HOUSTON (Reuters) - Nearly three-quarters of U.S. Gulf of Mexico oil production was offline ahead of Tropical Storm Nate, and more oil companies were halting operations late Friday, bracing for the second major storm in as many months to menace the region.
Nate was about 80 miles east of Cozumel Mexico and moving at 21 miles per hour late Friday afternoon. It was expected to strike the U.S. Gulf Coast Saturday with hurricane force winds and rain, according to the National Hurricane Center.
Its path takes it right through the most-active oil-producing region of the U.S. Gulf of Mexico. Nate has shuttered nearly three times as much Gulf crude production as Hurricane Harvey did in August. At its height, Harvey shut-in only about 25 percent of the region’s oil production.
BP (BP.L), Exxon Mobil (XOM.N), Chevron (CVX.N) and ConocoPhillips (COP.N) also withdrew staff and curtailed output. Government data showed oil companies evacuated 66 platforms and took 1.24 million barrels of oil per day offline since Thursday.
Nate was expected to cut U.S. exports of crude oil and boost refining margins given low stockpiles of gasoline and other refined products, brokerage Goldman Sachs (GS.N) said in a note to clients.
Oil prices CLc1 dropped nearly 3 percent on Friday despite the storm, on concerns about global oversupply and profit taking.[O/R]
ConocoPhillips began evacuating non-essential personnel from its Magnolia oil platform, Exxon evacuated staff at its Mobile Bay and Lena platforms.
Chevron shut its 4,100-mile (6,598 km) pipeline subsidiary, saying it would not accept or deliver crude until after Nate subsided.
Matt Rogers, meteorologist at Commodity Weather Group, said the rapid speed of the storm could keep it from becoming more than a Category 1 hurricane, producing up to 80 mile per hour winds.
“In our view it is not going to be strong enough to do damage” to offshore production facilities, he said. “Usually when storms move this quickly they have troubles developing,” he said.
The U.S. Coast Guard declared condition “X-Ray” at the port of New Orleans ahead of Nate, which means gale force winds could come within 48 hours. Commercial vessels and large barges must report to the Coast Guard to decide whether to depart or remain.
Parts of the Mississippi River, which flows past New Orleans and is a major transit hub for oil and other commodities, have been closed to inbound deep draft vessels.
The region’s oil refineries are still recovering from Harvey, which shut production at some plants for weeks. Producers also curtailed some production but quickly resumed output.
Royal Dutch Shell Plc (RDSa.L) decided against cutting operations at its 225,800 barrel-per-day (bpd) Norco, Louisiana, refinery, reversing an earlier decision.
Shell did, though, close production at three oil-producing hubs in the eastern Gulf.
Phillips 66 (PSX.N) was shutting down its 247,000 bpd Alliance, Louisiana, refinery, 25 miles (40 km) south of New Orleans, as a precaution. [nL2N1MH01Y]
Commodity Weather forecast Nate to bring moderate rainfall when it makes landfall somewhere west of Mobile Bay, Alabama, and east of New Orleans, Louisiana. It expects between 4 inches and 6 inches of rain to fall in the path of the storm.
The U.S. Gulf of Mexico is home to about 17 percent of U.S. crude output and 5 percent of dry natural gas output, according to the U.S. Energy Information Administration. More than 45 percent of U.S. refining capacity is along the Gulf Coast.
Reporting by Ernest Scheyder; Additional reporting by Marianna Parraga, Gary McWilliams and Erwin Seba; Editing by Marguerita Choy and David Gregorio