October 10, 2018 / 12:44 PM / a month ago

Michael shuts over a third of U.S. Gulf of Mexico natgas output

FILE PHOTO: An oil and gas drilling platform stands offshore in the Gulf of Mexico in Dauphin Island, Alabama, U.S., October 5, 2013. REUTERS/Steve Nesius/File Photo

(Reuters) - U.S. energy firms reduced natural gas output from offshore wells in the Gulf of Mexico by about 35 percent by early Wednesday as Hurricane Michael approaches the Florida coast, according to data from Refinitiv.

Michael is a dangerous Category 4 storm expected to hit the Florida Panhandle later Wednesday with maximum sustained winds of 145 miles (233 kilometers) per hour.

A week ago, drillers were pulling about 3.4 billion cubic feet per day (bcfd) of gas out of the offshore Gulf of Mexico. On Tuesday, that was down to just 2.2 bcfd, according to the Refinitiv data.

One billion cubic feet of gas is enough to fuel about 5 million U.S. homes for a day.

In addition to the reduction in gas supplies, nearly 40 percent of daily crude oil production was also lost from offshore Gulf wells because of platform evacuations and shut-ins ahead of Hurricane Michael.

Hurricanes, however, do not pack the same punch for the natural gas market as they did in 2005, the most active year for storms when both Katrina and Rita hit the Gulf Coast.

That is because over 60 percent of the gas produced in the United States now comes from shale formations located far from the Gulf of Mexico as drillers figured out how to use hydraulic fracturing and horizontal drilling technologies to extract the fuel from shale rocks.

The United States is projected to produce about 81.0 bcfd of gas on average in 2018 with just 2.7 bcfd, or 3 percent of the total, expected to come from wells in the federal offshore Gulf of Mexico, according to federal data.

In 2004, the year before the active 2005 hurricane season, the federal offshore Gulf of Mexico produced about 10.9 bcfd, which was 21 percent of the nation’s total gas output of 50.9 bcfd that year.

Reporting by Scott DiSavino; Editing by Nick Zieminski

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