As Tropical Storm Hilary downgrades from a hurricane but continues to flood parts of Mexico, California and the Southwest U.S., Enverus Intelligence Research (EIR), a subsidiary of Enverus, has released a report assessing the impact of Atlantic hurricanes on the U.S. Gulf of Mexico (GOM) and its oil and gas production.
The National Oceanic and Atmospheric Administration has increased its prediction for the 2023 Atlantic hurricane season from a near-normal level to an above-normal level of activity, partially due to record high sea surface temperatures. EIR's report analyzes the potential for production shut-ins, loss of assets and oil-price upside under potential storm strength scenarios.
"Should a hurricane disrupt oil and gas production in the GOM, EIR's mid-impact case estimates 40% of total GOM production would be shut in and take seven days to recover; and a high-impact case estimates 90% shut-in and 16 days to recover," said Marvin Ma, report author and vice president at EIR.
Absent a direct hit on energy infrastructure, EIR points out that hurricane-related shut-ins historically have not led to material and durable changes to oil prices. In the past, the U.S. Strategic Petroleum Reserve (SRP) has responded to the GOM shut-ins with releases to offset supply losses. But depressed SPR stocks could weaken its ability to respond to any supply disruptions this season.
