REFILE-US oil industry recovers from Isaac as storm weakens

Thu Aug 30, 2012 11:15am EDT

* No platform or refinery damage reported from storm

* Energy firms inspect infrastructure, aim to restart output

* Belle Chasse, Louisiana refinery safe from flooding-report

* LOOP oil terminal can operate on backup power after outage

* Oil futures fall, natural gas futures rise

By Kristen Hays and Erwin Seba

HOUSTON, Aug 30 (Reuters) - Oil and gas companies assessed their U.S. Gulf region installations on Thursday for damages in the wake of Hurricane Isaac, which has weakened to a tropical storm and moved inland.

The oil and gas industry in the Gulf region has so far reported no major storm-related damage to infrastructure, and companies, including Royal Dutch Shell, said they could restart shut-in offshore production as early as Friday.

Isaac moved north on Thursday, after hitting Louisiana at hurricane strength earlier this week. The storm had triggered widespread, precautionary production cuts from the Gulf region's offshore platforms and onshore refineries this week.

U.S. oil futures fell 1.2 percent to $94.28 a barrel as of 10:47 a.m. EDT (1447 GMT). Natural gas futures rose 1 percent.

Henry Hub terminal, the Louisiana delivery point for benchmark NYMEX gas contracts, was operating normally, a spokesman from NYMEX owner CME said.

"We haven't heard of significant damage and it seems most of the concern has passed," said Matt Smith, analyst at Summit Energy in Louisville, Kentucky.

"Now it's just a case of the actual production coming back online. We'll probably see a temporary drop in crude imports due to Isaac and a drop in crude demand from refineries that have been closed."

Ninety-five percent of oil output and 72 percent of natural gas production in the U.S. Gulf of Mexico remained shut in, and 5.5 percent of U.S. refining capacity remained offline due to Isaac as of Wednesday, government figures showed.

One southern Louisiana refinery that had been at risk from floods - the 247,000 barrel per day (bpd) Phillips 66 plant in Belle Chasse - "seems to be fine" and wasn't flooded, Plaquemines Parish President Billy Nungesser told WWL 870 local radio early Thursday.

Phillips wasn't immediately available to comment.

Independent refiner Valero said it detected no structural damage at two Louisiana refineries it operates, during a preliminary inspection on Thursday. It was still unclear when the plants would restart.

The Louisiana Offshore Oil Port (LOOP), a crude terminal that typically handles 13 percent of U.S. imports, has adequate backup power generation to restart deliveries and meet anticipated demand from refineries after Isaac passes, spokeswoman Barb Hesterman said.

LOOP facilities, including its onshore terminal at Clovelly, Louisiana, suffered power outages after a transmission line was damaged. The line could be difficult to repair since it crosses a marsh, utility Entergy Corp. said.

Hesterman said LOOP personnel were inspecting for damages on Thursday. LOOP operations have been suspended this week and Hesterman said it wasn't immediately clear when it would restart.

Major offshore oil and gas producers said they would begin inspecting platforms for any Isaac-related damages on Thursday, and hoped to re-staff them soon.

The U.S. Gulf typically accounts for 23 percent of domestic oil and 7 percent of natural gas production. The coastal region's refineries account for 45 percent of U.S. crude processing capacity.

The National Hurricane Center said Isaac was moving north-westward over Central Louisiana with maximum sustained winds of 45 miles (75 km) per hour as of 8:00 a.m. EDT (1200 GMT) on Thursday.