Offshore Oil Wells, Ports Shut as U.S. Gulf Coast Storm Advances

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September 14, 2020

At 1 p.m. CDT, the center of Hurricane Sally was located about 125 miles (200 km) east-southeast of the mouth of the MIssissippi River and about 160 miles (260 km) southeast of Biloxi, MIssissippi. Image courtesy NOAA/GOES

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By Erwin Seba HOUSTON, Sept 14 (Reuters) – Energy companies, ports and refiners on Monday raced to shut down as Hurricane Sally lumbered towards the central U.S. Gulf Coast, the second significant hurricane to shutter oil and gas activity over the last month.

The U.S. government said 21%, or 395,790 barrels per day (bpd), of offshore crude oil production and 25%, or 685 million cubic feet per day (mmcfd), of natural gas output was shut in the U.S.-regulated northern Gulf of Mexico.

Sally was upgraded to a hurricane on Monday, the U.S. National Hurricane Center (NHC) said, but its trajectory has shifted east towards Mississippi, likely sparing some of Louisiana’s refining operations.

The hurricane is disrupting oil imports and exports as the nation’s sole offshore terminal, the Louisiana Offshore Oil Port, stopped loading tanker ships on Sunday, while the port of New Orleans was closing Monday.

Numerous offshore production facilities have been shut, including those operated by Chevron Corp and BP Plc . Last month, Hurricane Laura forced roughly 1.5 million barrels per day (bpd) of output to temporarily close.[0]=68.ARA6ZtzzQeehR3ZPpsSrw1ope8xkDWhwJh-I9ZdXCd4SuYELA9T8o1sYt8ZlMuhAuU3BHs387jwQpZDVb3Dr1jKcwwV5kD97kGSy6e_CDSWMI8P6xo7ZZrx8ocAFt4sHyb2LP9uN_YBdnzoH4s5k54nWT_tvmFPeuLxKRJ6BnELI25cCsWADP7JCGLItBM6FHdZKKPXMhio6-rPS98xwD6Etv4c2emQ-wqa01k_5YfYIHHqKNBP285Pm2cxRVZZgsDYIg3-OCc6cVscQtpo8Ic1sCjEAIdF23nON0D7CeoSGdc4ct_RsDWAytq5sk0AHHh99wzQXP40ic9UWdA5-ztzNyg&__tn__=-R

The port of New Orleans and LOOP combined exported about 307,000 bpd of crude and 411,000 bpd of refined products and imported about 342,000 bpd of crude for the June-to-August period, according to Kpler data.

As of 1 p.m. CDT (1800 GMT), Sally was about 125 miles (200 km) east-southeast of the mouth of the Mississippi River, with sustained winds of up to 90 mph (150 km/h).

Officials in Mississippi and Louisiana issued mandatory evacuations for residents in low-lying areas.

The U.S. Coast Guard said all southbound vessel traffic from the port of New Orleans would be brought to a halt at noon CDT (1700 GMT) on Monday and all traffic from the port would be stopped at 6 p.m. CDT (2300 GMT).

Refiners in the region are winding down operations. The Phillips 66 Alliance oil refinery, which processes 255,600 bpd at a site along the Mississippi River on the coast of Louisiana, shut on Monday, said operator Phillips 66.

Shell cut production to minimum rates on Monday at its 227,400 bpd Norco, Louisiana, refinery, including idling its crude distillation unit, said sources familiar with plant operations.

Valero Energy Corp’s 125,000-barrel-per-day (bpd) Meraux, Louisiana, refinery plans to continue normal operations as the storm will pass to the east, sources told Reuters.

PBF Energy’s 190,000 Chalmette, Louisiana, refinery was also continuing normal operations, said sources familiar with operations at that plant.

Chevron, BP, Equinor and Murphy Oil evacuated some offshore workers from production platforms, the companies reported. Royal Dutch Shell Plc curtailed production at its Olympus, Mars and Appomattox platforms on Monday, the company said.

U.S. Gulf of Mexico offshore oil production delivers about 17% of U.S. crude oil and 5% of U.S. natural gas output. As much as 1.5 million barrels per day (bpd) of offshore oil production was shut in by Hurricane Laura last month. (Reporting by Erwin Seba, Gary McWilliams in Houston and Devika Krishna Kumar in New York; Editing by Jonathan Oatis, Timothy Gardner and Bernadette Baum)

(c) Copyright Thomson Reuters 2020.

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