Hurricane Nate, the most recent storm in an unforgettably violent hurricane season, made landfall twice in early October. The storm first came ashore on October 7 near the mouth of the Mississippi River in southeast Louisiana as a Category 1 hurricane, then made a second landfall in Mississippi the morning of October 8. Although Nate was considerably weaker than both Harvey and Irma, it has had a significant impact on the oil industry because of the infrastructure that fell in its path.
Oil Production
Refineries
Two refineries shut down entirely in preparation for Nate’s landfall: all monitored units at Chevron’s 330,000 bpd Pascagoula, MS, refinery and Phillips 66’s 247,000 bpd Alliance, LA, refinery were shut on October 6. Meanwhile, several other refineries in Louisiana remained online. Shell originally planned to cut rates at their 233,500 bpd Norco, LA, refinery, but decided it was unnecessary when forecasts shifted the path of the storm slightly east, according to Reuters.
A maximum of 563,000 bpd of monitored primary processing capacity was offline due to Nate on October 7, which paled in comparison to the 3.7mn bpd offline on August 30 due to Hurricane Harvey. However, no Louisiana refineries were affected by Harvey, with the outages occurring in Texas.
Refineries were largely spared by two factors this time around because Nate failed to escalate beyond a Category 1 storm, and many oil facilities in eastern Louisiana lie within leveed areas. In addition, Nate quickly progressed through the Gulf Coast, while Harvey spent several days over the Texas coast.
Waterborne Movements
Gasoline Demand
Hurricane Implications
The onslaught of hurricanes in the Atlantic Basin this year has bombarded daily operations across the oil industry. However, the impact of each hurricane has been unique based on the storm’s path and what oil-related infrastructure was jeopardized.
Hurricane Harvey took its biggest toll on crude demand, as refinery shutdowns along the Texas Gulf Coast overshadowed hampered supply. Hurricane Nate had the opposite outcome, as platform evacuations in the Gulf of Mexico significantly impaired domestic production, while only two refineries ceased operations.
In all cases during the 2017 hurricane season, the transportation of crude was disrupted, hindering barrels from getting to market. Waterborne shipments were blocked by port closures and, in extreme cases, pipelines were shut down.
The hurricane season peaked on September 10 and will be winding down until its official end on November 30, according to NOAA. Though the season is coming to an end, Hurricane Nate has effectively demonstrated the ramifications that even a Category 1 storm can send through the industry. With more than a month left in the 2017 hurricane season, early and accurate information is pivotal in understanding and properly mitigating future and ongoing storm impacts.
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