Tropical Storm Lee Cuts Gulf Output, Soaks Louisiana

Tropical Storm Lee is “drifting erratically” near the Louisiana coast, shutting more than half of the crude oil and natural gas production from the resource- rich Gulf of Mexico.

Lee was about 45 miles (72 kilometers) southwest of Morgan City, Louisiana, and moving in “a slow and possibly erratic motion to the north or north-northwest” during the next 24 hours, the U.S. National Hurricane Center said in its latest advisory at 5 p.m. New York time. The storm’s maximum sustained winds were 60 mph, with higher gusts, and tropical storm-force winds stretch as far as 230 miles from its center, the forecaster said.

New Orleans is in the bulls-eye of the flooding rain,” said Matt Alto, an AccuWeather.com meteorologist, on the State College, Pennsylvania-based forecaster’s website.

Companies including Anadarko Petroleum Corp. (APC), BP Plc (BP/), Exxon Mobil Corp. (XOM) and Noble Corp. (NE) evacuated workers from Gulf rigs and platforms. About 60.3 percent of Gulf oil production and about 55 percent of natural gas output has been shut by the storm, according to the Bureau of Ocean Energy Management, Regulation and Enforcement.

The Gulf accounts for 27 percent of U.S. oil output and 6.5 percent of natural gas production. As much as 91 percent of gas and 98 percent of oil output in the Gulf may be shut in the next five days, according to Kinetic Analysis Corp., a Silver Spring, Maryland-based company that predicts the effects of natural disasters.

Production Outlook

Oil and gas producers will be watching wind speeds and wave heights to determine whether and how long to shut operations, said Jan Vermeiren, chief executive officer of Kinetic Analysis.

James Williams, an economist at WTRG Economics, an energy research firm in London, Arkansas, said Lee isn’t strong enough to cause any significant damage to energy assets at this point.

“We’re not talking about Hurricane Gustav here, moving pipelines up and down Louisiana like it was spaghetti,” Williams said in a telephone interview. “This one isn’t a big story. It’s a wet story.” Gustav struck in 2008.

Ten to 15 inches (25 to 38 centimeters) of rain is expected to fall over southern Louisiana, Mississippi and Alabama, with as much as 20 inches in some areas, according to the hurricane center. Louisiana has already received as much as 7 inches in some coastal areas, the center said. The Florida panhandle may see as much as eight inches of rain through tomorrow night.

Heavy Rain

The center of Lee is expected to cross the Louisiana coast today and move slowly across the state tomorrow. Entergy Corp. (ETR) said more than 38,000 customers in Louisiana had lost power as of 1 p.m. local time.

Louisiana Governor Bobby Jindal declared a state of emergency, saying the storm threatens “extremely heavy, prolonged” rain over the state and may cause flash flooding and high tides.

Thirty-five Louisiana parishes have declared states of emergency, and officials urged voluntary evacuations in parts of Lafourche Parish and Grand Isle, Jindal told a news conference yesterday.

New Orleans Mayor Mitch Landrieu extended a state of emergency he declared earlier this week after a fire broke out in the eastern part of the city.

Storm Warnings

Storm warnings were posted for the northern Gulf coast from the border of Alabama and Florida westward to Sabine Pass, Texas, including New Orleans.

Mississippi Governor Haley Barbour declared a state of emergency in several counties expected to be hit with heavy rain and floods as Lee nears.

In the Atlantic, Katia was reduced to a tropical storm, with maximum sustained winds of 70 mph. The storm was about 430 miles east-northeast of the northern Leeward Islands and moving northwest at 10 mph, said in an advisory posted at about 5 p.m. New York time.

Katia may intensify to a hurricane “at any time,” the center said.

To contact the reporters on this story: Lynn Doan in San Francisco at ldoan6@bloomberg.net; Dan Hart in Washington at dahart@bloomberg.net

To contact the editor responsible for this story: Sylvia Wier at swier@bloomberg.net

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