The National Oceanic and Atmospheric Administration has issued its most aggressive Atlantic hurricane season forecast on record, predicting an 85% chance of an above-average season with between 17 and 25 named storms. This forecast is due to near-record water temperatures and the development of La Niña conditions in the Pacific.
This intense hurricane season poses a significant threat to the U.S. oil and natural gas industry, particularly refineries along the Gulf Coast. Refineries in Louisiana, which account for nearly half of U.S. refining capacity, could face flooding and power outages in the event of a major storm. Operators may evacuate nonessential personnel and halt production to prevent damage to facilities or injuries to employees.
Refineries in Louisiana, like ExxonMobil’s Baton Rouge refinery, account for 3.3 million barrels per day of refining capacity. More than 1 million bpd of capacity could be taken offline in anticipation of a major storm. In severe cases, damage may lead to a refinery permanently closing, as was the case with Phillips 66’s Alliance refinery in Belle Chase after Hurricane Ida in 2021.
Offshore crude oil and natural gas production units in the Gulf of Mexico will also evacuate personnel and halt production if necessary. In 2023, Gulf of Mexico crude oil production made up 14% of U.S. production, while natural gas production accounted for 2%.
Hurricanes could also disrupt supply chains for petroleum products, as fuel supplies are shipped from Gulf Coast refineries. An intense Atlantic hurricane season has the potential to significantly disrupt oil and natural gas production along the Gulf Coast, impacting the entire U.S. oil and natural gas industry.
