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Energy

Twin U.S. Gulf Coast storms stir deep production cuts by energy giants

HOUSTON, Aug 24 (Reuters) - Energy companies are weighing production cuts at U.S. Gulf Coast oil refineries after shutting half the area’s offshore crude oil output ahead of back-to-back storms aiming for the coast this week.

Tropical Storms Marco and Laura, a rare double-team approach to the U.S. Gulf Coast, threaten days of heavy rains and strong winds this week. Firms had shut wells accounting for 1 million barrels per day of oil on Sunday, as one storm is forecast to become a damaging Category 2 hurricane.

Oil prices on Monday rose 1% to $44.83 a barrel on hopes for a COVID-19 vaccine and despite lackluster demand for fuels amid economic declines from the pandemic. The Louisiana Offshore Oil Port, the largest Gulf Coast oil-export facility, halted operations at its marine terminal.

At least one top refiner is weighing a shutdown for the larger and potentially more damaging Storm Laura, which is forecast to strike the Texas/Louisiana coast by Thursday as a Category 2 hurricane with 105 mile per hour (169 km/h) winds and heavy rain. Some meteorologists say the storm could strengthen to a major hurricane before it makes landfall.

Operators including Exxon Mobil, Valero and Royal Dutch Shell are planning to maintain operations at Louisiana plants as the first cyclone arrives Monday, sources familiar with plans at those refineries said. Storm Marco is expected to drop up to 5 inches (12.7 cm) of rain along the Louisiana coast.

Refineries in east Texas including those operated by Exxon, Valero, Total and Motiva are weighing plans for Storm Laura when it hits the Texas-Louisiana border.

Motiva Enterprises may shut the largest crude oil refinery in the United States, people familiar with plant operations said. Its 607,000 barrel-per-day (bpd) refinery in Port Arthur, Texas, could be drenched by both storms, the people said.

During 2017’s Hurricane Harvey, which occurred three years ago this week, five feet (1.52 meters) of rain fell on east Texas, forcing Motiva to halt operations for nearly two weeks and others to take shorter shut-downs.

That storm led Motiva, which is owned by the world’s top oil producer Saudi Aramco, to cancel plans to expand the refinery. (Reporting by Erwin Seba; Writing by Gary McWilliams; Editing by Andrea Ricci)

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