US energy industry braces for Hurricane Sally

Energy companies, ports and refiners on Monday raced to shut down as Hurricane Sally bores in on the central United States Gulf Coast, the second significant hurricane to shutter oil and gas activity over the last month.

Sally was upgraded to a hurricane on Monday, the US National Hurricane Center (NHC) said, but its trajectory has shifted east towards Mississippi, likely sparing some of Louisiana’s refining operations.

The hurricane is disrupting oil imports and exports, as the nation’s sole offshore terminal, the Louisiana Offshore Oil Port, stopped loading tanker ships on Sunday, while the port of New Orleans is closing on Monday.

Numerous offshore production facilities have been shut, including those operated by Chevron Corp and BP Plc. Last month, Hurricane Laura forced roughly 1.5 million barrels per day (bpd) of output to temporarily close.

The port of New Orleans and LOOP combined exported about 307,000 bpd of crude and 411,000 bpd of refined products and imported about 342,000 bpd in crude for the June-to-August period, according to Kpler data.

As of 12:05pm EDT (16:05 GMT), Sally was about 220 kilometres (135 miles) east-southeast of the mouth of the Mississippi River, with winds of up to 140 kilometres per hour (85 miles per hour).

Officials in states issued mandatory evacuations for residents in low-lying areas.

The US Coast Guard said all southbound vessel traffic from the port of New Orleans would be brought to a halt at 17:00 GMT on Monday and stop all traffic from the port at 23:00 GMT.

Refiners in the region are winding down operations. The Phillips 66 Alliance oil refinery, which processes 255,000 bpd at a site along the Mississippi River on the coast of Louisiana, shut on Monday, said energy industry intelligence service Genscape.

Shell cut production to minimum rates on Monday at its 227,400 bpd Norco, Louisiana, refinery, including idling the refinery’s crude distillation unit, said sources familiar with plant operations.

Valero Energy Corp’s 125,000 bpd-refinery plans to continue normal operations as the storm will pass to the east, sources told the Reuters news agency.

Chevron, BP, Equinor and Murphy Oil all evacuated some offshore workers from production platforms, the companies reported. Royal Dutch Shell Plc curtailed production at its Olympus, Mars and Appomattox platforms on Monday, the company said.

US Gulf of Mexico offshore oil production delivers about 17 percent of US crude oil and 5 percent of US natural gas output. As much as 1.5 million bpd of offshore oil production was shut in by Hurricane Laura last month.