Uneven recovery for U.S. offshore output drives prices higher

An Oil Rig offshore Australia

U.S. Gulf Coast energy companies on Friday advanced the recovery from Hurricane Ida on a few fronts, but slipped elsewhere as lack of crews, power and fuel reversed earlier production gains and helped drive prices higher.

Ports were reopening and some pipelines restarted as companies completed post-storm evaluations. However, larger hurdles remained for producers and refiners that struggled to get up and running.

Five days after the hurricane churned through offshore oil and gas fields, crews have not returned to three-quarters of the evacuated platforms and more than 90% of production remained offline, government data showed.

Oil futures rose on expectations the output losses would further deplete U.S. stocks, which are 15% below year-ago levels.


The White House sought to ease regional fuel shortages, authorizing the release of 1.5 million barrels of crude oil to Exxon Mobil to produce gasoline. Four large refineries in the state remain shut.

Fuel and power shortages have hampered recovery. About 860,000 homes and businesses in the state lacked power. More than a third of gasoline stations in Louisiana were without fuel, according to tracking firm GasBuddy.

The shortages included aviation fuel for helicopters that conduct post-hurricane aerial evaluations and ferry workers to and from platforms. Ida’s winds crushed fuel depots and helicopter pads used by transport firms.

“Staff is dealing with their personal issues, including losing houses and the lack of transportation to reach the base camps,” said an executive of an offshore oil producer, who spoke on condition of anonymity.


Royal Dutch Shell, the largest Gulf of Mexico producer, has resumed 20% of its usual production, the company said. An offshore facility that carries offshore oil and gas to shore suffered damage, it said.

Pipeline operator Enbridge said it continues to evaluate its Gulf of Mexico facilities and offshore production remained shut. Damages to offshore oil facilities could cost insurers about $1 billion, estimated CoreLogic.

Overall Gulf of Mexico output declined by 240,000 barrels, according to government data, an unusual reversal. Production restarts are taking longer than after past storms, analysts said, in part because of the extent of infrastructure damage.

Tony Odak, chief operating officer of Stone Oil Distributor, which supplies fuel to offshore producers, said he has begun getting supplies from as far away as Port Arthur and Galveston, Texas.

“We are securing resupply outside the Mississippi River right now,” said Odak.


Most Louisiana ports have reopened, including the Port of New Orleans and the port of Port Fourchon, an offshore resupply hub, reopened on Thursday for daylight operations only.

However, portions of the Mississippi River west of New Orleans were shut because of a downed transmission line. The Louisiana Offshore Oil Port, the largest deepwater oil terminal, also remained closed, according to the U.S. Coast Guard.

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