Bloomberg News

Hurricane Isaac Pounds Louisiana as Energy Prices Drop

August 29, 2012

Hurricane Isaac will linger over Louisiana with heavy wind-driven rain for two days while reducing the threat to offshore energy production.

Natural gas futures in New York dropped to the lowest price in almost 10 weeks after Isaac’s landfall reduced concern that the storm would damage pipelines and platforms in the Gulf of Mexico. Oil also fell.

“In the oil rig areas, the conditions there aren’t going to let up until Friday,” said Jeff Masters, co-founder of Weather Underground in Ann Arbor, Michigan. “The winds over the water are going to be stronger than over the land. They are just going to have to wait. It’s going to be a patience game with this storm.”

Isaac, pounding the New Orleans area on the seventh anniversary of Hurricane Katrina, was 75 miles (121 kilometers) southwest of New Orleans at 10 a.m. local time, the National Hurricane Center said in an advisory. Its top winds were at 75 mph, making it a Category 1 hurricane on the five-step Saffir- Simpson scale.

“It is moving very slowly, it is just drifting about the south Louisiana coastline, so they are just going to get pounded with wind and rain for quite some time now,” said Dan Pydynowski, a meteorologist at AccuWeather Inc. in State College, Pennsylvania. “The areas that are getting hit hard right now will continue to take a pounding through most of the day today.”

Gulf Impact

Isaac has halted 93 percent of U.S. oil production in the Gulf and 67 percent of natural-gas output, and forced evacuations from 503 production platforms and 49 rigs, the Bureau of Safety and Environmental Enforcement said yesterday. Six Louisiana refineries were shut and three were running at reduced rates, idling 6.7 percent of U.S. capacity, according to data compiled by Bloomberg.

Natural gas for September delivery fell 0.6 cents, or 0.2 percent, to $2.608 per million British thermal units at 10:53 a.m. on the New York Mercantile Exchange. Prices earlier dropped to $2.575, per million Btu, the lowest since June 22. Crude oil for October delivery declined $1.04, or 1.1 percent, to $95.29 a barrel, extending losses after stockpiles rose unexpectedly.

The Gulf region is home to 23 percent of U.S. oil output, 7 percent of natural gas and 44 percent of refining capacity.

Surge, Rain

Isaac unleashed a storm surge into southern Louisiana and Mississippi that is raising sea levels to 12 feet (3.7 meters) above normal. The rising water pushed over the top of a levee in Plaquemines Parish.

Seven to 14 inches of rain may fall and some areas may receive as much as 20 inches, the hurricane center said.

Pydynowski said that since the storm is lingering near the coast, it will take some time to weaken. It may retain its hurricane strength for hours because the swampy land of southern Louisiana is full of warm water that can fuel a storm, he said.

A wind gust of 67 mph was reported at Lakefront airport on the south shore of Lake Pontchartrain near New Orleans, the hurricane center said at midnight.

A hurricane warning is in effect from Morgan City, Louisiana, to the Mississippi-Alabama line, including New Orleans.

Hurricane Katrina stuck New Orleans and the Gulf Coast on Aug. 29, 2005, swamping the city’s levees and killing more than 1,800 people.

Tropical Storm Kirk, the 11th named Atlantic weather system this year, is 1,220 miles east-northeast of the northern Leeward Islands and no threat to land, the National Hurricane Center said in a separate advisory. It has maximum sustained winds of 45 miles per hour and is moving at 9 miles per hour.

To contact the reporters on this story: Brian K. Sullivan in Boston at bsullivan10@bloomberg.net; Matthew Brown in London at mbrown42@bloomberg.net.

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net


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