What a hyperactive hurricane season means for Louisiana’s oil and natural gas industry

The National Oceanic and Atmospheric Administration on Thursday issued its most aggressive Atlantic hurricane season forecast on record.

Due to near-record water temperatures and the development of La Niña conditions in the Pacific, NOAA predicts an 85% chance of an above-average season with between 17 and 25 total named storms. A typical year averages about 14 named storms.

A particularly intense Atlantic hurricane season would pose a significant threat to the U.S. oil and natural gas industry, as refineries along the Gulf Coast—many of which are located in Louisiana—account for nearly half of U.S. refining capacity. Those refineries risk flooding and power outages in the event of a major storm, and many operators will evacuate nonessential personnel and halt production if they believe severe weather might damage facilities or injure employees, according to the Energy Information Administration.

Refineries along the Louisiana Gulf Coast, including 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, and refineries that sustain major damage or flooding may be taken offline for longer periods.

In severe cases, the EIA notes, damage may lead to a refinery permanently closing. Notably, Phillips 66’s Alliance refinery in Belle Chase closed in 2021 after sustaining major damage from Hurricane Ida.

Offshore crude oil and natural gas production units must contend with some of the most severe hazards associated with hurricanes and tropical storms, and they too will evacuate nonessential personnel and halt production if necessary. In 2023, Gulf of Mexico crude oil production accounted for 14% of U.S. crude oil production; Gulf of Mexico natural gas production, 2% of U.S. natural gas production.

According to the EIA, hurricanes could also disrupt supply chains for petroleum products, as fuel supplies are shipped on barges from Gulf Coast refineries such as those in Louisiana and Texas.

All this to say: An intense Atlantic hurricane season has the potential to significantly disrupt oil and natural gas production along the Gulf Coast, and that’s something that could send shockwaves throughout the entire U.S. oil and natural gas industry.