A Review of the Nigerian Energy Industry

US Gulf oil producers shut output ahead of Storm Isaac

27 August 2012, Sweetcrude, HOUSTON – OIL and natural gas producers in the
Gulf of Mexico at the weekend braced for the first hurricane to affect the US oilpatch in 2012, which could spur shut-downs of nearly half of US offshore oil output.

Tropical Storm Isaac’s current track takes it to the east of US offshore production facilities, with the US National Hurricane Center forecasting it will reach hurricane strength on Sunday before making landfall on the Florida Panhandle late on Tuesday or early on Wednesday.

Offshore operators still skittish from catastrophic storms in 2005 are taking no chances. London-based BP Plc, the biggest US Gulf producer, on Friday shut production from its giant Thunder Horse platform, the world’s largest, which can process 250,000 barrels per day of oil and 200 million cubic feet per day of natural gas.

So far, Isaac has shut 8.63 percent of US offshore oil output and 1.62 percent of natural gas output, according to US government figures released on Saturday.

Those numbers could rise substantially in coming days. Up to 43 percent of US offshore oil capacity and 38 percent of the Gulf’s natural gas output could see short-term outages by Isaac’s expected sweep across the eastern Gulf, according to forecasters at Weather Insight, an arm of Thomson Reuters.

If Isaac stays on the track projected by US forecasters, it will pass to the east of the US offshore energy production zone, which produces about 23 percent of US oil output and 7 percent of its natural gas output.

However, a westward shift in Isaac’s track could bring it into the heart of the offshore oil patch and spur significant supply disruptions. Isaac has a 50 percent chance of entering the heart of the oil and gas producing region, Weather Insight said on Saturday.

On Saturday BP suspended production at nearby facilities in the Mississippi Canyon offshore drilling block at the Na Kika, Horn Mountain and Marlin platforms.

Royal Dutch Shell Plc on Friday said it would evacuate support workers not essential to production personnel from most of its Gulf platforms. Other offshore operators are likely to announce precautionary shut-downs in coming days as Isaac nears.

Isaac was forecast to avoid most of the US refinery row along the Gulf Coast, which stretches from Mississippi to south Texas and accounts from more than 40 percents of US fuel output.

Only Chevron Corporation’s 330,000 barrel per day (bpd) Pascagoula, Mississippi, refinery was near the storm’s expected landfall. Production had not been affected at the refinery by the storm, Chevron said.

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