The process of making gas and oil production fully operational in the Gulf of Mexico once again, stalled on Sunday, as Hurricane Ike came barrelling towards the region.
Ike, the second hurricane in as many weeks to swirl through the Caribbean, is set to enter the gulf on Tuesday prompting all too familiar fears over oil supplies.
In the wake of Hurricane Gustav, only about 20% of oil output and about 30% of natural gas production had been restored by this weekend. Virtually all hydrocarbons output in the U.S. Gulf were shut down ahead of Hurricane Gustav.
The U.S. Minerals Management Services (MMS), said on Sunday: “Offshore oil and gas operators in the Gulf of Mexico who are re-boarding platforms and rigs and restoring production following Hurricane Gustav are now starting to take precautions for Hurricane Ike.”
Workers in the U.S.’s energy rich region must not know whether they are coming or going.
Ike is currently a Category 4 storm with sustained winds of 135 miles an hour and is creating surges of as much as 18 feet above normal tide levels. Those swells will likely hit portions of the Southeast United States over the next couple days.
The markets' reaction to Gustav was somewhat muted, partly due to concerns about reduced demand for oil and gas from an already weakening economy, said Guy Gleichmann, the President of United Strategic Investors Group, a Hollywood, Florida - based energy brokerage.
But, now that crude and natural gas futures have tumbled, the energy markets could rise sharply should Ike become a cause for concern to supplies. Mr Gleichmann, said: “We have a stronger chance of a rally than we did with Gustav.
“A lot of the economic negativity has already been priced into the market,” he added.
Light, sweet crude oil for October delivery fell 8% last week to a five-month low of $106.23 a barrel on the New York Mercantile Exchange.
Oil futures had edged upwards in the days leading up to Hurricane Gustav – before it hit the Louisiana coastline on September 1 - but sold off after it became apparent that the storm didn't significantly damage energy infrastructure. Natural gas futures rallied ahead of Hurricane Gustav, reaching a high of $8.808 a million British thermal units on August 28.
So far, in preparation for Ike, more than a quarter of the personnel from the 717 manned platforms in the Gulf of Mexico have been evacuated, and 10 of the 121 Gulf rigs have had staff removed, according to the MMS.
Although not fully operational from before, nearly 80% of all oil production in the Gulf, or about 1.3 million barrels per day (bpd), has been shut down, according to the MMS. About 70% of all natural gas production is off, or about 7.4 billion cubic feet.