Following on this post from yesterday, Chevron Corp.’s announcement that its Typhoon tension leg platform was severed from its moorings by Hurricane Rita and is floating upside down in the Gulf of Mexico dovetailed with the news that natural-gas futures on the New York Mercantile Exchange skyrocketed 10% to almost $14 per million British thermal units, which is its highest closing on record.
Thus, if it’s going to be a long, cold winter in the U.S. hinterlands this winter, then it’s looking increasingly as if it’s going to be a long, cold, expensive winter.
Natural-gas futures on the Nymex for delivery in October rose $1.251 to $13.907 per million BTUs. The expiration of the October contract at the same time that the delivery point for Nymex futures, Louisiana’s Henry Hub, which has been closed down for the past week, added to the uncertainty and volatility in the market.

As a result, the Natural Gas Supply Association — an association that represents producers and marketers — issued this alert (pdf) that colder weather in the East combined with hurricane-related supply disruptions along the Gulf Coast will likely translate into substantially higher natural-gas prices across the U.S. this winter. The damage from the two major hurricanes in the Gulf over the past month have delayed or halted production of about 5% of the annual U.S. production of natural gas from the Gulf of Mexico, and that reduction in domestic natural gas production cannot be readily replaced with imports.
As for the Typhoon platform, it is floating upside down after the deep-water facility took a direct hit from Rita. Although Chevron has not announced whether the massive platform can be salvaged, my sense is that it’s probably a total loss because its engines, pumps and living quarters are probably unsalvageable. The Typhoon is located in 2,000 feet of water in the Green Canyon area approximately 165 miles south-southwest of New Orleans.
Along those same lines, The Oil Drum provides this summary of the status of the known damage to drilling and production facilities in the Gulf of Mexico.