Friday, September 12, 2008

Storm vulnerability in the Gulf of Mexico oil business

Energy Daily: The Gulf of Mexico, where Hurricane Ike churned Thursday, is a hub of the US petroleum industry where a quarter of US crude oil is produced and 40 percent of refinery capacity is concentrated...

The Gulf of Mexico is also home to most of Mexico's oil industry. Mexico pumps 80 percent of its crude oil production -- 3.7 million barrels per day in 2006 -- in the Gulf of Campeche, a part of the Gulf of Mexico west of Yucatan, notably in the giant Cantarell oil field, according to the DoE.

The Gulf of Mexico is particularly exposed to the tropical storms that typically rage between June and the end of November, known as the Atlantic hurricane season. The last hurricane to strike the area, Hurricane Gustav, did not do as much damage to energy installations as was feared but forced the total shutdown of oil production. Refinery capacity was curbed more than 10 percent, experts said. The oil industry was coming back on line when Hurricane Gustav arrived, a little more than a week later.

Analysts at Canadian bank CIBC recently highlighted that the Gulf of Mexico, once seen as the best hope for greater US energy self-sufficiency, was increasingly threatened by severe storms that continue to grow in frequency and strength in the region. "The net result has been a multiyear, and now likely irreversible, decline in oil production from the region. Already down some 300,000 barrels per day from its pre-Katrina peak, Gulf of Mexico production is likely to lose another 200,000 barrels (per day) over the next five years," said Jeff Rubin, chief economist at CIBC....

Map of the Gulf's oil rigs, NOAA, Wikimedia Commons

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