in the near term outlook, oversupplied balances limit the longer-term upside. However, history has shown that hurricanes can take large amounts of supply off the market for an extended period of time, the relationship between the projected intensity of hurricane activity in the Atlantic and production shut-ins is imprecise.

"Whether or not a hurricane season shuts in production depends to some extent on the number of hurricanes, but most of all on their intensity and paths, as well as the amount of rain and wind that affects infrastructure," Barclays noted.

Barclays noted that the natural gas market has been bitten not once but twice by the destructive force of hurricanes, with Hurricane Ivan in 2004 shutting in production of over 170 Bcf and causing significant damage to vital undersea pipeline infrastructure.

In 2005, Hurricanes Katrina and Rita and later Wilma knocked out more than 800 Bcf of cumulative production and left long-term scars on the Gulf's supply infrastructure. In 2007 and 2008, Hurricanes Gustav and Ike shut-in more 430 Bcf of gas output as they tore through key infrastructure regions.


Click on the button below to add a comment.
Post a Comment
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
Branson Williams | Jul. 22, 2010
Are the production volumes shut-in annual? (For instance, the 800 Bcf shut-in by Katrina )


Our Privacy Pledge

From the Career Center
Jobs that may interest you
Automation Engineering Manager
Expertise: Electrical Engineering|Engineering Manager
Location: Houston, TX
Senior Accountant
Expertise: Accounting
Location: Chantilly
Channel Development Manager Job
Expertise: Business Development|Sales
Location: Minneapolis, MN
search for more jobs

Brent Crude Oil : $56.86/BBL 0.76%
Light Crude Oil : $50.66/BBL 0.21%
Natural Gas : $2.959/MMBtu 0.30%
Updated in last 24 hours