Energy companies found little damage to their U.S. facilities during initial checks Tuesday in the wake of Hurricane Gustav — signaling a possible fast recovery from the biggest storm to threaten the oil sector since hurricanes Katrina and Rita in 2005.
Oil prices dove more than $5 to below $110 a barrel — the lowest level in five months — as reports trickled in from oil companies and government officials that platforms, pipelines and refineries appeared to have been spared.
“The market is breathing a sigh of relief that Gustav hit much weaker than originally forecast,” said Chris Jarvis, senior energy analyst at Caprock Risk Management in Hampton Falls, New Hampshire.
All 1.3 million barrels of oil production in the Gulf of Mexico — which accounts for a quarter of the nation’s output — remained shut Tuesday, a day after Gustav hit land near New Orleans, according to a government report.
But companies said production could start to ramp up by the end of the week if there is no significant damage, and the U.S. Coast Guard said overflights of the offshore oil fields revealed no evidence of problems.
A full return to U.S. production could take two weeks, U.S. emergency officials told a news conference Tuesday, in stark contrast to the several months it took production to recover after the devastating hurricanes of 2005.
Onshore, about a third of the nation’s refining capacity was either shut or slowed down by the storm, though initial checks showed that many of the plants appeared to have sustained little or no damage.
Some refiners said, however, that any restart attempts at those plants would depend on the restoration of reliable power supplies and the resumption of imports through waterways and ports that had been closed by the effects of the storm.
The Louisiana Offshore Oil Port, the nation’s only deepwater foreign crude tanker port, remained shut on Tuesday without a date for restarting operations as workers began preliminary checks of onshore and offshore facilities.
Most other key U.S. waterways from Houston to Lake Charles, Louisiana, were reopened.
Citgo Petroleum, a refining company owned by Venezuelan state oil company PDVSA, asked the U.S. Energy Department on Tuesday for 250,000 barrels of oil from the Strategic Petroleum Reserve for its refinery in Lake Charles, the U.S. government said Tuesday.
Citgo is the only oil company so far to ask for oil from the petroleum reserve, the government said, though Louisiana Gov. Bobby Jindal said Exxon Mobil and Shell Oil might also make requests for emergency crude.
Exxon Mobil and Shell said Tuesday that they were considering their options.
(Additional reporting by Janet McGurty, Richard Valdmanis and Robert Campbell in New York, Bruce Nichols, Eileen O’Grady and Chris Baltimore in Houston)
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