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Texas energy sector okay after Harvey, Fed survey finds

Most of those responding to a survey from the Dallas Fed overshot the federal estimate for total crude oil production.

By Daniel J. Graeber
Texas energy sector okay after Harvey, Fed survey finds
Survey results indicate few long-term impacts to business activity in the Texas energy sector from Hurricane Harvey. Photo by Sgt. 1st Class Malcolm McClendon/U.S. Army National Guard | License Photo

Sept. 28 (UPI) -- Respondents to a survey from the Federal Reserve Bank of Dallas said Hurricane Harvey should have only a modest, but lingering, impact on the energy sector.

Hurricane Harvey hit the southern coast of Texas and the largest density of refineries on the southern Gulf Coast in late August. By now, all of the refineries are back in service, though eight are still operating at reduced capacity. Around 15 percent of total U.S. refining capacity was impacted by the storm at the peak.

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About half of the respondents from 143 energy companies to a survey from the Dallas Fed said they expected minor impacts on their business activity from Harvey.

"Respondents reported widespread but generally limited impacts on their operations due to Hurricane Harvey, and most believe these effects will be gone six months from now," senior economist Michael D. Plante said in a statement. "When asked about the broader energy sector, which includes refineries, many believe there will be some minor lingering effects six months from now."

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The Eagle Ford shale basin in Texas was in Harvey's path, though shale exploration and production company Sanchez Energy said this week its production from Texas shale was accelerating even after the storm. Chesapeake Energy, however, said it expected a shortfall in third quarter production.

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Respondents to the Fed survey said oil and gas production increased for the fourth quarter in a row. Asked about their expectations for total output, about 40 percent said production would range somewhere between 10 million barrels per day and 10.5 million bpd. The federal estimate for next year is 10.1 million bpd.

In general, Plante said oil prices through the middle of September were still considered relatively weak and restraining.

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"Activity levels in the oil and gas sector increased for the sixth quarter in a row, but the pace of growth slowed compared to the second quarter," he said.

For crude oil prices, the average response for a prediction for West Texas Intermediate, the U.S. benchmark for the price of oil, was $50.20 per barrel. The average during the survey collection period, Sept. 13-21, was $49.91 per barrel and WTI was around $52.50 early Thursday.

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