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Vista Projects

Hurricane knocks out 42 percent of U.S. Gulf of Mexico oil output

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HOUSTON (Reuters) – Hurricane Michael on Wednesday cut 42 percent of U.S. Gulf of Mexico daily crude oil production and nearly a third of natural gas output, the largest reductions in a year, after companies evacuated staff and shut-in platforms as a precaution.

Michael slammed into the Florida Panhandle on Wednesday as a fast-moving, Category 4 storm bringing heavy rains and winds of 155 miles per hour (249 kph) to the U.S. southeast.

Companies turned off daily production of 718,877 barrels of oil and 812 million cubic feet of natural gas by midday on Wednesday, according to the federal offshore regulator, the Bureau of Safety and Environmental Enforcement (BSEE).

Despite the fall in output, U.S. crude futures CLc1 settled down more than 2 percent at $73.17 per barrel on Wednesday, tracking the weaker U.S. stock market and reflecting the declining importance of Gulf of Mexico output due to burgeoning growth from onshore shale fields.

Wednesday’s cuts represent about 6.5 percent of the nation’s daily output of 11.1 million barrels of crude. It is the most since Hurricane Nate a year ago curtailed more than 90 percent of Gulf oil production.

Total crude output lost in the last three days from shut-ins amounted to 1.7 million barrels, according to BSEE data. It can take several days after a storm passes to restaff and check equipment before production can resume.

Oil producers including Anadarko Petroleum Corp (APC.N), BHP Billiton (BLT.L), BP (BP.L), Chevron Corp (CVX.N) and Exxon Mobil Corp (XOM.N) evacuated workers from 89 Gulf production platforms before the storm entered the Gulf.

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Kinder Morgan Inc (KMI.N), North America’s second largest energy pipeline operators, said its fuel and natural gas lines serving the Southeast were unaffected. Construction at its Elba Island, Georgia, liquefied natural gas (LNG) project will be suspended on Thursday and resume once the storm passes.

U.S. Gulf Coast oil refineries were not in the path of the storm and continued to operate. The Louisiana Offshore Oil Port LLC, the only port in the United States capable of fully loading and unloading supertankers, halted operations at its marine terminal.

A week ago, drillers were pulling about 3.4 billion cubic feet per day (bcfd) of natural gas from offshore Gulf of Mexico wells. On Tuesday, that was down to just 2.2 bcfd, according to data from Refinitiv.

Southern Co (SO.N), the biggest power company in Georgia and Alabama, on Wednesday reduced power in two units at the Farley nuclear power plant in Alabama as a precautionary measure.

The reduced operating level will allow personnel to continue monitoring the storm’s progress and if necessary shut the 1,751-megawatt Farley plant, which is about 90 miles (145 km) north of the coast.

More than 162,000 customers in Florida, Georgia and Alabama were without power on Wednesday, according to local power companies, and the outages were expected to rise as the storm moved farther inland.

Reporting by Gary McWilliams, Scott DiSavino and Liz Hampton; Editing by Marguerita Choy and Chizu Nomiyama

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