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Lower Oil Production Hits Pipeline Operators Hard

Lower Oil Production Hits Pipeline Operators Hard

This year’s U.S. oil production…

Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

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Gulf Of Mexico Oil Producers Begin Evacuation Ahead Of Nate

After Chevron said on Wednesday it was preparing to begin shutting down two platforms in the Gulf of Mexico ahead of a tropical storm raging in the Caribbean, now more oil and gas producers in the Gulf have followed suit as Tropical Storm 16 was upgraded to Nate, currently wreaking havoc on Costa Rica and Nicaragua and soon heading for the US.

Nate brings heavy rains and is expected to strengthen into a hurricane before it makes landfall in Louisiana. Its route, Reuters notes, will take it through an area thickly populated with oil and gas platforms, producing over 1.6 million bpd of oil. This represents 17 percent of the U.S. crude oil production total. Of this, over 250,000 bpd in daily production has already been shut in, the Bureau of Safety and Environmental Enforcement said. The figure represents 14.55 percent of total oil production in the Gulf of Mexico.

The BSEE also said that as of Thursday, the crews of six production platforms in the Gulf had been evacuated. Among the companies evacuating crews and shutting in production are Shell, Exxon, BP, and Anadarko. ConocoPhillips and Marathon Oil are monitoring the progress of Nate but have not yet taken any steps with regard to production or personnel safety. Related: Venezuela And Russia Team Up To Tackle The Petrodollar

Processing facilities in Louisiana are also preparing for Nate as the location of its landfall is in close proximity to several refineries. Shell is cutting production at its Norco refinery, which has a capacity of 225,800 bpd, and Phillips 66 is mulling over the shutdown or temporary standby of its 247,000-bpd Alliance facility. Sources told Reuters that other refiners plan to continue to work as normal despite the approaching hurricane.

Nate is the second potentially devastating hurricane to touch down on the U.S. Gulf Coast in two months, after Harvey lived up to negative expectations, taking out a substantial chunk of the national refining capacity for a couple of weeks. What could aggravate the situation further this time is that Texas ports are rerouting larger tankers to Louisiana as they reel from Harvey’s effects. If Nate ends up as strong as Harvey, it will seriously disrupt the supply of crude oil to Gulf Coast refineries.

By Irina Slav for Oilprice.com

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