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Offshore oil wells, ports shut as Hurricane Sally advances on U.S. Gulf

HOUSTON (Reuters) - Energy companies, ports and refiners on Monday raced to shut down as Hurricane Sally bores in on the central U.S. Gulf Coast, the second significant hurricane to shutter oil and gas activity over the last month.

Tropical Storm Sally churning in the Gulf of Mexico in a satellite image taken from a video dated September 13, 2020. Courtesy NOAA/via REUTERS THIS IMAGE HAS BEEN SUPPLIED BY A THIRD PARTY.

Sally was upgraded to a hurricane on Monday, the U.S. National Hurricane Center (NHC) said, but its trajectory has shifted east towards Mississippi, likely sparing some of Louisiana’s refining operations.

The hurricane is disrupting oil imports and exports, as the nation’s sole offshore terminal, the Louisiana Offshore Oil Port, stopped loading tanker ships on Sunday, while the port of New Orleans is closing Monday.

Numerous offshore production facilities have been shut, including those operated by Chevron Corp and BP Plc. Last month, Hurricane Laura forced roughly 1.5 million barrels per day (bpd) of output to temporarily close.

The port of New Orleans and LOOP combined exported about 307,000 bpd of crude and 411,000 bpd of refined products and imported about 342,000 bpd in crude for the June-to-August period, according to Kpler data.

As of 12:05 p.m. EDT (1605 GMT), Sally was about 135 miles (220 km) east-southeast of the mouth of the Mississippi River, with winds up to 85 mph (140 km/h).

Officials in states issued mandatory evacuations for residents in low-lying areas.

The U.S. Coast Guard said all southbound vessel traffic from the port of New Orleans would be brought to a halt at noon CDT (1700 GMT) on Monday and stop all traffic from the port at 6 p.m. CDT (2300 GMT).

Refiners in the region are winding down operations. The Phillips 66 Alliance oil refinery, which processes 255,000 bpd at a site along the Mississippi River on the coast of Louisiana, shut on Monday, said energy industry intelligence service Genscape.

Shell cut production to minimum rates on Monday at its 227,400 bpd Norco, Louisiana, refinery, including idling the refinery’s crude distillation unit, said sources familiar with plant operations.

Valero Energy Corp’s 125,000-barrel-per-day (bpd) refinery plans to continue normal operations as the storm will pass to the east, sources told Reuters.

Chevron, BP, Equinor and Murphy Oil all evacuated some offshore workers from production platforms, the companies reported. Royal Dutch Shell Plc curtailed production at its Olympus, Mars and Appomattox platforms on Monday, the company said.

U.S. Gulf of Mexico offshore oil production delivers about 17% of U.S. crude oil and 5% of U.S. natural gas output. As much as 1.5 million barrels per day (bpd) of offshore oil production was shut in by Hurricane Laura last month.

Reporting by Erwin Seba, Gary McWilliams in Houston and Devika Krishna Kumar in New York; Editing by Jonathan Oatis and Timothy Gardner