Exxon, Anadarko, Shell among energy explorers cutting output
Would be first major hurricane to hit U.S. since Wilma
Hurricane Harvey, set to become the worst storm to strike Texas in more than a decade, wreaking havoc upon the heart of America’s energy sector, has forced evacuations from offshore platforms, shut refineries and sent the prices of commodities from gasoline to soybeans rallying.
Oil refiners in the Gulf Coast, home to as much as half of the nation’s refining capacity, began halting operations as Harvey, a Category 1 storm with top winds of 85 miles (137 kilometers) an hour, bore down on the Gulf Coast, threatening the region with deadly floods and storm surges. If Harvey makes landfall as a Category 3 -- with winds of at least 111 miles -- it’ll be the strongest storm to hit the U.S. since Wilma in 2005.
“We are expecting catastrophic, life-threatening flooding in Southeastern Texas,” said Carl Erickson, a senior meteorologist for AccuWeather. “The weather goes downhill as the day goes on Friday.”
Harvey has drifted from the southern Gulf of Mexico, regaining strength after passing over Mexico’s Yucatan Peninsula earlier this week. While its course has meant the storm isn’t shutting much oil and natural gas production in the Gulf, it’s set to hit a cluster of refineries that process almost 5 million barrels of oil a day.
Gasoline futures in New York surged to the highest in four months in intraday trade, rising by as much as 4 percent to $1.7303 a gallon, and were at $1.7301 at 12:29 p.m. Singapore time. Oil pared a fourth weekly loss and traded at $47.75 a barrel.
Flooding will probably close roads and inundate plants, while strong winds may disrupt on utilities’ systems and knock out power to hundreds of thousands of homes and businesses. Flooding poses a “very serious risk,” said Kyle Cooper, director of research with IAF Advisors in Houston.
The Port of Corpus Christi closed for all vessels sailing in or out as part of its hurricane preparations, officials said in an e-mailed statement. The U.S. Coast Guard shut Houston-Galveston ports to inbound vessels, and energy companies are shutting fuel terminals.
“It is definitely going to be an issue for the ship channels,” said Shunondo Basu, a meteorologist and natural gas analyst at Bloomberg New Energy Finance.
Texas Governor Greg Abbott declared a state of disaster for 30 Texas counties and evacuations have begun. A hurricane warning has been issued from Port Mansfield to Sargent, Texas. A storm surge of up to 12 feet (3.7 meters) may occur near the Padre Island National Seashore to Sargent. Storm surge accounts for close to half of all hurricane deaths.
Harvey may dump as much as 35 inches on areas of Texas over the next week. The Federal Emergency Management Agency is sending staff and food and water supplies to the region.
Hurricane Ike, a Category 2 storm when it struck near the mouth of the Houston Ship Channel in 2008, killed 103 people across the Caribbean and the U.S., including at least 21 in Texas, Louisiana and Arkansas. It caused about $29.5 billion in damage, according to a 2009 National Hurricane Center report. Property analytics firm CoreLogic estimated Thursday that 232,721 homes along the Texas coast with a reconstruction cost value of about $39.6 billion were at risk of storm surge damage.
Other businesses and markets affected:
- Anadarko Petroleum Corp., Exxon Mobil Corp., Royal Dutch Shell Plc are among the energy explorers that have shut platforms in the Gulf of Mexico; ConocoPhillips and EOG Resources Inc. are among those that have halted drilling in Texas
- Refiners including Valero Energy Corp. shut plants, forcing about 1 million barrels a day of crude and condensate capacity in Texas offline
- Kinder Morgan Inc. declared force majeure at natural gas compressor stations; DCP Midstream LPshut gas capacity in south-central Texas; and Enbridge Inc. evacuated non-essential workers from some platforms
- Soybean futures climbed Thursday as crops in Louisiana and Mississippi may be damaged; grain elevators including Corpus Christi Grain Co. suspended shipments
- Rain could damage almost 200,000 cotton bales in region, said Chris Yaklin, general manager of Gulf Coast Cooperative
- BNSF was halting traffic from Galveston Island late Thursday and holding Galveston-bound trains until further notice
- Policyholder-owned State Farm Mutual Automobile Insurance Co. has the largest share in the market for home coverage in Texas, followed by Allstate Corp., Farmers Insurance and United Services Automobile Association, according to data compiled by A.M. Best Co.
— With assistance by Amy Stillman, Sheela Tobben, Naureen S Malik, Barbara J Powell, Mary Schlangenstein, Sonali Basak, Ryan Collins, Laura Blewitt, Jim Polson, Alex Tribou, Alex Longley, David Wethe, Jessica Summers, Jen Skerritt, Catherine Traywick, Sophie Caronello, and Tim Loh