July 10, 2019 / 1:10 PM / a month ago

U.S. oil companies slash Gulf of Mexico production as storm bears down

HOUSTON (Reuters) - U.S. oil producers on Wednesday cut nearly a third of Gulf of Mexico crude output as what could be one of the first major storms of the Atlantic hurricane season threatened offshore oil production and began soaking Louisiana with heavy rains.

FILE PHOTO: A massive drilling derrick is pictured on BP's Thunder Horse Oil Platform in the Gulf of Mexico, 150 miles from the Louisiana coast, May 11, 2017. REUTERS/Jessica Resnick-Ault/File Photo

Fifteen production platforms and four rigs were evacuated in the north central Gulf of Mexico, according to a U.S. regulator as oil firms moved workers to safety ahead of a storm expected to become a hurricane by Friday.

The withdrawals helped push U.S. oil futures up 4.5% to $60.43 a barrel on Wednesday, and lifted gasoline futures more than 4% to the highest price since late May. The U.S. Gulf of Mexico produces 17% of U.S. crude oil and 5% of natural gas.

As the potential hurricane, to be named Barry, approached Louisiana, Governor John Bel Edwards on Wednesday declared a state of emergency, warning that up to 15 inches (38 cm) of rain could fall on parts of the Gulf Coast state. New Orleans was under a flash flood warning after receiving about 8 inches of rain early in the day.

Vermilion Parish, a coastal community, called for residents of some low-lying areas to evacuate.

A tropical depression is expected to form in the Gulf by Thursday, with the potential to strengthen to a hurricane by the weekend, according to the National Hurricane Center. The system could produce a storm surge and heavy rainfall from Louisiana to the upper Texas coast.

The storm could drop up to 12 inches of rain along the Central Gulf Coast through next week, with up to 18 inches falling in some areas.

Exxon Mobil Corp, ConocoPhillips, Anadarko Petroleum Corp and others withdrew staff, and some cut production from deepwater platforms as a safety precaution.

The U.S. Bureau of Safety and Environmental Enforcement (BSEE), which regulates offshore drilling, said more than 600,000 barrels per day of Gulf oil production and 17% of the region’s natural gas production were shut by producers by Wednesday morning.

Exxon has evacuated nonessential staff from three platforms in the Gulf, but anticipates little effect on its production, spokeswoman Julie King said.

Anadarko, the third-largest U.S. Gulf producer by volume, said it is stopping oil and gas production and removing workers from its four central Gulf facilities: the Constitution, Heidelberg, Holstein and Marco Polo platforms. It said it is also evacuating nonessential staff from eastern Gulf platforms.

Royal Dutch Shell Plc expanded an earlier offshore evacuation to seven platforms and shut more production, the company said on Wednesday.

Operations at the Louisiana Offshore Oil Port, the only U.S. port where the largest crude tankers can load and unload, were normal on Wednesday morning, a spokeswoman said.

Oil refiners Motiva Enterprises [MOTIV.UL] and Marathon Petroleum Corp said they were monitoring the developing storm and prepared to implement hurricane plans.

Motiva’s Port Arthur, Texas, refinery was one of four refineries in east Texas inundated by more than 5 feet (1.52 m) of rain in a single day during 2017’s Hurricane Harvey.

Chevron, Phillips 66, Exxon and Royal Dutch Shell were preparing for heavy rain and wind at refineries along the Gulf Coast, company representatives said. Exxon reported operations at its Gulf Coast refineries were normal on Wednesday morning.

Chevron has shut production at five Gulf platforms - Big Foot, Blind Faith, Genesis, Petronius and Tahiti - and has begun to evacuate all workers at those offshore facilities, spokeswoman Veronica Flores-Paniagua said.

BP Plc, the second-largest oil producer in the Gulf by volume, is shutting all production at its four Gulf platforms - Thunder Horse, Atlantis, Mad Dog and Na Kika - which produce more than 300,000 barrels of oil equivalent per day.

FILE PHOTO: The logo for Anadarko Petroleum corp. is displayed on a screen on the floor at the New York Stock Exchange (NYSE) in New York, U.S., April 30, 2019. REUTERS/Brendan McDermid/File Photo

BHP Group Ltd was also removing staff from its two offshore energy platforms, according to a company statement.

Two independent offshore producers, Fieldwood Energy LLC and LLOG Exploration Company LLC, declined to comment.

The Atlantic hurricane season runs from June through November.

Reporting by Collin Eaton and Erwin Seba in Houston; Editing by Leslie Adler and Matthew Lewis

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