Gustav May Hit Gulf Platforms Harder Than Katrina (Update4)
By Jim Polson
Aug. 31 (Bloomberg) -- Hurricane Gustav threatens to hurt U.S. oil and natural-gas production and refining more severely than hurricanes Katrina and Rita did three years ago.
Gustav, downgraded to a Category 3 storm by the National Hurricane Center in Miami today, may strengthen to Category 4 later today and will make landfall as a ``major'' hurricane. The storm shut three-quarters of oil output in the region and refineries operated by Valero Energy Corp., ConocoPhillips, Marathon Oil Corp. and Exxon Mobil Corp.
``This storm will prove to be a worst-case scenario for the production region,'' Jim Rouiller, senior energy meteorologist for Planalytics.com, said yesterday in an e-mailed message. ``This storm will be more dangerous than Katrina.''
As of 10 a.m. New Orleans time, Gustav was about 325 miles (523 kilometers) from the mouth of the Mississippi River. The storm may reach Louisiana as early as midday tomorrow.
BP Plc, Exxon Mobil and Royal Dutch Shell Plc led producers in shutting wells and whisking staff ashore. The Louisiana Offshore Oil Port, the nation's largest crude-oil terminal, closed yesterday.
Fields in the Gulf produce 1.3 million barrels a day of oil, about a quarter of U.S. production, and 7.4 billion cubic feet a day of natural gas, 14 percent of the total, government data show. Hurricane Katrina in 2005 closed 95 percent of regional offshore output and, along with Hurricane Rita, idled about 19 percent of U.S. refining capacity.
Gas Pipelines
Sabine Pipe Line LLC began to shut its pipelines and the Henry Hub natural gas connection point in Louisiana after mandatory evacuations were declared. Henry Hub is the pricing point for natural-gas futures contracts traded on the New York Mercantile Exchange.
Exxon Mobil said it's closing its 192,000 barrel-a-day Chalmette, Louisiana, refinery. ConocoPhillips said it began shutting two refineries in Louisiana that together process almost 500,000 barrels a day of crude oil.
Marathon Oil Corp. said it began closing its 256,000-barrel- a-day Garyville, Louisiana, refinery, yesterday. Valero was shutting its St. Charles refinery west of New Orleans and may decide today whether to shut its Port Arthur, Texas, refinery, spokesman Bill Day said in an e-mailed message.
Three Louisiana parishes with refineries have ordered mandatory evacuations.
Market Concern
``The big question for the market is going to be how quickly after Gustav passes will the industry be able to recover and get back online,'' said Andy Lipow, president of Houston-based Lipow Oil Associates LLC.
Enbridge Inc., Canada's largest pipeline company, and its U.S. affiliate closed conduits capable of bringing ashore 6.7 billion cubic feet a day of natural gas. Evacuation of Terrebonne Parish shut 550 million cubic feet a day of gas flow into the 10,500-mile (16,900-kilometer) Transco line to the U.S. northeast, owner Williams Cos. said in a statement.
Exxon Mobil said it shut platforms producing 5,000 barrels of oil and 50 million cubic feet of natural gas. BP said it shut Gulf production and evacuated all staff. Its normal production is equivalent to 290,000 barrels a day from the region. Anadarko Petroleum Corp. said it will close the equivalent of 105,000 barrels a day of production.
Workers Evacuated
Shell said it would shut daily production equivalent to 510,000 barrels of oil yesterday.
Workers from 45 rigs and 223 production platforms were evacuated as of 12:30 p.m. yesterday, the Minerals Management Service said in a statement on its Web site. About 998,000 barrels of daily oil production have been halted in preparation for the storm, as well as 2.75 billion cubic feet of gas.
Crude oil futures on the Nymex fell 13 cents to $115.46 a barrel on Aug. 29 on speculation supplies will be adequate to meet demand after the storm passes. Natural gas futures fell 10.7 cents to $7.943 per million British thermal units.
Most U.S. financial markets are closed until Sept. 2 for the Labor Day holiday. Nymex plans to start electronic trading in energy products at 2:30 p.m. New York time today with trades dated Sept. 2.
The Louisiana Offshore Oil Port shut at 9:30 a.m. local time yesterday. Shipments to customers continue from the port's 53 million barrels of storage on shore, she said.
Katrina, Rita
Hurricanes Katrina and Rita in 2005 cut supplies for months. About 27 percent of Gulf oil production and 19 percent of gas output was still shut in January 2006, the Minerals Management Service reported.
Rising waters from a Category 4 storm can cut escape routes as early as five hours before landfall, with flooding as much as six miles inland. The coastal storm surge may reach 18 feet, and the winds can rip away roofs and walls of homes, according to the National Hurricane Center.
A Category 5 storm can destroy the roofs of industrial buildings, flatten all trees and homes, and drive a storm surge above 18 feet. Only three Category 5 storms, Andrew in 1992, Camille in 1969, and the Labor Day Hurricane of 1935, have made landfall in the U.S. since record-keeping began.
To contact the reporter on this story: Jim Polson in New York at [email protected].
Last Updated: August 31, 2008 12:29 EDT
By Jim Polson
Aug. 31 (Bloomberg) -- Hurricane Gustav threatens to hurt U.S. oil and natural-gas production and refining more severely than hurricanes Katrina and Rita did three years ago.
Gustav, downgraded to a Category 3 storm by the National Hurricane Center in Miami today, may strengthen to Category 4 later today and will make landfall as a ``major'' hurricane. The storm shut three-quarters of oil output in the region and refineries operated by Valero Energy Corp., ConocoPhillips, Marathon Oil Corp. and Exxon Mobil Corp.
``This storm will prove to be a worst-case scenario for the production region,'' Jim Rouiller, senior energy meteorologist for Planalytics.com, said yesterday in an e-mailed message. ``This storm will be more dangerous than Katrina.''
As of 10 a.m. New Orleans time, Gustav was about 325 miles (523 kilometers) from the mouth of the Mississippi River. The storm may reach Louisiana as early as midday tomorrow.
BP Plc, Exxon Mobil and Royal Dutch Shell Plc led producers in shutting wells and whisking staff ashore. The Louisiana Offshore Oil Port, the nation's largest crude-oil terminal, closed yesterday.
Fields in the Gulf produce 1.3 million barrels a day of oil, about a quarter of U.S. production, and 7.4 billion cubic feet a day of natural gas, 14 percent of the total, government data show. Hurricane Katrina in 2005 closed 95 percent of regional offshore output and, along with Hurricane Rita, idled about 19 percent of U.S. refining capacity.
Gas Pipelines
Sabine Pipe Line LLC began to shut its pipelines and the Henry Hub natural gas connection point in Louisiana after mandatory evacuations were declared. Henry Hub is the pricing point for natural-gas futures contracts traded on the New York Mercantile Exchange.
Exxon Mobil said it's closing its 192,000 barrel-a-day Chalmette, Louisiana, refinery. ConocoPhillips said it began shutting two refineries in Louisiana that together process almost 500,000 barrels a day of crude oil.
Marathon Oil Corp. said it began closing its 256,000-barrel- a-day Garyville, Louisiana, refinery, yesterday. Valero was shutting its St. Charles refinery west of New Orleans and may decide today whether to shut its Port Arthur, Texas, refinery, spokesman Bill Day said in an e-mailed message.
Three Louisiana parishes with refineries have ordered mandatory evacuations.
Market Concern
``The big question for the market is going to be how quickly after Gustav passes will the industry be able to recover and get back online,'' said Andy Lipow, president of Houston-based Lipow Oil Associates LLC.
Enbridge Inc., Canada's largest pipeline company, and its U.S. affiliate closed conduits capable of bringing ashore 6.7 billion cubic feet a day of natural gas. Evacuation of Terrebonne Parish shut 550 million cubic feet a day of gas flow into the 10,500-mile (16,900-kilometer) Transco line to the U.S. northeast, owner Williams Cos. said in a statement.
Exxon Mobil said it shut platforms producing 5,000 barrels of oil and 50 million cubic feet of natural gas. BP said it shut Gulf production and evacuated all staff. Its normal production is equivalent to 290,000 barrels a day from the region. Anadarko Petroleum Corp. said it will close the equivalent of 105,000 barrels a day of production.
Workers Evacuated
Shell said it would shut daily production equivalent to 510,000 barrels of oil yesterday.
Workers from 45 rigs and 223 production platforms were evacuated as of 12:30 p.m. yesterday, the Minerals Management Service said in a statement on its Web site. About 998,000 barrels of daily oil production have been halted in preparation for the storm, as well as 2.75 billion cubic feet of gas.
Crude oil futures on the Nymex fell 13 cents to $115.46 a barrel on Aug. 29 on speculation supplies will be adequate to meet demand after the storm passes. Natural gas futures fell 10.7 cents to $7.943 per million British thermal units.
Most U.S. financial markets are closed until Sept. 2 for the Labor Day holiday. Nymex plans to start electronic trading in energy products at 2:30 p.m. New York time today with trades dated Sept. 2.
The Louisiana Offshore Oil Port shut at 9:30 a.m. local time yesterday. Shipments to customers continue from the port's 53 million barrels of storage on shore, she said.
Katrina, Rita
Hurricanes Katrina and Rita in 2005 cut supplies for months. About 27 percent of Gulf oil production and 19 percent of gas output was still shut in January 2006, the Minerals Management Service reported.
Rising waters from a Category 4 storm can cut escape routes as early as five hours before landfall, with flooding as much as six miles inland. The coastal storm surge may reach 18 feet, and the winds can rip away roofs and walls of homes, according to the National Hurricane Center.
A Category 5 storm can destroy the roofs of industrial buildings, flatten all trees and homes, and drive a storm surge above 18 feet. Only three Category 5 storms, Andrew in 1992, Camille in 1969, and the Labor Day Hurricane of 1935, have made landfall in the U.S. since record-keeping began.
To contact the reporter on this story: Jim Polson in New York at [email protected].
Last Updated: August 31, 2008 12:29 EDT
