USGC ports and production enter recovery as Francine dissipates into tropical depression

Oil and natural gas producers faced the peak of production shut-ins in the US Gulf of Mexico Sept. 12 as Tropical Depression Francine struck the region as a hurricane the night before, landfalling in eastern parts of Louisiana which resulted in additional facilities going offline, according to the federal Bureau of Safety and Environmental Enforcement statistics.

As of around noon CT Sept. 12, the US Gulf had 730,472 b/d of crude oil production shut-in, or 42% of the region's total production of roughly 1.85 million b/d, BSEE said. In addition, 991,680 Mcf/d of gas, or nearly 53% of total US Gulf production of about 113 Bcf/d, was shut in, the agency said.

By contrast, on Sept. 11, a total of 674,833 b/d, or 39% of the region's crude production, and 907,000 Mcf/d, or 49% of its gas output, was shut in, the BSEE said.

Also on Sept. 12, 169 platforms, or 45.5% of the US Gulf's total, were shut in compared with 171 platforms the day before.

Data for the BSEE update comes from offshore operator reports submitted as of 11:30 am CT Sept. 12.

Oil major Shell reported production losses at multiple locations on Sept. 12, in addition to previous shut-ins that were initiated earlier in the week, the company said in a press release.

"Because of downstream issues, we have had to curtail production at Appomattox, Mars, Vito, Ursa, and Olympus," the statement said. "We have begun redeploying personnel to our Perdido asset, while production there and at our Auger and Enchilada/Salsa assets is still shut in. Drilling remains paused at our Whale asset, scheduled to begin operations later this year."

Chevron has begun to assess the condition of their offshore facilities Sept. 12, a spokesperson told S&P Global Commodity Insights, and plans to return personnel at the Anchor, Big Foot, and Tahiti platforms this evening with production ramp-up to follow. Oil production continues from the company's other Chevron-operated Gulf of Mexico facilities.

Woodside Energy's Shenzi production hub in the US Gulf, meanwhile, remains shut-in Sept. 12 due to an onshore refinery losing power, the company told Commodity Insights.

The supply losses have helped boost crude prices, with NYMEX front-month crude settling $1.66 higher at $68.04/b Sept. 12.

While prices have climbed near-term, however, NYMEX front-month crude has fallen over $14 between Aug. 12 and Sept. 12, a longer-term downtrend as slowing demand has been met with a rise in global crude production.

The impact on spot crude price differentials has been modest so far, suggesting a well-supplied prompt market, and the temporary nature of the outages. US Gulf Coast sour Mars crude remained at a 75 cents/b discount to WTI Sept. 12.

With the storm dissipating into a tropical depression and finally exiting the region Northeast into Mississippi, USGC ports are preparing to bring facilities back online.

Texas ports at Houston and Corpus Christi reopened fully to inbound and outbound vessel traffic, with the exception of the Galveston port, which was still restricting inbound traffic Sept. 12. The Cameron and Lake Charles, Louisiana ports remained shut, according to the US Coast Guard Sept. 12.

All operations at the Port of New Orleans remain shut, with no vessel movement allowed and additional restrictions on portions of the Lower Mississippi River.

Port Fourchon has moved into a recovery phase Sept. 12, with the port commissioner allowing limited access to tenants assessing damage, according to a Sept. 12 update from the port's website.

The Louisiana Offshore Oil Port was still shut as of a Sept. 11 update, with all marine operations suspended in expectation of the worst of the weather event.