Oil and Gas Disruption From Hurricanes Katrina and Rita

Publication Date: April 2006

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Energy

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Abstract:

Hurricanes Katrina and Rita shut down oil and gas production from the Outer Continental Shelf in the Gulf of Mexico, the source for 25% of U.S. crude oil production and 20% of natural gas output. Katrina, which made landfall on August 29, resulted in the shutdown of most crude oil and natural gas production in the Gulf of Mexico, as well as a great deal of refining capacity in Louisiana and Alabama, 554,000 barrels per day of which was still closed as of late October, 2005. Offshore oil and gas production was resuming when Hurricane Rita made landfall on September 24, and an additional 4.8 million barrels per day (mbd) of refining capacity in Texas and nearby Louisiana was closed.

Combining the effects of both storms, 1.3 mbd of refining -- about 8% of national capability -- is shut down, reducing the supply of domestically refined fuels commensurately. Much of the refined product shortfall was made up by imports of refined products, some of which were made available by strategic supplies released by International Energy Agency (IEA) member nations on September 2.

As part of the IEA drawdown, 30 million barrels of crude oil were made available from the U.S. Strategic Petroleum Reserve (SPR), which holds only crude. Only 11 million barrels was sold from the SPR, in part because limited refinery capacity reduced the call on crude.

Natural gas production from Gulf of Mexico and Louisiana state lands has been recovering since the storms, but the equivalent of about 3% of U.S. consumption remains shut-in because of production or transport problems. Unlike refined products, which can be imported, there is little extra available supply. A normal storage situation at the start of the heating season -- coupled with a very warm winter -- saw Spring 2006 arrive with surplus gas in storage and gas prices well below equivalent oil prices.

This report will be updated to reflect significant restoration of gas and oil production and related infrastructure, as well as relevant changes in hydrocarbon supply and demand.