Francine shuts in 24pc of US Gulf oil output: Update

Spanish Market: Crude oil, Natural gas
10/09/24

Includes production shut-in figures, port status updates and spot crude price information.

US offshore operators shut in 24pc of Gulf of Mexico oil production ahead of tropical storm Francine, which is expected to gain hurricane status later today and hit Louisiana Wednesday.

About 412,070 b/d of offshore oil output was off line as of 12:30pm ET due to storm preparations, according to the Bureau of Safety and Environmental Enforcement (BSEE). About 494mn cf/d of natural gas production, or 26pc of the region's output, was also off line. Operators evacuated workers from 130 platforms.

The storm was about 380 miles southwest of Morgan City, Louisiana, packing maximum sustained winds of 65mph, according to a 2pm ET advisory from the National Hurricane Center. It is expected to continue to move across the northwestern Gulf of Mexico tonight and make landfall in Louisiana on Wednesday evening.

The storm will track through an offshore region that accounts for about 15pc of US crude output and 5pc of US natural gas production.

Ports closing ahead of storm

Ports along the storm's path are restricting inbound and outbound traffic ahead of the storm, with many planning to close in the next day.

Lightering operations were paused off of Galveston, Texas, starting Monday night due to high seas, and the Louisiana Offshore Oil Port export/import facility said it was following its inclement weather plans, which includes shutting down ahead of a storm like Francine.

The port of Houston closed to both inbound and outbound vessel traffic at 1pm ET Tuesday due to worsening weather conditions from Francine, a ship agent said. The US Coast Guard's captain of the port expected port condition Zulu, where gale force winds are anticipated within 12 hours and port operations are suspended, to be in place by 7pm ET Tuesday.

In Louisiana, terminal operations at the port of New Orleans will be closed Wednesday, with operators expected to resume on Thursday.

Operations at the New Orleans Public Belt, which connects major railroads to the port, will continue Tuesday before closing Wednesday and are expected to resume on Thursday.

Offshore crude flows curtailed

Chevron initiated shut-in procedures for its Anchor and Tahiti platforms, 190 miles south of New Orleans, and began transporting all personnel from the facilities. Production from its other operated platforms in the Gulf of Mexico remained at normal levels.

Non-essential staff were also being removed from the Big Foot and Jack/St. Malo platforms, around 225 miles and 280 south of New Orleans, respectively.

Crude from Tahiti is transported to the Boxer platform, from where it can move along pipelines that feed into multiple streams — Mars, medium sour grades Poseidon and Southern Green Canyon (SGC) — as well as lighter sour grades Eugene Island and Bonito. Production from the recently-started Anchor platform feeds into the Amberjack pipeline, which carries crude into the Mars stream.

Mars has been heard trading at 70-90¢/bl discounts to the US benchmark in Cushing, Oklahoma, on Tuesday, rising over the day from a volume-weighted average discount of 96¢/bl on Monday. Francine's path over Louisiana means it has the potential to weigh more on refinery demand there than on offshore crude production.

ExxonMobil said all staff had been transported off the Hoover platform, located about 200 miles south of Houston, and operations shut-in, while Shell said it was shutting in production at its nearby Perdido platform after earlier pausing drilling operations from the facility.

Hoover and Perdido both feed 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 SGC was discussed at a 70¢/bl discount to the US benchmark today, which is where it traded in the prior session when narrowed its discount by about 35¢/bl from ahead of the weekend.

So far, no major problems are expected at BP's offshore facilities in the region.

Non-essential personnel have been evacuated from Shell's Enchilada/Salsa and Auger assets, located about 120 miles south of Vermillion Bay, Louisiana.

By Stephen Cunningham, Tray Swanson and Amanda Smith

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