Updated with reporting by Hart Energy staff and Reuters on Aug 31.

As Harvey’s ruinous path moved east Aug. 30, Eagle Ford Shale production remained in limbo as flooding and damage to midstream and downstream infrastructure remained the likeliest obstacles to resuming production.

Many U.S. Gulf Coast ports remained shut and more Texas refineries were reported closed as Harvey headed toward Lake Charles, La., with tropical storm winds.

U.S. crude oil prices are on track to post the steepest monthly losses in more than a year on Aug. 31 as concerns spread over falling demand in the world’s top oil-consuming country after storm Harvey knocked out almost a quarter of its refineries.

But prices rallied in the oil products markets, with U.S. gasoline futures hitting a two-year high above $2 a gallon, buoyed by fears of a fuel shortage just days ahead of the Labor Day weekend that typically sees a surge in driving.

Harvey, which brought record flooding to the U.S. oil heartland of Texas and killed at least 35 people, has paralyzed at least 4.4 million barrels per day (MMbbl/d) of refining capacity, according to company reports and Reuters estimates.

Traders from Europe to Asia were scrambling to fix fuel cargoes to the U.S.

Goldman Sachs said it could take several months to restore all production.

“While no two natural disasters are similar, the precedent of Rita-Katrina would suggest that 10% of the ... currently offline capacity could remain unavailable for several months,” the investment bank said.

Jeff Quigley, director of energy markets for Stratas Advisors, said he expected offshore production to come back sooner rather than later. Onshore production, however, was harder to forecast.

“Because U.S. shale production is so decentralized, it’s hard to know exactly how much is currently offline,” Quigley said during a webinar on Aug. 30 for clients. “We do expect that there will be drilling slowdowns in the Eagle Ford. Even though there are currently rigs deployed in the area, many of them aren’t functioning because of safety concerns, because of weather, so that is definitely going to slow down crude replacement rates for the next couple of weeks. You’re also likely to see some labor issues as well as people are evacuated from parts of the region.”

The U.S. Department of Energy (DOE) reported that six refineries in the Corpus Christi area, seven in Houston/Galveston and two in Beaumont and Port Arthur are shut down and five others were operating at reduced rates.

At least 11 oil and gas pipelines were shut-in due to flooding or evacuation and further floods could cause E&Ps’ production to grind, Goldman Sachs said in an Aug. 30 report by analyst Damien Courvalin.

Several Eagle Ford operators halted drilling and completions or said they will be affected by the midstream and downstream challenges.

Penn Virginia Corp. (NASDAQ: PVAC) said Aug. 30 that it had not sustained damage from the storm and is producing at 50% of its full potential with full production resuming within a week.

However, on Aug. 31, ConocoPhillips said there was damage at one of its Eagle Ford well sites in DeWitt County.

The E&P said rising waters brought by Hurricane Harvey’s heavy rains and flooding in the Guadalupe River system washed out four of its storage tanks on Aug. 29. Although the tanks held about 385 barrels of oil and about 76 barrels of produced water, ConocoPhillips said the spill volume hasn’t been determined.

“At the time of the incident, this well remained shut-in, so no oil and water were flowing to the tanks,” ConocoPhillips said in a news release.

The company feared a similar incident happened at another site, but an inspection proved otherwise. “No oil or water had been spilled,” ConocoPhillips said, noting the well’s production was shut-in Aug. 25 through Aug. 27 before Harvey made landfall.

Eagle Ford Shale production remains at risk from continued refinery and midstream capacity outages, Courvalin said. However, most shutdowns appear to be preventative.

Sundance Energy Australia Ltd. (NASDAQ: SNDE) said in an Aug. 29 regulatory filing that it shut in about 75% of its Eagle Ford production.

“The hurricane has caused the majority of midstream and downstream natural gas and crude oil infrastructure to be shut down across the Texas Gulf Coast,” the company said, adding that management expects its wells will be shut down for at least a week.

“On the production side, we see two risks to a full return of shut-in production, beyond any well damages,” he said. “First, the main outlet for this production is USGC refineries or industrial facilities on the USGC for gas. If some of these remain offline, U.S. production will not be able to fully recover.”

Courvalin said damage to pipelines, storage and processing facilities is also likely.

“Data on these remains limited given the fragmented nature of these facilities and the significant increase in capacity over the past few years. With most gas pipeline underground, risks are greatest for processing and storage facilities and would create significant disruptions for the NGL market in particular,” he said. “Operator comments we have been able to gather suggest no major damages so far but further flooding is forecast.”

However, Harvey is likely be a net bearish event for the oil market with more demand loss than supply disruptions.

Texas Railroad Commission (RRC) Chair Christi Craddick said personnel continue to staff the Texas Division of Emergency Management’s State Operations Center to assist with the response to the storm.

“RRC district offices in Corpus Christi and San Antonio are open and assisting the public and energy operators with their needs during this disaster,” she said.

GoM/Refinery Update

Meanwhile, offshore workers began returning to platforms Aug. 31 as the percentage of Gulf of Mexico (GoM) production shut down dropped and the U.S. Bureau of Safety and Environmental Enforcement (BSEE) began overflights of offshore facilities to assess damage and monitor pollution.

BSEE said that 31 companies reported just more than 13%, or 236,115 bbl/d, of the GoM’s oil production remained shut-in Aug. 31, while about 17.6% of gas production, or about 568 million cubic feet per day (MMcf/d), remained shut-in.

Those figures are down from the 323,760 bbl/d of oil and 611.09 MMcf/d of gas reported shut-in on Aug. 30.

BSEE also reported the number of platforms evacuated dropped from 102 to 94, less than 13% of the GoM’s 737 manned platforms.

“At this point, no damage reports from oil and gas operators have been received,” BSEE said.

But refineries continue to be a source of conern for operators.

Harvey, Gulf of Mexico, oil and gas production, BSEE

Refineries closed due to the storm have a combined refining capacity of 3.87 MMbbl/d — roughly 40% of total gulf coast (PADD 3) refining capacity and 20.9% of total U.S. refining capacity, DOE reported.

The five refineries operating at reduced rates have a total capacity of 1.5 MMbbl/d, or 15.6% of total gulf coast refining capacity—and 8.2% of total U.S. refining capacity.

Unaffected refineries in the Midcontinent, East Coast and Europe will benefit from strong margins as the loss of USGC capacity requires refineries to run at higher rates, Courvalin said.

Darren Barbee can be reached at dbarbee@hartenergy.com.