US Gulf shut-ins grow as Nate approaches: Update
Update BSEE and company shut-in info.
Houston, 6 October (Argus) — US oil and gas output shut-ins grew today as producers prepare for Tropical Storm Nate, which is expected to strengthen into a Hurricane as it travels through the Gulf of Mexico this weekend.
The Bureau of Safety and Environmental Enforcement (BSEE) today said 1.24mn b/d of oil output has been shut in, representing 71pc of the total from the offshore Gulf. Over 53pc of the offshore gas production has been shut, at about 1.7 Bcf/d, it said. As many as 66 platforms and five rigs have been evacuated, it said.
Most major oil and gas producers in the offshore Gulf of Mexico region including Chevron, BP and Shell had yesterday begun to shut in all or most of their platforms and facilities and removed all personnel stationed there.
Nate is expected to strengthen to near hurricane intensity when it approaches the Yucatan Peninsula today, according to the US National Hurricane Center. Life-threatening storm surge flooding is likely along portions of the northern US Gulf coast. A hurricane warning has been issued for portions of the Gulf coast from Louisiana to Alabama.
Shell said it is beginning to shut in production on platforms in the eastern Gulf, which includes the Mars, Ursa, Olympus and Ram Powell facilities. It has also suspended drilling operations and all personnel are returning to shore.
In addition to platforms, Chevron has initiated hurricane preparedness plans at its Gulf terminals including at Fourchon and Empire.
"Shippers have been notified of our plans to secure the terminals and to discontinue the receipt and delivery of crude oil until after the storm," it said.
The US Coast Guard closed the lower Mississippi river to all inbound deep draft vessels that do not have confirmed berth arrangements.
The agency also set "port condition X-ray" for the port of New Orleans, which is implemented when gale force winds are possible within 48 hours. Port stakeholders should expect conditions to continue to change for the next 48-72 hours, the agency said.
Light Louisiana Sweet traded at premiums to WTI as strong as $5.80/bl so far today, which is the strongest since Hurricane Harvey made landfall 25 August. Before August, the last time LLS was reported trading at such a strong premium was May 2015.
More production is at risk from Nate than Hurricane Harvey, which made landfall at the end of August as a much stronger system "given [Nate's] path threatens more US Gulf Coast platforms," Goldman Sachs said in a note.
Phillips 66 was preparing to shut down its 250,000 b/d Alliance refinery in Belle Chasse, Louisiana, ahead of the storm.
The state of Alabama, in the pathway of the weather system, has declared a state of emergency and has directed the activation of the state's emergency operations plan.