UPDATE 2-Ike keeps U.S. Gulf oil output at a trickle

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Tue Sep 9, 2008 10:50pm BST

(Updates with closing oil price)

By Erwin Seba

HOUSTON, Sept 9 (Reuters) - Oil and natural gas production in the Gulf of Mexico remained at a trickle on Tuesday as Hurricane Ike moved toward the region, triggering the second storm-related wave of offshore platform evacuations and production shutdowns in less than two weeks. [ID:nN093102P].

The hurricane, pummeling Cuba since late Sunday, was expected to move through the Gulf of Mexico midweek south and west of the biggest concentration of platforms before coming ashore near the Texas refining hub of Corpus Christi.

The Gulf of Mexico is home to a quarter of U.S. crude oil production and 15 percent of U.S. natural gas production, and the bulk of the nation's oil refineries dot the Gulf Coast from Mississippi to Texas.

"We're glad that Ike is going a little bit further south of the production areas," said Chevron (CVX.N) spokesman Mickey Driver. "However, we're carefully watching Ike and preparing accordingly."

The U.S. Minerals Management Service said about 78 percent of the 1.3 million barrels per day (bpd) of oil along with about 65 percent of the 7.4 billion cubic feet per day (bcfd) in natural gas produced in the Gulf was shut as of Tuesday due to Gustav and Ike's one-two punch.

Ike lashed Cuba on Tuesday with winds of 80 mph (128 kph), making it a Category 1 hurricane on the five-step Saffir Simpson scale, but it was expected to strengthen into a major hurricane before striking the Texas Coast.

BP Plc (BP.L), Anadarko (APC.N) and Exxon Mobil Corp (XOM.N) said on Tuesday they were shutting production and pulling workers from platforms in the Gulf to prevent injuries and environmental damage, joining Shell (RDSa.L), Conoco (COP.N), Apache (APA.N) and Marathon (MRO.N).

Gulf of Mexico oil production was already mostly paralyzed in the wake of last week's Hurricane Gustav.

Together, Gustav and Ike have already triggered a cumulative loss of nearly 12.8 million barrels of crude oil and 62.5 billion cubic feet of gas.

While Ike's track is expected to spare offshore facilities any major damage -- spelling a quick recovery in oil and gas output -- the hurricane poses a risk to the three low-lying, flood-prone refineries in Corpus Christi, which collectively have a refining capacity of 784,000 barrels per day (bpd).

Valero Energy Corp (VLO.N), Citgo and Flint Hills refineries in Corpus Christi were making preliminary preparations for Ike's approach as were some plants all along the Louisiana and Texas coasts.

U.S. crude oil CLV8 CLc1 settled down $3.08 at $103.26 per barrel due to forecasts Ike was on a path south that would keep it from directly hitting the more than 4,000 platforms in the U.S. Gulf.

Mexico's national oil company, Pemex, said it was watching Ike, which is forecast to stay far away from production areas in the Bay of Campeche.

"We are doing absolutely nothing ... nothing more than monitoring it," said a Pemex spokesperson. (Reporting by Erwin Seba, Richard Valdmanis, Janet McGurty, Catherine Bremer; Editing by Marguerita Choy)

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