U.S. Gulf Energy Producers Braces for Another Storm Strike

At 1 p.m. CDT on October 28, 2020, the center of Hurricane Zeta was centered over the Gulf of Mexico about 145 miles (235 km) southwest of the mouth of the Mississippi River and about 155 miles (255 km) south-southwest of New Orleans, LA. Image courtesy NOAA/GOES

By Erwin Seba HOUSTON, Oct 28 (Reuters) – Energy firms shut two-thirds of offshore U.S. Gulf of Mexico oil production, turned off undersea pipelines and evacuated workers as Hurricane Zeta raced toward a strike on the U.S. Gulf Coast.

Zeta intensified to a Category 2 hurricane on the Saffir-Simpson scale at midday on Wednesday. It was churning toward the coast at 20 miles (35 km) per hour, and was forecast to crash into Louisiana later in the day with maximum sustained winds of up to 100 miles per hour (155 kph), the U.S. National Hurricane Service said.

Energy producers had halted two-thirds of the offshore region’s oil production and 45% of its natural gas output. The shut-ins removed 1.23 million barrels of oil per day and 1.20 billion cubic feet of natural gas, data from the U.S. offshore energy regulator showed.

BP Plc, Chevron Corp, Royal Dutch Shell Plc and Murphy Oil Corp were among the major oil producers that had evacuated workers from 157 offshore facilities. Occidental Petroleum Corp, the third-largest offshore Gulf of Mexico producer, said it was implementing storm procedures.

Ports along the Mississippi River from Baton Rouge, Louisiana, to the Gulf of Mexico, and from Gulfport, Mississippi, east to Pensacola, Florida, were closed by the U.S. Coast Guard to vessel traffic.

Repeated storm shutdowns this year have been costly for oil and gas producers and processors. Some were pulling staff for at least the sixth time since June and having to exit under COVID-19 pandemic precautions.

Zeta is the 11th named storm of the year to make a U.S. landfall and will be the seventh named storm this year to affect energy producers along the Gulf Coast.

The millions of barrels of oil production lost from the storms have not boosted oil prices. U.S. oil futures were off 5% on Wednesday as energy demand has been crushed by the pandemic and crude oil supplies in storage risen.

Gulf Coast refiners that had not already halted operations, including PBF Energy’s Chalmette, Louisiana, were planning to run through the storm, people familiar with plant operations said. Chalmette is on the storm’s forecast track.

An onshore gas processing plant removed its workers on Tuesday, and two Louisiana oil-processing facilities have been idled since storms earlier this year. (Reporting by Erwin Seba; writing by Gary McWilliams Editing by Marguerita Choy)

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