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EIA: strong hurricane season forecast presents risk for US oil and natural gas industry

Published by , Editorial Assistant
Hydrocarbon Engineering,

Meteorologists are forecasting a particularly intense Atlantic hurricane season this year; they expect 20 – 25 named storms with a possibility of 30 or more, according to reports from AccuWeather in April 2024. Colorado State University similarly forecasts an estimated 23 named storms this year. The potential for a stronger hurricane season suggests heightened risk for weather-related production outages in the US oil and natural gas industry.

The 2023 Atlantic hurricane season had 20 named storms, but only one hurricane made landfall in the US. None of last year’s storms had a significant impact on US petroleum infrastructure. More information on energy infrastructure and potential storm risks is available using the EIA's Energy Atlas.

Hurricanes primarily affect petroleum markets by disrupting crude oil production and refinery operations. Offshore crude oil in the UnS is concentrated in the Federal Offshore Gulf of Mexico (GOM) and could be significantly limited by inclement weather. Offshore oil and natural gas floating production units must contend with some of the most severe hazards associated with hurricanes and tropical storms; they must have emergency procedures to evacuate nonessential personnel and temporarily halt production. In 2023, GOM crude oil production accounted for 14% of US crude oil production.

Refining of crude oil is also affected by hurricanes in certain parts of the Gulf Coast. Refineries along the Texas and Louisiana Gulf Coast account for almost half of US refining capacity. These facilities risk flooding or power outages associated with major storms or hurricanes. Like offshore floating production facilities, many refinery operators will evacuate nonessential personnel and temporarily stop production if they believe severe weather might injure employees or damage their facilities.

A hurricane could also reduce natural gas production in the GOM, which is mostly associated gas production; however, recent hurricanes have had a much smaller impact on total US natural gas supply because natural gas production in the GOM has been declining for years. The GOM provided less than 2% of total US marketed natural gas production in 2023, down from 17% in 2005 when Hurricanes Katrina and Rita interrupted significant volumes of natural gas production.

Hurricanes can affect US natural gas demand by interrupting LNG export operations. The US has nearly 13 billion ft3/d of LNG export capacity located on the Gulf Coast, making it vulnerable to weather-related disruptions such as hurricanes. Although LNG facilities generally have many layers of protection from direct impact, hurricanes can damage electrical and marine infrastructure and hamper ship movement. For example, the effects of Hurricane Laura, which made landfall in August 2020, temporarily halted LNG exports from Louisiana’s Sabine Pass and Cameron LNG facilities.

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