August 4, 2008 / 2:20 PM / 11 years ago

Storm Edouard shuts refinery, hits shipping

HOUSTON (Reuters) - Tropical Storm Edouard forced shut a huge U.S. offshore oil port, a refinery, some oil production and disrupted shipping as the storm raced toward the Texas-Louisiana coast on Monday.

Energy companies evacuated staff from offshore platforms due to Edouard, the second named storm of the season to threaten oil operations in the Gulf of Mexico, with Apache shutting a small amount of output.

So far, Edouard had closed 0.9 percent of crude oil production and 7.2 percent of natural gas output, according the U.S. Minerals Management Service.

The Gulf of Mexico supplies about a quarter of U.S. crude oil output and 15 percent of its natural gas, while Gulf Coast refiners make about a quarter of domestic gasoline.

Marathon shut its 76,000 barrel per day Texas City, Texas refinery and Valero Energy Corp warned that its plants in the region could be affected after the storm halted inbound traffic to the Houston Ship Channel and the Sabine Pass ship channel.

“We have started an orderly shut-down in preparation for the storm,” said Marathon spokeswoman Angela Graves.

At its predicted strength, Tropical Storm Edouard is unlikely to swamp coastal area refineries in the same way 2005’s Katrina and Rita did, said Kenneth Medlock, an energy fellow with Rice University’s Baker Institute.

Some refineries are on the “dirty side” of the storm’s projected landfall, where winds are the most damaging. But “I do not think it will matter much,” Medlock said. “The swell won’t likely be big enough to do sustained damage.”

Packing 50 miles per hour (85 kph) winds, Edouard swept across the northern Gulf of Mexico about 80 miles south-southwest of Grand Isle, Louisiana, threatening to come ashore on the Texas-Louisiana coast.

The U.S. National Hurricane Center said Edouard had about a 20 percent chance of becoming a hurricane by the time it reaches land.

Accuweather meteorologist Paul Pastelok said Texas City could see wind gusts up to 60 mph (97 kph) wind gusts when Edouard comes ashore Tuesday morning.

The Louisiana Offshore Oil Port, the only deep-water U.S. oil port and a major conduit for the country’s crude oil imports, temporarily suspended offloading oil tankers in the Gulf of Mexico due to high waves and winds.

The port’s onshore storage continued to supply refiners with crude on-hand, however, a spokeswoman said.

Crude oil prices fell more than $4 early Monday to below $121 a barrel, extending a steep decline from the July 11 record over $147.

“Edouard doesn’t seem to have much of an impact here, and while the LOOP is temporarily suspended, all it means is that tankers are just sitting out there,” said Kyle Cooper, research director of IAF Advisors.

Apache shut 8,600 bpd of oil output and 130 million cubic feet per day of natural gas production after evacuating 110 personnel from facilities off Louisiana.

Chevron Corp, Anadarko, BP, and Shell Oil said they were evacuating workers from platforms as a safety precaution but added production of oil and natural gas was not affected.

Other oil companies, including Exxon Mobil, El Paso, Citgo and ConocoPhillips, said they were keeping a close eye on the storm.

“We’ve been monitoring the storm track and have considered some evacuations of personnel in the path of the storm,” said Richard Wheatley, spokesman for El Paso Corp.

A series of powerful hurricanes in 2004 and 2005, including Hurricane Katrina, toppled oil rigs and severed pipelines in the Gulf, pushing oil prices to then-record highs.

Reporting by Erwin Seba, Chris Baltimore, Haitham Haddadin, Richard Valdmanis, Robert Campbell; writing by Matthew Robinson and Richard Valdmanis; Editing by Marguerita Choy

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