More U.S. oil and gas producers, refiners shut ahead of hurricane

9/15/2020

More than a fifth of U.S. offshore oil production was shut and key exporting ports were closed on Tuesday as a precaution ahead of Hurricane Sally’s landfall on the U.S. Gulf Coast, the second significant storm to shutter oil and gas activity over the last month.

Slow-moving Sally weakened to a Category 1 hurricane on Tuesday and is expected to maintain that strength with sustained winds of 85 mile per hour (140 km per hour) through landfall by early Wednesday, the U.S. National Hurricane Center said.

The storm’s trajectory takes it through the prime U.S. offshore production areas on a path toward western Alabama, sparing some larger Gulf Coast refineries from high winds.

Royal Dutch Shell said it shut its Appomattox oil platform about 80 miles off the coast of Louisiana, joining BP , Chevron Corp and Equinor in closing facilities less than one month after Hurricane Laura forced up to 1.5 MM barrels per day of output to close temporarily.

The U.S. government said 21%, or nearly 396,000 barrels per day (bpd), of offshore crude oil production and 25%, or 685 MM cubic feet per day (mmcfd), of natural gas output were shut in the U.S. Gulf of Mexico.

Oil prices were tame on Tuesday despite the shutdowns. U.S. crude oil and gasoline futures each rose about 1% as domestic stockpiles of fuel remain above year-ago levels due to weaker demand during the pandemic.

The nation’s sole offshore terminal, the Louisiana Offshore Oil Port (LOOP), stopped loading tankers on Sunday, while the port of New Orleans closed on Monday. That will cut off roughly 307,000 bpd of crude and 411,000 bpd of refined products, according to Kpler data.

As of 7 a.m. CDT (1200 GMT) on Tuesday, Sally was about 65 miles (110 km) east of the mouth of the Mississippi River, and moving to the northwest at 2 mph (3 kph).

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

Shell cut production to minimum rates on Monday at its 227,400-bpd Norco, Louisiana, refinery.

(Reporting by Erwin Seba, Gary McWilliams in Houston and Devika Krishna Kumar in New York; Editing by Marguerita Choy and Jason Neely)