The next hurricane could shut down 40% of oil and gas production in the Gulf of Mexico, or even 90%!

A day after Tropical Storm Harold battered South Texas, the flow of natural gas to liquefied natural gas (LNG) giant Cheniere Energy's Corpus Christi export plant in the state fell nearly 30 percent on Wednesday. The amount of natural gas flowing into Corpus Christi fell to about 1.50 billion cubic feet per day on Wednesday from the previous 2.10 billion cubic feet per day, according to Refinitiv.

At full capacity, the three liquefaction plants at the Corpus Christi LNG export plant can cool 2.40 billion cubic feet of natural gas a day into LNG, enough to supply 12 million U.S. homes.

While Chenier Energy officials declined to comment on the plant's operations, a report by Enverus Intelligence Research (EIR), a subsidiary of U.S. energy consulting firm Enverus, estimated that,If a hurricane hits the Gulf of Mexico, about 40% of oil and gas production would be shut down in a moderate-impact scenario, taking seven days to recover. In a high-impact scenario, up to 90% of oil and gas production would be shut down, taking 16 days to recover.

The National Oceanic and Atmospheric Administration has raised its forecast for the 2023 Atlantic hurricane season from near normal to above normal, in part because of record high sea surface temperatures. According to the agency, the Atlantic hurricane season runs from June 1 to November 30,Most of the activity occurs between mid-August and mid-October, with September 10 being the peak of the hurricane seasonAt present, the agency projects a 70% chance of 13-21 named storms, six to 11 of which could become hurricanes, and two to five of which could become major hurricanes.

Monitoring Atlantic hurricanes is important for oil and gas markets, given that Gulf of Mexico oil production accounts for 15% of total U.S. crude oil production and offshore gas production in the Gulf of Mexico accounts for 5% of national production, according to the U.S. Energy Information Administration. More than 47% of U.S. oil refining capacity and 51% of U.S. gas processing plant capacity are located along the Gulf Coast.

The EIR report analyzes the potential for shutdowns, asset losses, and higher oil prices under potential storm intensity scenarios.

In the absence of a direct hit to energy infrastructure, hurricane-related shutdowns have historically not resulted in substantial and lasting changes in oil prices, the EIR noted. In the past, the US Strategic Petroleum Reserve (SRP) responded to Gulf of Mexico well shutdowns by releasing crude oil to make up for lost supply. ButThe current low SPR inventory could weaken its ability to respond to supply disruptions this quarter。

EIR estimation,The average impact of the hurricane season on Gulf of Mexico crude oil production in the third quarter was 3%.EIR is expectedU.S. natural gas prices will continue to be more sensitive to hurricanesIt expects Gulf Coast export capacity to grow by 15 billion cubic feet per day by the end of the decade.

Industrial foreign exchangeAnalysts have warned investors of the potential for severe supply disruptions in energy markets as the Atlantic hurricane season has just peaked. U.S. gasoline futures are up about 14 percent this year, while U.S. crude oil futures are up about 2 percent. The strength in gasoline and diesel has helped reverse losses to energy funds following a banking crisis triggered by the collapse of Silicon Valley Bank in March, according to data from Socie ́ te ́ Ge ́ ne ́ rale and calculations by Reuters.