Francine shuts in about 42pc of US Gulf oil: Update 2

Market: Crude oil, Natural gas
12/09/24

Adds spot crude pricing information, NOLA port reopening.

Hurricane Francine, which has since weakened to a tropical depression as it passes over central Mississippi, shut in about 42pc of US Gulf of Mexico oil output.

About 730,472 b/d of offshore oil output was off line as of 12:30pm ET Thursday, according to the Bureau of Safety and Environmental Enforcement (BSEE), while 991.68mn cf/d of natural gas production, or 53pc of the region's output, was also off line. Operators evacuated workers from 169 platforms this week ahead of the storm.

Companies including Chevron, ExxonMobil and Shell relocated offshore workers and suspended some drilling operations ahead of Francine, while a number of ports, including New Orleans, Louisiana, shut down.

Shell curtailed output at the Appomattox platform, around 80 miles south east of Louisiana, as well as the Mars, Vito, Ursa, and Olympus platforms because of downstream issues. Today Shell said it has started to redeploy staff to its Perdido facility, located about 190 miles south of Houston, where production is still shut. Operations at Shell's Auger and Enchilada/Salsa assets, about 120 miles south of Vermillion Bay, Louisiana. remain suspended. Drilling is still halted at the Whale platform, which is scheduled to start up later this year.

"As conditions continue to improve, we will begin the process of redeploying personnel to Auger and Enchilada/Salsa to bring staffing to normal operating levels," Shell said.

Offshore crude spot prices rise

Crude from Shell's Appomattox project moves through the offshore Proteus and Endymion pipelines to be marketed as part of the medium sour Thunder Horse stream, which has dedicated underground cavern storage in LOOP's Clovelly, Louisiana, hub. In today's spot market, prompt October Thunder Horse has been trading at a 30¢/bl premium to the US benchmark in Cushing, Oklahoma, today, 20¢/bl higher than in the prior session.

Crude from Shell's Mars, Vito, Ursa and Olympus platforms also delivers to LOOP's Clovelly hub, and is sold as Mars crude from there, where the medium sour also has dedicated cavern storage. Mars crude has sold in the spot market today at 70-80¢/bl discounts to the Cushing benchmark, in line with yesterday's 75-80¢/bl discounts.

Shell's Auger and Enchilada/Salsa production feeds primarily into the Bonito Sour crude stream, a light sour that is not often seen trading in the spot market.

Perdido feeds into ExxonMobil's Hoover Offshore Oil Pipeline System (HOOPS), that delivers the HOOPS Blend to the Texas Gulf coast. HOOPS Blend is a medium sour crude that is not actively traded in the spot market. Competing Texas-delivered medium sour Southern Green Canyon (SGC) was trading at a $1.25/bl discount to Cushing this morning, within yesterday's range of discounts between $1 and $1.30/bl. SGC discounts had tightened to as narrow as 70¢/bl this week — the tightest since mid-August.

Ports reopening

Conditions at the port of New Orleans were set to normal at 2pm ET today after the port was closed ahead of the storm, according to the US Coast Guard. The mouth of the Mississippi River remained closed to traffic however.

The port of Lake Charles reopened to vessel traffic at 11am ET Thursday after closing on Tuesday evening.

Francine was about 15 miles north-northeast of Jackson, Mississippi, as of a 12pm ET advisory from the National Hurricane Center, with maximum sustained winds of 35mph. It slammed into the Louisiana coast as a Category 2 hurricane Wednesday evening before weakening.

By Stephen Cunningham and Tray Swanson

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