Home SHALE Feed The Shale Daily Update – 8.27.2020: Laura Slams the Texas/Louisiana Coast

The Shale Daily Update – 8.27.2020: Laura Slams the Texas/Louisiana Coast

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What You Should Know About Oil and Gas Today

The Big Story

Hurricane Laura and its aftermath remain the Big Story for today. As I told reporters yesterday, so long as the storm moved quickly out of the coastal area as it was projected to do, impacts on oil and gas refining and other infrastructure, as well as supply chains should be fairly minimal.

Fortunately, that is exactly what the storm did. Laura landed right at the mouth of the Sabine River, hitting the region from Beaumont over to Lake Charles hard, with high winds and a big storm surge, and then moved rapidly north. As a result, the coastal region has avoided the devastating, flooding rains that shut down so many refining operations for weeks following Hurricane Harvey.

The storm has caused significant power outages, however, with the Houston Chronicle reporting this morning that pretty much all of Orange County is currently without electricity. Orange County is home to several refineries and other oil and gas infrastructure, so we will have to wait and see how that is impacted in the coming hours and days. The Texas Tribune reports that thousands of Texans are also without power in Jefferson and Hardin counties.

Lake Charles, Louisiana, home to refinery infrastructure as well as Cheniere Energy’s Sabine Pass LNG export facility, was hit especially hard by the storm. While reports on any damage to energy infrastructure there are still sketchy, the Baton Rouge Advocate has a report this morning that includes video of part of the roof of the Golden Nugget casino hotel being peeled away by Laura’s heavy winds.

Make no mistake about it: Laura was a brutal, destructive storm and we will see much more reporting about damages emerging as today goes on. The only saving grace about this storm is that it quickly moved along.

Meanwhile, in other news…

Hurricane Laura isn’t the only big story related to Cheniere Energy this morning. Kallanish Energy reports that the Blackstone Group private equity firm has made a huge deal to sell a piece of its take in the LNG giant. Blackstone is selling roughly half of its 41% stake in Cheniere to Brookfield Asset Management for the princely sum of $7 billion, or $34.25 per share. That’s a big deal.

Oklahoma pipeline company Williams becomes the latest big oil and gas company to engage in the virtue-signaling exercise of setting a “zero emissions target” for 2050. According to the Houston Chronicle, the company also set a goat of cutting its emissions by 56% by 2030. Okey-dokey.

Meanwhile, in news that means something real to the environment, natural gas power generation in the U.S. achieved an all-time high in late July. The EIA reports that clean-burning natural gas provided a record 316 gigawatts of power generation across the U.S. on July 27. On that day, natural gas provided roughly 45% of America’s electrical needs in the Lower 48 states.

daily U.S. electricity generation by source

Amazing.

S&P Global Platts reports that Hurricanes Marco and Laura resulted in the shutting-in of roughly 84% of the oil and gas production in the Gulf of Mexico this week. The Gulf currently accounts for about 15% of U.S. oil production and about 3% of the nation’s natural gas.

The Trump Administration’s Bureau of Land Management caused activists’ heads to explode yesterday by announcing it plans to hold a lease sale on federal lands in California before the end of this year. The BLM said it plans to try to auction 7 parcels of land totaling 4,430 acres in Kern County in the central part of the state. Who knows? Maybe they’ll even have some bidders.

Speaking of BLM lease auctions, Reuters reports this morning that a Permian Basin-focused BLM lease sale held in New Mexico yesterday attracted “weaker bids than pre-pandemic levels.” Man, nobody could have seen that coming, right?

That’s all for today.