U.S. Oil and Gas Sectors at Risk Due to Potentially Strong Hurricane Season: EIA

Meteorologists are predicting a stronger hurricane season this year, which elevates risk for weather associated production disruptions in the U.S. natural gas and oil sectors, according to a May 22 report published by the U.S. Energy Information Administration.

Reports from AccuWeather are forecasting around 20 to 25 storms this year, with a likelihood of around 30 or more. Similarly, Colorado State University is predicting 23 named storms during 2024. During the 2023 Atlantic hurricane seasons there were 20 named storms, with only one hurricane making land in the U.S. Storms during the 2023 Atlantic hurricane season had an insignificant impact on production in the U.S. oil and gas sectors.

Hurricanes mainly impact the petroleum sector by interrupting crude oil production and refinery operations. Offshore crude oil in the U.S. is focused in the Federal Offshore Gulf of Mexico (GOM) and is negatively impacted by extreme weather. Offshore oil and gas assets must cope with threats linked with hurricanes and tropical storms, and must adhere to emergency protocols to vacate employees and provisionally cease production.

Crude oil refineries are also impacted by hurricanes in particular regions of the Gulf Coast. Refineries along the Texas and Louisiana Gulf Coast are at risk of power outages or flooding due to major hurricanes and storms. Moreover, hurricanes can negatively impact natural gas production in the GOM, however, recent hurricanes have had a minimal impact on total U.S. natural gas supply, since natural gas production in the GOM has been on a downward trend for a number of years. During 2023, the GOM accounted for less than two percent of total U.S. marketed natural gas production compared to 17 percent in 2005 when Hurricanes Katrina and Rita affected significant volumes of production.

LNG export operations can also be negatively impacted by hurricanes. LNG facilities in general have many layers of defence from direct hurricane impacts, however hurricanes can harm electrical and marine infrastructure, as well as hinder ship activities.

As well as impacting production of oil and gas, hurricanes and tropical storms can disrupt supply chains for petroleum products, leading to deficits in local supply.