Hurricane Ivan Threatens Energy Production in Gulf

From AccuWeather Hurricane Center —

Hurricane Ivan’s westward drift is now threatening US oil and gas production. Article describes the possible impacts.

Hurricane Ivan Threatens Energy Production in Gulf
Off-Shore Oil and Gas Facilities Will Feel First Effects of Storm that Will Bring Destruction from Florida to Eastern Great Lakes States

(State College, PA – September 13, 2004) – AccuWeather.com Hurricane Center meteorologists warned today that Hurricane Ivan may bring Florida a storm that combines the worst aspects of the two previous devastating storms in Florida, Hurricanes Frances and Charley. In addition, there is grave concern that catastrophic flooding will occur after landfall from Florida, Georgia and Alabama into the Carolinas and possibly further north.

Oil and gas production off the Central Gulf Coast will be the first business sector to feel the impact of Hurricane Ivan now that the probable track of the dangerous Category 5 hurricane has shifted away from the Florida Peninsula.

The size and power of Hurricane Ivan make it prudent to evacuate oil and natural gas rigs across a wide area in the Gulf of Mexico. Since Ivan is a very slow-moving storm, it may be the middle of next week before the rigs are operational again. This is expected to cause a shortage of crude and natural gas, since oil wells in the Gulf of Mexico account for 30% of the total U.S. output.

Crude oil pricing has already been very volatile over the last several weeks, mainly because of the events in the Middle East. It rose as high as $48 a barrel, before dropping back to near $40 and is now fluctuating at the lower part of that range.

Because natural gas is more influenced by regional and local factors then is the case for the worldwide crude oil market, Ivan may have a proportionately greater effect on natural gas. Ivan is threatening to put wells out of production for as much as 10 to 15 days, just as inventories are being built up for the winter. If Ivan indeed significantly reduces gas production for a period to time, the country will go into the winter with less in storage than had been anticipated.

Ivan’s westward shift appears to have ended the threat of further storm damage in the orange-growing regions of Florida. Hurricanes Charley and Frances recently caused the loss of 15% to 25% of the orange crop. In the past, when freeze damage caused crop losses of a similar magnitude, the price of orange juice went up 50% to 100%. Prices last week rose over 40%, but have dropped since last Friday, apparently due to the passage of the threat from Hurricane Ivan.

This is a life-threatening situation over a large portion of the East, and all interests in the eastern and central Gulf of Mexico, Florida, and the southeast U.S. are urged monitor the AccuWeather.com Hurricane Center updates on AccuWeather.com. In addition, severe weather alerts, radar maps and satellite images are available to cell phone users who subscribe to AccuWeather.com wireless products.

NOTE TO EDITORS: Hurricanes tracks and strengths can change rapidly with little notice. To get the most up-to-date information on these and future tropical threats, contact 814-235-8650 to speak with an AccuWeather.com Hurricane Center expert meteorologist.

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