July 11, 2019 / 1:40 PM / 8 days ago

Storm threat shuts down U.S. coastal refinery, adding to offshore oil production losses

HOUSTON, July 11 (Reuters) - Threatened flooding from a storm in the U.S. Gulf of Mexico that has cut nearly a third of the region’s oil production has forced the shutdown of a coastal refinery, pushing oil and gasoline prices higher on Thursday.

Phillips 66 said it expected to complete the closing its 253,600-barrel-per-day (bpd) Alliance, Louisiana, refinery this morning after local authorities ordered a mandatory evacuation of the area.

Oil companies have shut a third of offshore U.S. Gulf of Mexico production ahead of the storm that could become Hurricane Barry late Friday, according to a National Weather Service (NWS) forecast.

Offshore oil and gas platforms operated by Anadarko Petroleum, Chevron, Royal Dutch Shell and others were evacuated, and many halted production, according to company reports.

Crude futures, which rose more than 4% on Wednesday, were fractionally higher on Thursday, with U.S. crude trading at $60.60, the highest since May. Gasoline futures also rose a fraction.

On Thursday morning, the potential storm was about 115 miles (185 km) southeast of the mouth of the Mississippi River, moving west at about 5 miles per hour (7 km per hour). It could make landfall on Saturday on the Louisiana coast, forecasters said.

The potential storm could become a Category 1 hurricane with winds of at least 74 mph (119 kph) and drive ocean water up the Mississippi, forecasters said. The storm surge is projected to be 3 feet to 6 feet (.9 meter to 1.8 meters), according to the weather service.

The Alliance refinery sits next to the river 39 miles (63 km) south of New Orleans. The last hurricane to flood the refinery was 2012’s Hurricane Isaac. The refinery was also shut by Hurricane Gustav in 2008 and Hurricane Katrina in 2005.

In 2017, Hurricane Nate led Phillips 66 to shut the refinery, which was restarted within days as the storm turned away from the area. (Reporting by Erwin Seba; editing by Jonathan Oatis)

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