Oil companies shut in Gulf production on storm threat

HOUSTON Fri Jun 22, 2012 4:59pm EDT

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HOUSTON (Reuters) - Energy companies began shutting in production and evacuating personnel from operations in the Gulf of Mexico on Friday as a weather system threatened to form into the first tropical cyclone to hit the oil and gas producing region this year.

BHP Billiton evacuated all workers from its platforms and shut in 170,000 barrels per day (bpd) of oil output and 100 million cubic feet per day of natural gas production in preparation. BHP operates two platforms, Shenzi and Neptune.

The U.S. National Hurricane Center said a low pressure system in the Gulf of Mexico, home to 20 percent of U.S. oil production and 6 percent of natural output, had a 70 percent chance of developing into a tropical cyclone over the next two days.

Other companies removed some staff, but saw had not shut in any production ahead of the potential storm.

Anadarko Petroleum Corp. and Murphy Oil Corp said they were removing non-essential workers from the offshore region, but added production had not been affected. Murphy operates three oil and gas platforms in the Gulf, while Anadarko operates eight.

The Louisiana Offshore Oil Port, the only U.S. port capable of offloading foreign crude from giant Ultra Large Crude Carriers and Very Large Crude Carriers, said it was removing non-essential workers from operations about 20 miles offshore but that operations were normal.

"We're offloading ships as we speak," spokesman Barb Hesterman said. "We have some maintenance work going on that we'd brought people in for."

Shell said it may evacuate workers not associated with producing and drilling activities, and that some weather-sensitive activities such as construction and painting could be delayed or shut down. ExxonMobil, ConocoPhillips, and Chevron Corp. were monitoring the storm but had not yet taken any actions.

Royal Dutch Shell, one of the largest oil and gas producers in the Gulf, was monitoring the system, "and will take appropriate steps as circumstances warrant," spokesman Bill Tanner said.

Energy markets have traditionally kept a sharp watch on storms passing through the region, especially after the destruction caused by Hurricanes Katrina and Rita to offshore facilities and refineries along the Gulf Coast in 2005.

The risk to markets has diminished slightly in recent years, as the development of shale deposits caused a boom in onshore production of both natural gas and oil.

Still, concerns about the potential storm -- which would be called Debby if it develops -- helped bolster U.S. natural gas and oil prices on Friday.

(Reporting By Kristen Hays; writing by Matthew Robinson; Editing by Marguerita Choy and David Gregorio)

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