Van Santos

The Weather Research Center, a 22 year old non-profit organization, has released their predictions for the 2009 Hurricane season.  This is interesting news as the Oil production community tends to rely on the WRC’s information to help gauge/predict potential impact on production for the coming year.  Obviously, not an exact science, but still something to pay attention…

So, what does the WRC predict for 2009?

• Number of Named Storms: 7
• Number intensifying into Hurricanes: 4
• Number of Hurricane Days: 7
• Number of Tropical Storm Days: 47
• US Landfalls: 3
• Cat 3 or Higher Storms in the Atlantic: 50%

The WCR suggests the highest risk of landfall for a Tropical Storm or Hurricane is from Louisiana to Alabama with a 70% Chance.  Mighty close to the oil production centers in the Gulf of Mexico.

When Hurricane Ike pushed through the Gulf of Mexico in 2008, the price of oil continued the previously established downward pattern.  Now that oil is range bound from $35 to $45 dollars, and OPEC has cut output drastically, what would happen to the price of oil if a major storm hit production centers in the Gulf?

Note: page down on the article after you click through.

Who cares if it’s on purpose, and staged, the wave makes all the difference! Don’t get me wrong, it’s foolish on the guys part, and he may be an attention whore, but cool looking none the less.

With Ike hitting the U.S. late Friday night / Early Saturday morning, the news and picture of the aftermath are now coming out.

Initial news reports are indicating the economic damange, mainly due to the fact that oil infrastructure seemed to have been missed, is much less than had been expected.   The major problem facing the areas hit by the storm is the lack of power, roughly 2.6 million customers in Texas and Louisiana are out of power.

Interested in some pictures of the aftermath?  Chron.com has a nice wrap up.

This is worth reading - Melissa Clouthier was Live Blogging her Hurricane experience.

If you are interested in the Hurricane and the impact to oil, check out The Oil Drum. They have data showing what Oil rigs are out of order due to the storm.  Outstanding write-up, great read and a new add to my “must read” list.

From the you get what’s coming to you file:

A stubborn few decided to defy orders to leave. Emory Sallie, 44, of Galveston, said he had braved storms in the past and didn’t think Ike would be any different. He didn’t believe the dire warnings - he was more worried about the wind, not the flooding. “If the island is going to disappear it has to be a tsunami,” he said, as he walked along the block where his home is located, drinking a beer and smoking a cigarette. “If it ain’t your time you ain’t going anywhere.”

I mean… come on now.

If you’ve ever wanted to feel small, just take a look at this:

Hurricane Ike over Cuba

This is a picture that NASA took as Ike passed over Cuba. Now realize that the storm has doubled in size since this picture was taken. Amazing. Simply amazing.

The storm looks to be on track to his Houston at some point this evening. With nearly a million people moving out of Ike’s path, gas prices on the rise due refinery shut downs, and 15 foot storm surge expected, this will be a wild weekend for some in Texas.

Here is the current model…

Others talking about the storm:

Hurricane Ike Resources
Jonny Torres - Ike video coming ashore
Diary of a Mad Poker Player - Hurricane Ike
Symonsez - Hurricane Ike Not Intense But Has Serious Muscle

I had been expecting oil to rise as Ike moved into the Gulf, but for a range of reasons that is not happening.  What did happen is the spike in Gas prices:

“The wholesale price of gasoline ranged from $4 to nearly $5 a gallon at the U.S. Gulf Coast on Thursday…That is up significantly from about $3 to $3.30 a gallon on Wednesday…The wholesale price of gasoline is what refineries charge retailers. Retailers then mark up those prices for the customer so they can make a profit — so if these wholesale prices hold, it could mean that pump prices for U.S. drivers easily break through the July 17 record of $4.114 a gallon.”

If the storm continues to head north, I would expect Gas, Oil and Natural Gas to increase in price.  Who knows these days, it’s a wild market right now!

As I had mentioned previously, the storm track for Ike seems to change by the hour.  Models have the system moving back toward Houston about 24 hours after it looked as if Ike was going to the US/Mexican border and a Hurricane warning is extended almost to New Orleans.

The evacuation orders in Texas are also starting, and Houston is starting to feel the worry that a storm of this size can bring.  What really surprises me is, with nearly 96% of oil production off line in the Gulf, the price of oil continues to decline.  That says a lot, I believe…

More to come.

I’m not a meteorologist, nor do I play one on TV, but I am really surprised at how quickly hurricane Ike’s projected path changed in a matter of hours. In the last two days the storm went from hitting New Orleans to just about hitting the US / Mexican border. The surprise, for me, is the path changed significantly from this morning – in a matter of 4 hours.

When I first logged on all models were showing Houston was still the target of the storm but come lunch time it’s Corpus Christi. That’s a big difference in a short period of time which says to me one shouldn’t underestimate where this guy is going.

Think about it – the models are changing so quickly, so dramatically, anything could happen in a matter of hours. While targets have it trending west and south into less populated areas, the Gulf should still fear a turn to the north.

Never underestimate Mother Nature.

Here is the current storm path:

First the good news - models suggest New Orleans looks to miss the brunt of Hurricane Ike.

The bad new - compare the storm track above with the Gulf Coast Oil platforms and you’ll see the production area is on the east side of the storm, not a good area to be. I’m surprised oil prices managed to stay below $110 with the storm on the way. Maybe the oil bubble is over, maybe the market really doesn’t think this will hurt production…

The really bad news - Houston could be the new target of the storm.

Ike slammed into the Bahamas causing serious damage, hurt the relief efforts already underway in already suffering Haiti, and just went ashore in Cuba roughly an hour ago.  The storm is now a Category 3 Hurricane, down froma 4, and is expected to come in to the Gulf of Mexico on Tuesday or Wednesday.

The current storm track can be found here and here.  Storm models show Ike drifting east or west of New Orleans, which can give the city a break but can mean trouble for Houston, Mississippi or Alabama.

Something to keep in mind: the price of oil.  NYMEX Crude and Nymex Henry Hub Futures (Natural Gas) are both up 2.26 and 3.0% respectively.  If the storm causes a shutdown of oil / gas production and OPEC cuts oil output expect the prices to rise.

Update: Oil Price Coverage

• WSJ - Energy sector Hums Again
• Reuters - Oil rises over $2 to top $108 on hurricane threat

  From the Reuters article…

Hurricane Ike is expected to enter the Gulf of Mexico as a severe Category 4 storm, a U.S. Federal Emergency Management Agency official said on Sunday. It may threaten Gulf energy rigs that account for a quarter of U.S. oil output and 15 percent of natural gas production.

• AP - Gulf oil and gas producers give Ike a serious look

With nearly 88 percent of crude-oil and 74 percent of natural-gas output shut due to Hurricane Gustav, it is easy to see how Ike could shut down all production once again.