Hurricane Delta Halts 80% of Gulf Oil Output as it Steams Towards U.S. Mainland

Hurricane Delta pictured October 8, 2020 at approximately 12:00 p.m. ET. Image courtesy NOAA/GOES East

HOUSTON, Oct 8 (Reuters) – Hurricane Delta began its march through prime U.S. offshore oil producing areas in the U.S. Gulf of Mexico on Thursday as energy companies moved drilling rigs and pulled workers off platforms.

The storm, expected to intensify over the Gulf’s warm waters to a Category 3 hurricane with winds of 115 miles per hour (185 kmh), has halted 80% of the region’s offshore oil and nearly 50% of its natural gas output.

Offshore producers including Royal Dutch Shell, BP , Chevron and Occidental Petroleum pulled workers from oil and gas production platforms to safer quarters onshore.

The unusually high number of storms coupled with pandemic safety precautions has made this year a costly and difficult one for offshore producers.

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U.S. crude oil futures were up 2.7% at $41.02 a barrel in morning trade on the shut-ins and prospects for a new U.S. economic stimulus to combat fallout from the COVID-19 pandemic.

Onshore oil and gas processing plants and energy ports from Port Arthur, Texas to New Orleans also were battening down under tropical storm wind advisories. Louisiana Offshore Oil Port, the sole deep water port on the Gulf of Mexico, halted seaborne exports and imports.

Delta was steaming at 15 mph on Thursday over the Gulf after scraping across Mexico’s Yucatan peninsula and battering its resort areas. It is expected to make landfall on the Louisiana coast by Friday evening. The state sought and received a federal disaster declaration ahead of the storm’s arrival.

Shell began preparing three refineries in Convent, Geismar and Norco, Louisiana, for Delta’s arrival. Further west, other refineries were still under maintenance in the wake of prior hurricanes.

U.S. natural gas futures slipped 2% on Thursday on forecasts for less demand than expected on a drop in gas flowing to Gulf Coast liquefied natural gas (LNG) export terminals ahead of Hurricane Delta. More than half a dozen liquefied natural gas (LNG) tankers were also waiting to enter U.S. export plants off the Louisiana coast.

(Reporting by Gary McWilliams; Additional reporting by Scott DiSavino in New York; Editing by Richard Pullin and Andrea Ricci)

(c) Copyright Thomson Reuters 2020.