Hurricane Sally takes quarter of US Gulf of Mexico output offline

Royal Dutch Shell shuts its oil platform off Louisiana, joining BP, Chevron Corp and Equinor in closing facilities.

Sally weakened on Tuesday to a Category 1 hurricane [Joe Raedle/Getty Images/AFP]
Sally weakened on Tuesday to a Category 1 hurricane [Joe Raedle/Getty Images/AFP]

More than a quarter of US offshore Gulf of Mexico oil output was shut and export ports were closed on Tuesday as Hurricane Sally stalled just off the US Gulf Coast, lashing the region with heavy rains.

Sally weakened on Tuesday to a Category 1 hurricane with sustained winds of 85 miles/hour (140km/h), moving at a snail’s pace that threatened “historic” flooding from Mississippi to Florida, the US National Hurricane Center said in a late-day update.

The storm ploughed through prime US offshore production areas and was meandering on a path towards Alabama and the Florida Panhandle, sparing New Orleans and some larger Gulf Coast refineries from its winds and rain.

Royal Dutch Shell shut its Appomattox oil platform off the coast of Louisiana, joining BP, Chevron Corp and Equinor in closing facilities less than one month after Hurricane Laura knocked about 1.5 million barrels per day of oil offline temporarily.

Nearly 500,000bpd of offshore crude oil production and 28 percent, or 759 million cubic feet per day (mmcfd), of natural gas output were shut in the US Gulf of Mexico on Tuesday, according to the US Department of the Interior.

US crude oil futures rose nearly 3 percent and petrol futures climbed 2.3 percent on Tuesday on the hurricane-related oil production and refinery shut-ins despite demand losses from the COVID-19 pandemic.

Disruptions

The nation’s sole offshore terminal, the Louisiana Offshore Oil Port (LOOP), stopped loading tankers on Sunday, while ports from Biloxi, Mississippi, to Pensacola, Florida, were closed.

Ports along the Mississippi River began to reopen late on Tuesday with restrictions. The closings will cut roughly 307,000bpd of crude and 411,000bpd of refined products, according to Kpler data.

As of 10pm CDT (03:00 GMT) on Tuesday, Sally was about 65 miles (105km) south of Mobile, Alabama, and crawling towards the northwest at 2mph (3kph). The crawling advance threatened to inundate the region.

Refiners in the region have wound down operations. Phillips 66 shut its Alliance oil refinery, which processes 255,600 bpd at a site along the Mississippi River on the coast of Louisiana.

Shell cut production to minimum rates on Monday at its 227,400bpd Norco, Louisiana, refinery, but planned to keep a Mobile, Alabama, chemical and refinery plant operating with a skeleton crew.

Murphy Oil Corp said it was beginning to restore production at its eastern-most Gulf of Mexico oil platforms, and oil-giant Equinor said it expected to return workers to its Titan platform on Thursday.

Source : Reuters

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