HOUSTON, June 1 - Shell Oil Co. (RDSa.L), one of the Gulf of Mexico's biggest oil and natural gas producers, unveiled its hurricane contingency plans on Monday as analysts discounted the potential supply impact of storms because U.S. crude oil and refined product stocks are brimming.
The 2009 Atlantic hurricane season officially began on Monday and runs through Nov. 30. Experts predict it will be a quieter season than last, when 16 tropical storms and hurricanes formed in the Atlantic, Caribbean and Gulf of Mexico.
"We don't bet on the forecast," said Frank Glaviano, vice president of Shell's U.S. offshore operations. "We prepare for the worst and hope for the best."
Shell is the largest natural gas producer and second largest oil producer in the Gulf, which accounts for 15 percent of U.S.-produced natural gas and 25 percent of domestic crude oil output.
Since Ivan in 2004, Katrina and Rita in 2005 and Gustav and Ike in 2008, the industry has learned vital lessons that could bolster facilities against this year's storms, analysts said.
And a global recession has relieved pressure on what for much of 2008 was a drum-tight U.S. oil and refined product distribution system with virtually no extra supply.
"In the current environment, where inventories are so abundant, I have a tough time being concerned about any outages at this point," said Tom Bentz, senior commodity analyst at BNP Paribas Commodity Futures Inc.
Global crude oil demand is down nearly 3 million barrels a day, erasing four year's worth of demand growth, and the market is struggling to digest the biggest spare capacity overhang in 21 years at 6.5 million barrels per day.
U.S. crude oil stocks totaled 363.1 million barrels last week and gasoline inventories stood at 203.4 million barrels, according to government statistics.
Recent hurricane experience also has made federal officials more willing to release oil from the nation's Strategic Petroleum Reserve in supply emergencies such as hurricanes.
During Ivan, underwater mudslides wreaked havoc on pipelines. Katrina and Rita sheared off production platforms and set drilling rigs adrift. Gustav and Ike shut nearly all offshore production.
As a result, Gulf oil and natural gas producers have taken steps to strengthen pipelines, rigs and platforms.
Analysts said there is better coordination between refiners and electric utilities to minimize shutdowns, improved construction standards for offshore production facilities and better mooring of drilling rigs to reduce risks.
"Hurricane-driven disruptions should probably be smaller going forward," said Antoine Halff, first vice president of research at NewEdge Group in New York.
"We learn from each prior experience, and we do what we can to minimize that disruption," said Tom Smith, president of Shell Oil Products U.S. "On the other hand, when Mother Nature comes calling, there may be certain things we can't do."
The 2009 Atlantic hurricane season officially began on Monday and runs through Nov. 30. Experts predict it will be a quieter season than last, when 16 tropical storms and hurricanes formed in the Atlantic, Caribbean and Gulf of Mexico.
"We don't bet on the forecast," said Frank Glaviano, vice president of Shell's U.S. offshore operations. "We prepare for the worst and hope for the best."
Shell is the largest natural gas producer and second largest oil producer in the Gulf, which accounts for 15 percent of U.S.-produced natural gas and 25 percent of domestic crude oil output.
Since Ivan in 2004, Katrina and Rita in 2005 and Gustav and Ike in 2008, the industry has learned vital lessons that could bolster facilities against this year's storms, analysts said.
And a global recession has relieved pressure on what for much of 2008 was a drum-tight U.S. oil and refined product distribution system with virtually no extra supply.
"In the current environment, where inventories are so abundant, I have a tough time being concerned about any outages at this point," said Tom Bentz, senior commodity analyst at BNP Paribas Commodity Futures Inc.
Global crude oil demand is down nearly 3 million barrels a day, erasing four year's worth of demand growth, and the market is struggling to digest the biggest spare capacity overhang in 21 years at 6.5 million barrels per day.
U.S. crude oil stocks totaled 363.1 million barrels last week and gasoline inventories stood at 203.4 million barrels, according to government statistics.
Recent hurricane experience also has made federal officials more willing to release oil from the nation's Strategic Petroleum Reserve in supply emergencies such as hurricanes.
During Ivan, underwater mudslides wreaked havoc on pipelines. Katrina and Rita sheared off production platforms and set drilling rigs adrift. Gustav and Ike shut nearly all offshore production.
As a result, Gulf oil and natural gas producers have taken steps to strengthen pipelines, rigs and platforms.
Analysts said there is better coordination between refiners and electric utilities to minimize shutdowns, improved construction standards for offshore production facilities and better mooring of drilling rigs to reduce risks.
"Hurricane-driven disruptions should probably be smaller going forward," said Antoine Halff, first vice president of research at NewEdge Group in New York.
"We learn from each prior experience, and we do what we can to minimize that disruption," said Tom Smith, president of Shell Oil Products U.S. "On the other hand, when Mother Nature comes calling, there may be certain things we can't do."
