Weakened storm spares most Gulf oil operations
Energy analysts and traders were cautiously optimistic Monday that the Gulf Coast oil complex had dodged a potentially devastating blow.
A weakened Hurricane Gustav came ashore about 70 miles southwest of New Orleans, passing over the key Louisiana Offshore Oil Port but missing areas most heavily populated with oil and natural gas drilling rigs and production platforms.
Risk Management Solutions, which provides damage assessments for insurance companies and others, on Monday said it expected the less-severe Hurricane Gustav to cause from $1 billion to $3 billion in losses among offshore oil platforms and wells. On Sunday, the company had estimated $2 billion to $7 billion in damages.
“Gustav weakened from a category 4 hurricane to a category 3 storm before blustering into the platforms,” RMS’ Christine Ziehmann said. “The platforms tend to be fairly resilient to category 3 level winds.”
Little will be known for certain until energy companies can deploy workers to refineries and production platforms, but oil investors appeared to see Gustav’s threat to energy supplies as greatly diminished Monday. Crude for October delivery fell $4.34 to $111.12 a barrel in late afternoon electronic trading on the New York Mercantile Exchange.