Hurricane Delta: Gulf of Mexico Shut-Ins Highest Since Katrina

Reuters
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October 9, 2020

At 10 a.m. CDT, the center of Hurricane Delta was located about 130 miles (205 km) south-southwest of Cameron, LA. Delta is moving toward the north near 13 mph (20 km/h). Image credit: NOAA/GOES-East

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HOUSTON, Oct 9 (Reuters) – A large and powerful Hurricane Delta dealt the greatest blow to U.S. offshore Gulf of Mexico energy production in 15 years, halting most of the region’s oil and nearly two-thirds of natural gas output.

Delta packed 115 mile-per-hour (185 km) winds as it churned through the Gulf’s prime oil-producing area toward landfall on coastal Louisiana. It was 130 miles south of Cameron, Louisiana and moving north at 13 mph, according to a 10 a.m. CDT update from the U.S. National Hurricane Center.

Delta has shut 1.67 million barrels per day, or 92% of the Gulf’s oil output, the most since 2005 when Hurricane Katrina destroyed more than 100 offshore platforms and hobbled output for months.

Ports from Beaumont, Texas, to Lake Charles, Louisiana, were closed on Friday while those further east, including Morgan City and New Orleans were open with restrictions, the U.S. Coast Guard said.

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Oil prices eased in on Friday, but were on track for gains of about 10% for the week, boosted by outages in the Gulf of Mexico and a labor dispute in the North Sea. The two combined have removed 2 million barrels per day from the market.

U.S. natural gas prices on Friday were on track to close at the highest since November 2019 on the shut-ins. Front-month gas futures at 10:45 a.m. EDT (1445 GMT) rose 11 cents, or 6%, to $2.79 per million British thermal units.

Workers had evacuated 279 offshore Gulf of Mexico facilities and producers moved 15 drilling rigs away from Delta’s large and strong windfield. Tropical force winds stretched up to 160 miles from its center, the NHC said, a sign of its large size.

Delta’s force will decrease as it approaches the coast but is expected to remain at or near a Category 3 storm on the 5-step Saffir-Simpson scale. It will bring a 4- to 11-foot (1.2-3.3 meters) storm surge to the coast near landfall, the NHC said.

In addition to oil, producers have halted nearly 62% of the region’s natural gas output, or 1.675 billion cubic feet per day. Offshore Gulf of Mexico fields produce about 15% of U.S. crude oil and 5% of its natural gas production.

Total SA on Thursday began shutting an oil processing unit at its 225,500 barrel-per-day (bpd) Port Arthur, Texas, refinery because of the threat from Hurricane Delta, people familiar with plant operations said.

Royal Dutch Shell Plc said it would continue operating its refineries in Convent, Geismar and Norco, Louisiana, through the storm. (Reporting by Gary McWilliams and Erwin Seba; Editing by Ana Nicolaci da Costa, Chizu Nomiyama and David Gregorio)

(c) Copyright Thomson Reuters 2020.

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