The Energy Department’s Energy Information Administration (EIA) said last Tuesday that it expects a total of 11.3 million bbls of crude oil and 78 Bcf of natural gas to be shut in in the Gulf of Mexico during the 2008 hurricane season.

The prediction is based on the results of a Monte Carlo hurricane outage simulation, which is conditioned on how the National Oceanic and Atmospheric Administration’s (NOAA) most recent predictions for the level of Atlantic basin hurricane activity compare to historical activity, the EIA said.

The simulation indicated only a less-than-1% probability of experiencing seasonal outages similar to 2005, when Hurricanes Katrina and Rita struck the Gulf Coast and caused a cumulative production loss of more than 100 million bbls of crude oil and nearly 600 Bcf of natural gas, according to the agency.

“[The] EIA projects the chance that offshore production in the federally administered Gulf of Mexico will be impacted this year is 98% for both crude oil and natural gas,” it said in the report on hurricane production outages.

The agency said it expects the Gulf to experience 4-5.3 named storms, 1.7-2.5 total hurricanes and 0.6-1.5 intense hurricanes (Category 3 or greater) during the season, which runs until the end of November.

Most forecasters have said they foresee an active Atlantic hurricane season this year. Colorado State University (CSU) forecasters recently said there is a 44% chance that a major hurricane will make landfall on the Gulf Coast from the Florida Panhandle west to Brownsville, TX (see NGI, June 9). The CSU team forecast a total of 15 named storms forming in the Atlantic Basin — not all of them necessarily making their way into the Gulf — with eight of the storms likely to become hurricanes and four of those hurricanes expected to develop into intense or major hurricanes. meteorologist Joe Bastardi said Gulf of Mexico interests can expect seven to 10 days with at least the threat of weather disruptions (see NGI, May 19).

The EIA estimates that a moderate hurricane would result in a mean average outage of 1.4 million bbls of crude oil and 9.56 Bcf of natural gas, while an intense hurricane would cause a mean average outage of 12.1 million bbls of crude oil production and 72.9 Bcf of natural gas.

The agency offers two numbers — mean and median — for the anticipated cumulative loss of production this hurricane season. The median calculation projects 11.3 million bbls of crude oil and 78.4 Bcf of natural gas will be shut in during the season. The mean estimate forecasts production outages of 21 million bbls of crude oil and 129.4 Bcf of natural gas.

“This skewness [between the two numbers] occurs because the simulation allows for the possibility of another season like 2005. Given that such outcomes represent extreme outliers and the vast majority of simulated outages are comparatively low, the median statistic is a better representation of expected levels of shut-in production,” the EIA said.

The agency sees only a 10% chance of 53.1 million bbls of crude and 319.6 Bcf of gas being shut in, and a 5% chance of 67.5 million bbls of crude and 392.4 Bcf of natural gas being shut in.

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