HOUSTON (Reuters) - Oil companies began early preparations on Tuesday as forecasters predicted Hurricane Gustav will enter the U.S. Gulf of Mexico as a major storm by the weekend and energy prices jumped on the threat.
Royal Dutch Shell Plc (RDSa.L), the largest oil and natural gas producer in the region, said it would begin evacuating nonessential personnel from offshore facilities on Wednesday if the storm’s forecast remains unchanged.
Other companies operating in the Gulf, home to about 25 percent of U.S. oil production and 15 percent of U.S. natural gas output, were monitoring the progress of Gustav, which was lashing Haiti as a Category 1 hurricane on Tuesday.
U.S. crude oil futures rose as high as $117.89 a barrel earlier on Tuesday and settled up $1.16 at $116.27. Gasoline RBU8 gained 9 cents in trade on Tuesday.
“There’s the possibility of a Category 3 to Category 5 hurricane in the Gulf on Sunday ... that’s what has everyone’s attention right now. If we get a major hurricane in the Gulf there’s going to be a lot more short covering,” said Commercial Brokerage Corp’s Ed Kennedy.
Powerful hurricanes Katrina and Rita knocked out a quarter of U.S. fuel production in 2005, wrecking production platforms and offshore pipelines and battering several major oil refineries, which sent energy prices soaring.
Repairs to damaged facilities took months and helped fuel oil’s rally in 2006.
Hurricane forecasters were predicting on Tuesday that Gustav would skirt the western coast of Cuba and enter the Gulf of Mexico as a powerful Category 3 hurricane with winds in excess of 100 mph by Sunday.
“All of the oil platforms off Texas and Louisiana will probably be at risk, but that’s real long-range,” AccuWeather senior meteorologist Eric Wilhelm said in a telephone interview.
AccuWeather forecasts the storm will reach offshore production areas by the middle of next week.
“The entire Gulf energy infrastructure is now threatened,” wrote Jim Rouiller of forecaster Planalytics, who said two major hurricane forecasting models predicted the storm making landfall somewhere between Houston and New Orleans, which is home to nearly half of U.S. oil refining capacity.
Energy companies were already planning to evacuate crews from offshore platforms.
“We’re getting prepared ... We’ve got customers calling, beginning to plan ahead, and we’re planning ahead,” said Danny Holder, Gulf of Mexico director for Air Logistics in New Iberia, Louisiana.
At Port Fourchon, Louisiana, the southern-most onshore oil service port on the Louisiana coast, preparations were being made for Gustav’s arrival.
Windows were being boarded up and loose items secured, companies said. Port Fourchon is where the Louisiana Offshore Oil Port’s pipelines come onto the mainland.
LOOP operations were normal on Tuesday, a spokeswoman said.
Reporting by Erwin Seba and Bruce Nichols in Houston; Robert Campbell, Eileen Moustakis, Robert Gibbons, Richard Valdmanis, Rebekah Kebede in New York; editing by Matthew Lewis