Companies start shutting U.S. Gulf production on storm threat

by Reuters
Thursday, 3 October 2013 23:41 GMT

* Three producers report output shutdowns, others evacuating some workers

* Storm heads for heaviest energy infrastructure region in Gulf of Mexico

* Storm expected to reach shore over weekend

By Kristen Hays

HOUSTON, Oct 3 (Reuters) - Energy companies in the Gulf of Mexico started shutting in production on Thursday and were evacuating some workers as Tropical Storm Karen headed toward a crucial part of the basin, which overall provides nearly a fifth of daily U.S. oil output.

The National Hurricane Center said the storm was expected to be at or near hurricane strength on Friday, and that it was expected to reach the U.S. Gulf Coast between Louisiana and the Florida Panhandle over the weekend.

Anadarko Petroleum Corp said on Thursday afternoon that it was fully evacuating and shutting oil and gas production at four platforms in the storm's path, including the natural gas-only Independence Hub, which can produce up to 1 billion cubic feet of natural gas per day.

BHP Billiton said on Thursday it was doing the same at its two platforms in the Gulf.

In addition, Williams Cos said it had shut its 500 million cubic feet per day Canyon Station gas platform in the Gulf's shallow waters.

Similar announcements were expected as Karen's projected path crossed two areas known as Mississippi Canyon and Green Canyon, where the bulk of the Gulf's deepwater oil and gas platforms are located.

U.S. crude futures settled lower on Thursday despite Karen's approach as investors worried that the U.S. government shutdown could cut demand in the world's largest oil consumer.

Gulf Coast cash gasoline markets reacted to the storm as differentials rose on shutdown concerns, traders said. The Gulf of Mexico accounts for about 19 percent of U.S. daily oil production and about 6 percent of daily natural gas output, according to the U.S Energy Information Administration.

"All storm hype," a Gulf refined products trader said on the rise in differentials, which came despite a 1.85 million barrel inventory build last week in the well-supplied region.

BHP's two operated platforms include Shenzi, which can produce up to 120,000 barrels per day of oil and 50 million cubic feet per day of natural gas.

In addition to the Independence Hub, Anadarko's shut platforms include Marco Polo, with capacity to produce up to 120,000 bpd of oil and 300 million cubic feet per day of gas.

Anadarko operates four other platforms far west of the storm's path.

Royal Dutch Shell, BP Plc, and Chevron Corp , the top three oil producers in the U.S. Gulf, were evacuating some workers but said production was not affected.

Exxon Mobil Corp said it was shutting about 1,000 bpd of liquids production and evacuating some workers.

Shell did not identify affected platforms, but five of the company's six producing installations were in the storm's projected path as well as its newest platform, Olympus, which was anchored in the Gulf of Mexico in August.

All four of BP's operated platforms were in the path including Thunder Horse, the largest oil and gas platform in the world, which can produce up to 250,000 bpd of oil and 200 million cubic feet per day of gas.

All four of Chevron's platforms were in the projected path, including Tahiti, which can produce up to 125,000 bpd of oil and 70 million cubic feet a day of natural gas.

Anadarko was evacuating workers not essential to production from three other platforms, including the natural gas-only Independence Hub, with capacity to produce up to 1 billion cubic feet of gas per day.

Enterprise Products Partners said it shut four shallow-water "junction" platforms that link deepwater output to pipeline systems that reach shore.

Three can operate remotely, including West Delta 68, which connects the Independence Hub's pipeline to the Kinder Morgan's Tennessee Gas Pipeline that services New York and Boston.


Onshore, a crude distillation unit at Chevron's Pascagoula, Mississippi, refinery with capacity of 210,000 bpd was shut early on Thursday, market intelligence service Genscape said, though the company did not confirm the stoppage or say if it was storm related.

Chevron said refinery workers were monitoring the storm, "taking any appropriate precautions" and had no supply interruptions.

Phillips 66, Valero Energy Corp ,VLO.N>, Shell and Motiva Enterprises also said their refineries in Texas and Louisiana were monitoring the storm.

Destin Pipeline Co LLC on Thursday declared force majeure because it was unable to provide natural gas services from its offshore Gulf of Mexico receipt points due to Tropical Storm Karen. The pipeline receives output from some BP platforms, including Thunder Horse.

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