US Gulf may enter calmer period for storms

The US Gulf of Mexico may emerge unscathed from the Atlantic hurricane season for the first time in more than two decades, signaling a calmer future for storm activity in that energy-rich region.

No tropical storms or hurricanes have moved into the US Gulf this year and operators have yet to suffer any storm-related production disruptions during the 2014 storm season, which ends 30 November. The last time the Gulf was free of shut-ins was 1991, which was also the last year that no storms threatened the area, according to the US Bureau of Safety and Environmental Enforcement and the private forecaster Commodity Weather Group.

The 2013 hurricane season produced just two hurricanes, the fewest since 1982. In addition, there were no major hurricanes during that season and no significant production disruptions.

Chris Coleman, meteorologist at Texas power grid overseer Electric Reliability Council of Texas, said that warmer waters in the Pacific are deterring the formation of tropical storms in the Atlantic — leading to the recent quiet seasons and ending a 20-year period of high tropical storm activity in the Atlantic.

"We are starting to see a downturn in the average number of tropical storms and hurricanes. We think we will continue to see this for the next 20 to 30 years. There will always exceptions, but on average you will see lower average [number of storms]," Coleman said.

Commodity markets pay close attention to storm activity that can affect oil and natural gas production or energy infrastructure in the US Gulf. The US Gulf last year contributed 17pc of total US crude production and 5pc of US marketed gas production, according to the US Energy Information Administration (EIA). The UG Gulf is also home to 45pc of US refining capacity and 31pc of gas processing capacity.

The chances that a storm will enter the Gulf in the coming weeks are becoming slimmer as the hurricane season draws to a close.

"We have never had a major hurricane in the Gulf past the first week of October," Commodity Weather Group president Matt Rogers said.

Storms have had less influence on energy prices in the years since hurricanes Katrina and Rita created market havoc in 2005, because so much US oil and gas development has migrated to onshore shale fields. But hurricanes can cause fuel shortages and price spikes in regional markets for refined products. They can also lead to widespread power outages, limiting oil and gas demand.

The EIA had projected that storms this year would curb oil and natural gas production from the US Gulf by 11.6mn bl and 29.7 Bcf (841mn m³), respectively. Those predictions were up from the 2013 storm-related shut-ins of 3.1mn bl of oil and 6.7 Bcf of gas shuttered in the 2013 season.

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