Ike and the Oil Rigs

Hurricane trackers at the National Hurricane Center continue to update the path of Hurricane Ike, which now looks as if it will graze the area of the Gulf that has the densest concentration of oil and gas platforms. Click the thumbnail to see the path of the storm overlaid on a map of oil platforms.

Ike is still a category 2 hurricane with winds of 100 mph, but is expected to strengthen into a "major" category 3 hurricane before making landfall at around midnight Friday (tomorrow).

Expect Record-High Heating Bills This Winter

Heating a home in Santa Fe with natural gas this winter will be more expensive than ever before, according to the nonprofit Local Energy. The cost of heat generated by a typical natural gas furnace, including tax, is expected to be $16.35 per MMBTU, which is about 16 percent higher than last year. Don’t expect that record to last, however. For the past ten years, the cost of heating with natural gas in Santa Fe has been rising at an average rate of nearly 14 percent per year.

As Natural Gas Declines, Drilling Rises

New gas wells just aren’t what they used to be. Even after drilling more than 300,000 new natural gas wells over the last 35 years, the U.S. produces less natural gas now than it did back in 1973. Putting more holes in the ground doesn’t make more gas – in fact, quite the opposite. Just ten years ago, the U.S. was drilling about 11,000 new wells per year to maintain a production rate of 20 Quads of gas per year – a rate that hasn’t changed in more than thirty years. Today, drillers must complete three times that many wells to produce the same amount of gas.

Despite the furious pace of drilling, the amount of natural gas in storage for winter is about 5 percent lower than it was at this time last year, according to the Energy Information Administration. If the injection season finishes poorly, or drilling platforms and pipelines in the Gulf of Mexico sustain a big hit from Hurricane Ike this weekend, the price of natural gas could skyrocket this winter the way it did back in 2001. The difference this time is that our ability to respond with increased drilling is limited.

Waiting for Hurricane Ike

Forecasters at the National Hurricane Center continue to update the projected path of Hurricane Ike, and now it looks as if it may pass directly through the heart of the Gulf of Mexico’s oil and gas rigs. Ike is a giant, slow-moving storm with hurricane-force winds extending outward up to 115 miles from its center. Currently a category two storm with 100 mph winds, it is expected to strengthen before making landfall in Texas late Friday night.

About two-thirds of the natural gas production in the Gulf remains shut since last week, when Hurricane Gustav passed through.