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Oil Producers Evacuate Staff, Halt Output on Storm (Update1)

By Aaron Clark and Christian Schmollinger

Nov. 9 (Bloomberg) -- Oil and natural gas companies in the Gulf of Mexico are evacuating workers and halting some output as Tropical Storm Ida blows through the region, which accounts for more than a quarter of U.S. crude production.

Murphy Oil Corp. shut its Thunder Hawk and Medusa offshore oil and gas production platforms in the Gulf of Mexico as Ida approached, a spokesman said. Marathon Oil Corp. evacuated the one platform it has in the Gulf, according to Lee Warren, a company spokeswoman.

Royal Dutch Shell Plc said it evacuated about 160 non- essential workers from Gulf of Mexico drilling rigs and production platforms. Ida is the first storm to disrupt output in the Gulf this hurricane season, which began in June and runs through the end of this month.

Crude oil for December delivery climbed for the first time in three days, gaining $1.67, or 2.2 percent, to $79.10 a barrel at 10:28 a.m. on the New York Mercantile Exchange. Natural gas for December delivery was unchanged at $4.595 per million British thermal units.

Bristow Group Inc., a provider of helicopter services, evacuated approximately 1,000 people a day over the weekend and its 75 helicopters will conduct more flights today, said Danny Holder, director of the Gulf of Mexico business unit for Bristow.

“We’ve been in evacuation mode all weekend for our customers and contractors offshore in the Gulf of Mexico and we continue that today,” Holder said. He estimated that there are 7,000 to 9,000 workers offshore in the oil and gas industry. The company has 30 clients.

Chevron Production

Chevron Corp., the second-largest U.S. oil company, has halted “some production” at its Gulf of Mexico platforms, according to its Web site. The company moved some non-essential workers out of the area, spokesman Mickey Driver said yesterday.

BP Plc evacuated non-essential staff and shut some of its Gulf output. “Some precautionary curtailment of production has taken place,” BP said in a recorded statement on its hotline.

Enterprise Products Partners LP, the second-largest U.S. pipeline partnership, evacuated the Independence Hub yesterday and shut two platforms for Ida. Enterprise shut the West Delta 68 platform and the Viosca Knoll 817 platform, Rick Rainey, a spokesman for Houston-based Enterprise, said today in a telephone interview.

Gas Hub

The Independence Hub, with production capacity of 1 billion cubic feet a day, accounts for 2 percent of U.S. gas supplies and represents 10 percent of deliveries from the Gulf, according to Enterprise.

Ida’s maximum sustained winds slowed to about 70 miles (113 kilometers) per hour from 105 mph early today, the U.S. National Hurricane Center said in its latest advisory. Ida’s center was located about 185 miles south-southeast of the mouth of the Mississippi River at 10 a.m. New York time.

The Tropical Storm was moving north-northwest at 17 mph and all hurricane warnings and watches along the Gulf Coast have been discontinued, according to the center.

The Houston Ship Channel was closed to tanker traffic, the Coast Guard said. Ship pilots, who guide tankers through the channel to refineries in the Houston area, indefinitely suspended boardings because of high seas.

Louisiana’s Port Fourchon remains open, said Chet Chiasson, said the director of economic development at the port. Port Fourchon is base for three-quarters of support services to the Gulf’s deepwater oil and gas facilities.

Transocean Marianas

Transocean Ltd., the world’s largest offshore oil and gas driller, said it has completely evacuated its Transocean Marianas rig in the Gulf of Mexico.

Transocean has 14 drill ships and semi-submersible rigs in the Gulf, including the Marianas, with approximately 1,930 people currently on board the other 13 rigs, according to Cantwell.

Diamond Offshore Drilling Inc. said it evacuated one drilling rig over the weekend and planned no more evacuations.

Exxon Mobil Corp., the world’s biggest oil company, said its operations in the Gulf are normal and it’s monitoring the weather, according to an e-mail from David Eglinton, a spokesman. Royal Dutch Shell Plc said it’s “securing” offshore facilities though drilling isn’t affected.

About 80 percent of Shell’s U.S. oil and gas production comes from the Gulf of Mexico, the company said on its Web site.

The Gulf accounts for about 27 percent of U.S. oil production and 15 percent of gas output, according to Energy Department figures. Fuel prices rose to a record in 2005 after Hurricane Katrina decimated platforms, pipelines and refineries on the Mississippi and Louisiana coasts.

Coastal Refineries

Chevron said its 330,000 barrel-a-day Pascagoula refinery will stay open. The company is taking steps to secure the plant as the storm approaches, Steve Renfroe, a spokesman, said today in a telephone interview.

Refinery shutdowns sometimes occur when strong winds knock down power lines. Should the storm shift farther west, several more refineries in Louisiana may be subject to heavy rain, winds or possible flooding.

The Louisiana Offshore Oil Port stopped loadings from tankers at about noon local time yesterday because of rough seas, Barb Hestermann, a spokeswoman, said in a phone interview.

“Customers are still getting deliveries,” she said, adding that supplies to refineries are being made from onshore storage tanks. “It seems that Monday and Tuesday will be pretty bad.”

Anadarko Petroleum Corp., the second-largest producer of natural gas in the U.S., removed all workers from the eastern Gulf of Mexico and shut-in about 105,000 barrels a day of oil equivalent production at four off-shore platforms.

To contact the reporters on this story: Aaron Clark in New York at aclark27@bloomberg.netChristian Schmollinger in Singapore at christian.s@bloomberg.net;

Last Updated: November 9, 2009 11:03 EST

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