A Review of the Nigerian Energy Industry

Michael shuts nearly 40 percent of U.S. Gulf of Mexico oil output

US Gulf of Mexico oil rig

10 October 2018, News Wires — Nearly 40 percent of daily crude oil production and more than one-third of natural gas output was lost from offshore U.S. Gulf of Mexico wells on Wednesday because of platform evacuations and shut-ins ahead of Hurricane Michael.

Michael intensified to a Category 4 storm and is expected to hit the Florida Panhandle later Wednesday with maximum sustained winds of 145 miles (233 kilometers) per hour.

Oil producers – including Anadarko Petroleum Corp, BHP Billiton, BP and Chevron Corp – since Monday evacuated personnel from 75 platforms as the storm made its way through the central Gulf.

The country’s largest privately owned crude terminal, the Louisiana Offshore Oil Port, halted operations at its marine terminal. The facility is the only port in the United States capable of fully loading and unloading a tanker with a capacity of 2 million barrels of oil.

Companies turned off daily production of about 670,800 barrels of oil and 726 million cubic feet of gas by midday on Tuesday, according to the federal offshore regulator, the Bureau of Safety and Environmental Enforcement (BSEE).

The evacuations affected about 11 percent of the occupied platforms in the Gulf, it said.

Exxon Mobil said Wednesday it evacuated non-essential personnel from its Mobile Bay offshore facility and transferred control onshore in addition to evacuating staff from its Lena platform. It expects minimal impact to production.

A week ago, drillers were pulling about 3.4 billion cubic feet per day (bcfd) of gas out of the offshore Gulf of Mexico. On Tuesday, that was down to just 2.2 bcfd, according to data from Refinitiv.

Southern Co, the biggest power company in Georgia and Alabama, said on Wednesday it was reducing power in two units at the Farley nuclear power plant in Alabama as a precautionary measure.

The reduced operating level will allow personnel to continue monitoring the storm’s progress and if necessary shut the 1,751-megawatt Farley plant, which is about 90 miles north of the coast. Farley is the company’s reactor closest to where Hurricane Michael is expected to make landfall.

U.S. crude futures were trading down more than 2 percent at $73.20 per barrel Wednesday morning, reflecting the declining importance of Gulf of Mexico output that has resulted from the growth of production from the nation’s onshore shale fields.

Crude output lost in the two days of storm shut-ins represents about 9 percent of the U.S. production of 11.1 million barrels per day, according to data from the Energy Information Administration.

In addition to shutting in wells, oil producers halted most offshore drilling operations by evacuating three drilling rigs and moving eight others out of the storm area, BSEE said.

  • Reuters
In this article

Join the Conversation

Join the Conversation