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Intensifying storm shuts U.S. coastal refinery, adding to energy production losses

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Tropical Storm Barry intensifies over Gulf

Threatened flooding from a tropical storm in the U.S. Gulf of Mexico that cut nearly a third of the region’s oil production has forced the shutdown of a coastal refinery, pushing oil and gasoline prices higher on Thursday.Phillips 66 said it expected to complete the closing of its 253,600-barrel-per-day (bpd) Alliance, Louisiana, refinery on Thursday after local authorities ordered a mandatory evacuation of the area.

Pipeline operator Enbridge evacuated staff from three offshore platforms and halted operations on some deepwater Gulf of Mexico natural gas pipelines.

Oil companies have shut a third of offshore U.S. Gulf of Mexico production ahead of Tropical Storm Barry, which could become a Hurricane late Friday, according to a National Weather Service (NWS) forecast.

At least 17 offshore oil and gas platforms operated by Anadarko Petroleum , Chevron , Royal Dutch Shell and others were evacuated, and many halted production, according to company reports.

Crude futures, which rose more than 4% on Wednesday, were fractionally higher on Thursday, with U.S. crude trading at $60.69, the highest since May. Gasoline futures also rose a fraction.

The storm’s predicted path puts landfall near two of the nation’s four operating liquefied natural gas (LNG) export terminals, Cheniere Energy’s Sabine Pass and Sempra Energy’s Cameron plants.

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Data provider Refinitiv said natural gas output in the Lower 48 states could drop to a seven-week low of 87.2 billion cubic feet per day (bcfd) on Thursday due to the closings, from a record high of 91.1 bcfd on July 5.

On Thursday morning, the storm was about 95 miles (150 km) southeast of the mouth of the Mississippi River, moving west at about 5 miles per hour (7 km per hour). It could make landfall on Saturday on the Louisiana coast and bring up to 15 inches (38 cm) of rain to the central Gulf Coast, forecasters said.

The potential storm could become a Category 1 hurricane with winds of at least 74 mph (119 kph) and drive ocean water up the Mississippi, forecasters said. The storm surge is projected to bring 3 feet to 6 feet (.9 meter to 1.8 meters) to shore, worsening flooding from heavy rains, according to the weather service.

The Alliance refinery sits next to the river 39 miles (63 km) south of New Orleans. The last hurricane to flood the refinery was 2012’s Hurricane Isaac. The refinery was also shut by Hurricane Gustav in 2008 and Hurricane Katrina in 2005.

In 2017, Hurricane Nate led Phillips 66 to shut the refinery, which was restarted within days as the storm turned away from the area.

PBF Energy and Valero Energy Corp do not plan to idle their refineries in Chalmette and Meraux, Louisiana, sources familiar with plant operations said on Thursday morning.

(Reporting by Erwin Seba in Houston and Scott DiSavino in New York; editing by Jonathan Oatis and David Gregorio)

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