U.S. oilpatch braces for year's first big storm

By Erwin Seba

HOUSTON (Reuters) - Offshore oil producers in the Gulf of Mexico on Monday geared up to prepare for the first big storm of 2008, but Tropical Storm Dolly looked unlikely to deal a crippling blow to U.S. crude oil and natural gas production.

However, oil markets reacted nervously to news that Shell Oil Co had began flying workers from platforms in the western Gulf of Mexico. U.S. crude oil futures rose $3 to over $132 a barrel earlier on Monday, and were up $1.53 at $130.41 a barrel by 2:10 p.m. EDT (1810 GMT).

The storm, with sustained winds of nearly 50 mph (85 kph), emerged from the Yucatan Peninsula over the warm waters of the Gulf of Mexico, and could reach hurricane strength on Tuesday.

The U.S. National Hurricane Center issued a hurricane watch for the southern Texas coast, an area that includes Corpus Christi, a major refining center.

Dolly was forecast to hit Texas on Wednesday just above the Mexican border near Brownsville, well away from sensitive offshore drilling rigs and production platforms. Mexico's state oil company Pemex said its production was not likely to be hit.

The U.S. Energy Information Administration said if the storm holds to its current track it will likely miss major oil producing areas, but could threaten some coastal refineries later in the week.

"It looks like the fields and offshore platforms aren't in that area (of Dolly's path)," EIA analyst Neil Gamson told Reuters. According to the U.S. Minerals Management Service, no offshore production has been shut down so far.

About a quarter of U.S. oil supplies and 15 percent of natural gas supplies come from the Gulf of Mexico.