Gulf of Mexico Energy Industry Preps for Massive Hurricane

Reuters
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October 7, 2020

At 10 a.m. CDT, the center of Hurricane Delta was located just inland over the Yucatan peninsula about 65 miles (105 km) west-southwest of Cabo Catoche, Mexico. NOAA/GOES-East

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By Erwin Seba HOUSTON, Oct 7 (Reuters) – Oil and gas workers withdrew en masse from U.S. offshore production facilities and onshore refineries began preparations on Wednesday as Hurricane Delta was forecast to grow into a powerful storm over the Caribbean on its way to the Gulf of Mexico.

Delta’s winds declined to 105 miles per hour (169 kph) as it tore across Mexico’s Yucatan peninsula early Wednesday. It is expected to enter the Gulf of Mexico and intensify into a Category 4 storm, the National Hurricane Center said.

Oil producers had evacuated 57 production facilities in the U.S. Gulf of Mexico by Tuesday and halted 540,000 barrels per day of oil and 232 million cubic feet per day of natural gas production. The region accounts for about 17% of U.S. oil output.

Onshore energy facilities and export ports began securing operations. Royal Dutch Shell Plc was preparing three refineries in Convent, Geismar and Norco, Louisiana, for Delta’s arrival. Louisiana Offshore Oil Port, the sole deep water port on the Gulf of Mexico, halted seaborne exports and imports.

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Energy prices were mixed. Natural gas futures were up 8% this week on storm shut-ins and the potential disruption to exports from coastal processing plants. U.S. crude oil and gasoline futures each fell about 3%.

Delta is expected to strike the U.S. Gulf Coast on the weekend as the 10th named storm to make a U.S. landfall this year, eclipsing a record that has held since 1916.

After weakening over the Yucatan, Delta is expected to restrengthen and grow into a massive storm. The “significant increase in the size of Delta’s wind field while it is over the Gulf of Mexico” will drive a broad storm surge and wind threats to the U.S. Gulf Coast, the NHC said.

Oil companies have had to evacuate workers repeatedly during this storm season. The COVID-19 pandemic has complicated the departures and returns, with some workers required to quarantine ashore and be tested for the virus before returning.

Delta’s evacuations are at least sixth time that some companies have had to remove staff and curtail production since June.

W&T Offshore Inc, one of the smaller Gulf of Mexico producers, estimated the storms cost it 9,000 barrels of oil and gas per day in the latest quarter, more than a fifth of its targeted output.

Shell, the largest Gulf of Mexico offshore oil producer by volume, evacuated staff from nine facilities and is preparing to shut production at several. Chevron Corp was evacuating and shutting production on all its Gulf of Mexico platforms, along with BP Plc , BHP and Occidental Petroleum Corp.

(Reporting by Erwin Seba; writing by Gary McWilliams; Editing by Leslie Adler and Marguerita Choy)

(c) Copyright Thomson Reuters 2020.

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