Christina Nyquist Abundant Onshore Natural Gas Supply Keeps Prices Stable During Natural Disasters

Hurricane Isaac has made its way across the Gulf Coast and points north. Local residents and businesses in its wake are struggling with the impact of the storms. This region has seen more than its share of natural disasters and is still recovering from previous incidents.

Unlike previous hurricanes that have impacted the gulf, Isaac’s effect on natural gas prices was unnoticeable, pointing to a new era in market stability. Whereas hurricanes and other severe coastal weather in the Gulf used to signal shortages and price spikes due to interrupted offshore natural gas production, the now abundant supply of onshore natural gas has led to a new reality for the natural gas market.

While natural gas prices rose nearly 14 percent as a result of Hurricane Katrina in 2005, they remained far more stable during Isaac, rising just two percent.

This means the natural gas supply in the United States remained steady, even as operations responsible for about 72.5 percent of daily natural gas production in the Gulf of Mexico were shut down.

AGA sees several factors contributing to this new stability, the key being that we now have an abundant supply of onshore natural gas in the United States. Gas sourced from onshore shale plays now accounts for about 40 percent of domestic production, while offshore production in the Gulf provides less than 10 percent.

Paired with this increased onshore supply, that makes industry less reliant on offshore production, which can be vulnerable to hurricanes and coastal weather systems. Improvements to infrastructure and protection of processing plants have also increased the stability of domestic natural gas supplies. The grid-like structure of the Gulf Coast’s collection and transportation system also allows for gas to be rerouted and for other creative connection solutions, keeping the fuel source flowing.

In the past, influences to offshore facilities were not always long-lasting, but the impact of production interruption could last onshore if key facilities were damaged. “Now, given the current national picture for all supply sources,” says AGA Vice President of Policy and Analysis Chris McGill, “we do not believe there will be serious lingering impacts regarding the ability to serve coming winter heating season markets.”

For those on the ground in the Gulf states, the work continues to restore electric power and respond to storm and flood damage. Natural gas lines run underground, protecting them from strong winds and flooding above-ground. AGA member company Entergy noted that they didn’t experience major damages to their natural gas infrastructure. Still, Entergy crews are working hard to restore service to the hundreds of thousands of customers still without electricity.

While natural gas supply and reliability during natural disasters has improved, we know this doesn’t solve all the issues, some of which are far tougher to endure, that come with hurricanes.Our thoughts are with all those who have experienced difficulties and loss due to Hurricane Isaac as they continue to cope with the storm’s effects.

Christina Nyquist

About Christina Nyquist

Christina Nyquist is the Communications Specialist for the American Gas Association. Prior to joining AGA, Christina served as a Writer/Editor and Public Affairs Specialist at the United States Geological Survey (USGS). Christina holds a master’s degree from the George Washington University School of Media and Public Affairs.
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