U.S. Oil Production Costs From Hurricane Ida Escalate

Losses from the category 4 storm are some of the worst in 16 years; gasoline snafus persist.

September 09, 2021

Cars Lined Up Outside Gas Station

ALEXANDRIA, Va.—Hurricane Ida is one of the most costly events for U.S. oil production facilities in the past 16 years, according to Reuters.

Nearly 80% of oil and gas production in the Gulf of Mexico is still offline, as Ida’s extremely high wind gusts damaged platforms and onshore support facilities. The Gulf of Mexico accounts for about 17% of U.S. oil output and about 5% of natural gas output.

Underwater pipelines also leaked oil into the Gulf, according to the Wall Street Journal. Damage to the underwater pipeline caused the leak, and a line of crude oil was seen stretched for miles from the leak source. However, a Talos Energy Inc. cleanup and dive team reported that the leak had diminished significantly, and there were no observed impacts to shoreline and wildlife.

Nola.com reports that long lines at gas stations in Louisiana’s metro areas of New Orleans and Baton Rouge have shortened, but more rural areas that were hit harder by the storm are still struggling to provide gas to customers. Additionally, many customers are still without power in these areas, as several of South Louisiana’s refineries are still struggling to get back to full power.

“It seems like there is a bit more relief on fuel supply,” Ramesh Kolluru told Nola.com, who is a University of Louisiana-Lafayette professor helping Gov. John Bel Edwards’ administration track the fuel shortage. “On the other hand, you have some of the other parishes that are still a ways away from having power restored.”

About 20 million barrels of oil have been kept off the market because of Ida, according S&P Global Platts Analytics. For comparison, 2020’s Hurricane Marco and Hurricane Laura knocked out nearly 1.6 million barrels of oil a day, but production was largely restored about a week afterward.

Separately, the U.S. Environmental Protection Agency (EPA) Tuesday issued an emergency fuel waiver for Port Fourchon in Louisiana, citing extreme and unusual fuel supply circumstances due to Hurricane Ida.

The waiver covers the ultra-low sulfur diesel (ULSD) fuel requirements at Port Fourchon to help support critical marine operations in and around the port. The waiver began September 7 and will end on September 16, 2021. 

Additional Hurricane Ida-related waivers were issued late last week, while the Federal Motor Carrier Safety Administration on Friday clarified that the revised national hours-of-service waiver extension the agency issued due to the COVID-19 pandemic (which includes gasoline, diesel, jet fuel and ethyl alcohol) applies to narrow emergency conditions and not routine deliveries of goods.

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