BP Plc (BP/), the largest leaseholder in the deepwater Gulf of Mexico, shut in oil and gas output and other companies curbed energy production and refinery operations as Tropical Storm Karen whirled toward the U.S. coast.
Half of Gulf oil production and 39 percent of natural gas output is offline, the U.S. Bureau of Safety and Environmental Enforcement said yesterday. BP halted production at all four platforms it operates in the Gulf. Royal Dutch Shell Plc (RDSA) cut rates at Louisiana and Alabama plants. BHP Billiton Ltd., Exxon Mobil Corp. (XOM), Marathon Oil Corp. and the Williams Cos. were also among the companies that curbed energy output.
Karen, with top winds of 45 miles (72 kilometers) per hour, was expected to approach the Gulf Coast later today, the National Hurricane Center said in an advisory at 11 p.m. New York time yesterday. The system became disorganized on its path northward and a hurricane watch posted along the coastline has been dropped.
Energy markets are expecting the storm to be “kind of a blip,” resulting in short-lived supply disruptions, Dave Hackett, president of consulting firm Stillwater Associates, in Irvine, California, said yesterday. “There were a lot of lessons learned from Hurricane Katrina and subsequent storms. A big tropical storm is wet, but don’t think it’ll do any serious damage.”
Gasoline futures for November delivery slid 3.2 cents, or 1.2 percent, to $2.6076 a gallon yesterday on the New York Mercantile Exchange, the lowest settlement since December. Oil gained 0.5 percent, and natural gas rose 0.2 percent.
The hurricane center forecast that Karen would clip the extreme southwestern tip of Louisiana late today and come ashore tomorrow near Mobile, Alabama, and Pensacola, Florida. About 2.1 million barrels a day of refining capacity are within the cone of uncertainty.
Shell cut rates at its 85,000-barrel-a-day plant in Mobile and Motiva Enterprises LLC reduced output at the 250,000-barrel-a-day Norco, Louisiana, refinery because of crude shipment delays caused by Karen, Shell said on its website yesterday. Motiva is a joint venture between Shell and Saudi Aramco.
Shell, based in The Hague, was removing some nonessential personnel from drilling operations in the eastern Gulf, the company said on its website.
BP, based in London, shut in all production from its four deepwater platforms, Thunder Horse, Na Kika, Atlantis and Mad Dog. They have a combined capacity to produce 660,000 barrels of oil and 990 million cubic feet of natural gas a day, according to BP’s website.
Marathon halted output and evacuated all workers from its Ewing Bank platform 130 miles south of New Orleans, the Houston-based company said on its website. The company said it has shut in a total of 18,000 barrels of oil equivalent a day.
Melbourne, Australia-based BHP ceased production and evacuated its Gulf of Mexico facilities, Jaryl Strong, a spokesman for the company, said by e-mail yesterday. Williams shut and evacuated the Canyon Station, Devils Tower and Blind Faith platforms in the eastern Gulf of Mexico, the company said on its website yesterday.
Anadarko Petroleum Corp. (APC), with headquarters in The Woodlands, Texas, halted production and cleared all employees from the Independence Hub and the Neptune, Constitution and Marco Polo platforms, the company’s website showed.
Destin Pipeline LLC, which can transport 1.2 billion cubic feet of gas a day from the Gulf, declared force majeure Oct. 3, saying in a notice to shippers that it’s incapable of providing services from its offshore receipt points because of the storm.
Enbridge Inc.’s Manta Ray and Mississippi Canyon gas pipeline systems in the Gulf also declared force majeure.
LOOP LLC, the only U.S. port capable of offloading ultra-large crude carriers, suspended tanker operations, the Covington, Louisiana-based company said in a statement on its website.
As shale plays like the Bakken in North Dakota and the Eagle Ford in Texas have boomed, the U.S. has become less reliant on offshore energy.
The share of U.S. oil production from the Gulf reached the second-lowest monthly level in 17 years in June, following September 2008, the month after Hurricane Katrina made landfall, according to data from the U.S. Energy Information Administration. Gulf natural gas output was just 4.8 percent of the U.S. total in June, down from 26 percent in June 1998.
“Because of the growth onshore there has been less reliance on the offshore Gulf of Mexico,” said Vincent Piazza, a Princeton, New Jersey-based oil production analyst for Bloomberg Industries. “There should be less of an impact, all things being equal.”
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