U.S. Gulf Coast refiners, producers brace for tropical storm

HOUSTON (Reuters) - Oil and gas producers from Mexico to Louisiana are gearing up for heavy rains and winds this week as remnants of a tropical storm circulating over Mexico’s Yucatan Peninsula threaten to redevelop into a cyclone.

The remains of Tropical Storm Harvey, which are scattered over Mexico, have a 90 percent chance of developing into a cyclone over the next two days, the National Hurricane Center said on Tuesday.

A tropical depression could form over the Bay of Campeche, which is close to 80 percent of Mexico’s oil and gas production, on Wednesday and Thursday and grind toward the Texas coast on Friday, the Miami-based center added.

The storm could develop into a Category 1 hurricane with wind speeds of at least 74 miles per hour (120 kph) by Friday, and move slowly or even stall over central Texas during the weekend, said John Tharp, forecast operations supervisor for Weather Decision Technologies in Norman, Oklahoma.

“Rain does look to be a very serious concern with this system. A widespread 6 to 12 inches (15 to 30 cm) appears likely and it will be possible for the most impacted locations to see in excess of 25 inches (63.5 cm) of rainfall” between Friday and Monday, Tharp said, warning that it was still too early to tell where the worst of the rainfall would land.

Forecasts currently call for the budding storm to make landfall just east of Corpus Christi, and make its way to western Louisiana by early next week, he said.

The U.S. Gulf of Mexico is home to about 17 percent of the nation’s crude output and 5 percent of dry natural gas output, according to the U.S. Energy Information Administration. More than 45 percent of the nation’s refining capacity is along the U.S. Gulf Coast.

A serious rain event or heavy winds could disrupt oil and gas production, as companies evacuate platforms in the Gulf of Mexico and refiners along the coast face potential flooding.

Corpus Christi, where the storm may first land, is a major oil and gas refining and export hub. Valero Corp, Flint Hills Resources [FHR.UL], and Citgo Petroleum [PDVSAC.UL] together have almost 750,000 barrels per day of refining capacity in the region.

Wholesale gasoline prices along the U.S. Gulf Coast were slightly stronger on Tuesday ahead of the storm, traders said.

Separately, a large area of thunderstorms and showers over the Bahamas has a 30 percent chance of developing into a cyclone over the next five days, according to the NHC.

That system could bring heavy rain and potential flooding to the Florida peninsula, the NHC said. Its track currently is expected to move off land and into the Atlantic, but some models show it has the potential to make it into the Gulf of Mexico.