For the past decade, Houston and the wider US Gulf have been at the centre of the country’s shale revolution. Over the past fortnight, the region has found itself devastated by the first major hurricane to make landfall in the US since 2005, forcing the closure of a third of the country’s refinery capacity, and oil and gas production across Texas and Louisiana.
Two of Royal Dutch Shell’s (RDSB) deep water facilities have been affected by Harvey, according to chief executive Ben van Beurden. A restart of the oil major’s refining and petrochemicals complex at Deer Park, Houston, which processes 325,700 barrels of crude a day, was only just being prepared at the time of writing. Elsewhere, flooding in downtown Houston meant the US headquarters of BP (BP.) and ConocoPhillips (US:COP) remained closed as of this week, according to local media.
One London-listed company may have been particularly hard hit. On 30 August, Pantheon Resources (PANR) warned that Harvey’s path could pass its projects in Tyler and Polk counties, north-east of Houston. The Aim explorer acknowledged that suspension of its operations would result in delays to drilling at its VOBM#2H and VOBM#4 wells, although there had been no further update on potential damage to wellheads or associated facilities as we went to press.
For others, the wider ramifications were gradual, and may yet be unmasked through the steady release of US storage data. The latter has been a key indicator for oil markets, which are continually sizing up the force of US onshore production. Concerned that a sudden drop in processing demand from shuttered refineries could lead to a fall in crude prices, some commodity traders initially viewed Harvey as a bearish event.
But with Gulf refineries, pipelines and ports restarting, and the US government forced to release 4.5m barrels of crude from its strategic reserves, the short-term pricing outlook for oil producers has brightened. Indeed, the S&P 500 Energy Index (SP500-10) – a composite of the largest US-listed explorers and producers (E&Ps) – is up 3 per cent since Harvey made landfall. At $53.83 a barrel, Brent crude is at its highest point since May.
