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Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing for news outlets such as iNVEZZ and…

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Tropical Storm Cindy Cripples Gulf Of Mexico Oil Production

Gulf Of Mexico

Tropical storm Cindy—which made landfall in southwest Louisiana on Thursday and is moving northeast across the U.S.—has shut in around one-sixth of the Gulf of Mexico oil production and is crippling shipping that will affect oil and gas imports and exports this week and next.

Heavy winds and rain, as well as possible power outages and flooding, could also affect operations.

Storm Cindy, which was downgraded to a tropical depression after making landfall, comes just a few weeks after the National Oceanic and Atmospheric Administration (NOAA) warned that 2017 could be an “above-normal” year for large hurricanes.

Bracing for the storm, offshore producers in the Gulf of Mexico suspended some operations and some evacuated personnel, while utilities inland were advising that power outages in Texas and Louisiana are possible. Louisiana and Alabama declared statewide states of emergency ahead of Cindy’s landfall, while Texas increased the readiness of state operations.

On Tuesday, Shell said that “some well operations have been suspended and production is currently unaffected,” while Anadarko said on Wednesday that it had temporarily ceased production at the Marlin, Holstein, and Heidelberg facilities on June 20. On Thursday, Anadarko said that it had “begun the process of returning non-essential personnel to operations and would resume and ramp up production at those facilities that were temporarily shut in as third-party pipelines allow.”

BP has also evacuated nonessential personnel, and its spokesman Jason Ryan said on Wednesday that “at this time, there have been no impacts to production.”

The Bureau of Safety and Environmental Enforcement said on Thursday that based on operator reports, it is estimated that approximately 16.47 percent of the current oil production in the Gulf of Mexico has been shut-in, with personnel evacuated from 39 production platforms, 5.29 percent of the 737 manned platforms in the Gulf of Mexico. The impact on natural gas production was much smaller, with just 0.01 percent of output shut-in.

Oil production in the Gulf of Mexico accounts for 17 percent of total U.S. crude oil production, while natural gas output accounts for 5 percent of total U.S. dry production. More than 45 percent of total U.S. petroleum refining capacity is located along the Gulf coast, as well as 51 percent of total U.S. natural gas processing plant capacity. Related: The Biggest Obstacles For China’s $900 Billion Silk Road

On Wednesday, ExxonMobil, Phillips 66, and Motiva Enterprises said that Cindy had not affected their refining operations.

Not only oil production has been affected by storm Cindy, shipping has also taken a hit.

Captains have stopped guiding ships into Sabine Pass, the site of the only active LNG export terminal in the lower 48 states.

The Destine natural gas pipeline declared force majeure on Wednesday, advising that it “has been and continues to be unable to provide gas transportation service from all of its offshore receipt point.”

The Louisiana Offshore Oil Port (LOOP) marine terminal said on Thursday that vessel offloading operations were suspended at 0100 hours/June 20th and would remain down until the conditions are favorable to safely resume operations. “Considering the current forecast, vessel offloading operations at the LOOP Marine Terminal are expected to resume on the evening of 6/23,” it said. Related: Once Again, Tensions Are Rising In Nigeria’s Oil Sector

“The biggest impact would be on shipping activity which will remain suspended through Friday,” Andy Lipow, president of Lipow Oil Associates in Houston, told Bloomberg.

Phil Flynn, a senior market analyst at Price Futures Group Inc. in Chicago, said in a note, as quoted by Bloomberg:

“While the storm may not be a whopper, it will influence shipping and may impact imports and exports of oil for next week.”

By Tsvetana Paraskova for Oilprice.com

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