Hurricane Ivan so far has knocked out more than 55.5 Bcf of natural gas because of production shut-ins in the Gulf of Mexico (GOM), and may have at least temporarily reversed what had been a very negative price momentum in the gas market between mid-August and September, according to the latest statistics from the Minerals Management Service (MMS).

The MMS reported Wednesday that the estimated cumulative loss from Ivan-related shut-ins was 55.539 Bcf, equivalent to 1.25% of the yearly production of gas in the Gulf of Mexico (GOM), which is 4.45 Tcf. The shut-in gas production is equivalent to 18.88% of the daily gas production in the GOM, which is approximately 12.3 Bcf/d. Gas production shut ins have stabilized at about 2.3 Bcf/d over the last week. According to MMS, there are still 39 platforms and two rigs evacuated.

Mississippi-based Stephen Smith Energy Associates noted that through Sept. 24, there was “growing concern that there might be insufficient gas storage capacity to hold the gas storage level that appeared likely for Nov. 1.” However, the impact of Ivan “turned out to be more severe and more extended than original expectations.”

What was not well noticed until the gas storage report was issued on Sept. 23 was the weak demand from unseasonably mild September weather that had largely offset the reduced supply effects of Ivan, according to the Smith report. Between Sept. 10 and Sept. 24, combined heating degree days were 60% below normal, and as a result, storage increased by a combined 36 Bcf more than it would have increased if the weather were normal.

The Smith report noted that demand reduction caused by the mild September weather “roughly offset the cumulative Ivan-related supply reduction thus far.” Through Sept. 24, the shut-ins had amounted to 41 Bcf. “On balance, if our projection for Sept. 24 is correct, the gas storage surplus [compared to historical averages] will have actually increased by 7 Bcf [between Sept. 10-24] from 236 Bcf to 243 Bcf.”

The EIA said in its last storage report for the week ending Sept. 17, that there was 2,942 Bcf of working gas in storage, which was 188 Bcf more than the five-year average. Consensus estimates for the injection in the next storage report are centered on about 70 Bcf.

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