More than 25% of US Gulf oil, gas production offline as Hurricane Sally makes landfall

New York — About 27% of US Gulf of Mexico offshore oil and 30% of natural gas output remained offline Sept. 16 after Hurricane Sally made landfall earlier in the day, according to the US Bureau of Safety and Environmental Enforcement.

Producers have shut in 508,366 b/d of crude and 805 MMcf/d of gas output, 27.48% and 29.70% of total offshore US Gulf output, respectively. A total of 112 platforms and rigs were evacuated as of Sept. 16, according to BSEE.

Chevron said it has begun to "redeploy personnel and restore production at the Blind Faith and Petronius platforms in the deepwater US Gulf."

Other producers have been slower to signal start-up, keeping facilities offline. Shell on Sept. 15 shut in production at its Appomattox platform, while also curtailing oil volumes at its large Olympus, Mars and Ursa facilities.. Murphy confirmed it evacuated multiple platforms and took production volumes offline, but a spokeswoman declined to specify which facilities were impacted.

In addition, BP has evacuated non-essential personnel from its Na Kika and Thunderhorse platforms.

Sally did not impact oil operations as heavily as Hurricane Laura did at the end of August. Laura managed to shutter nearly 85% of Gulf oil production -- more than 1.5 million b/d -- and 2.3 million b/d of refining capacity.

As a result, the storm had a limited impact on petroleum futures. NYMEX October crude futures settled at $40.16/b Sept. 16, up $1.88 on the day. NYMEX October RBOB settled 5.08 cents higher at $1.1889/gal due in part to a fire at the Trainer, Pennsylvania, refinery. NYMEX October ULSD settled at $1.1163/gal, up 1.70 cents.

Refining, terminals

Phillips 66's 255,600 b/d Alliance refinery in Belle Chasse, Louisiana, was shut in advance of Sally. The storm had no direct impact on the plant and Phillips 66 is taking the opportunity to prepare to begin work planned for October, during which time most of the plant will remain down.

Chevron spokesman Sean Comey said the company's 356,400 b/d Pascagoula Refinery in Mississippi is still operating.

Shell is conducting a post-hurricane assessment of its Mobile refinery in Alabama and has not found serious damage. The refinery ran at reduced rates temporarily in anticipation of the storm.

Phillips 66 spokeswoman Melissa Ory said the company's 260,000 b/d Lake Charles refinery, which was shut ahead of Laura, could start up in two weeks after it has reliable electricity and operate while repairs are being made, which are expected to take several months. Electricity provider Entergy, which is rebuilding the destroyed transmission lines to the refinery and other facilities, said it hopes to restore power by the end of September.

Citgo Petroleum's 418,000 b/d Lake Charles refinery also was damaged by Laura and remains offline.

All told, that is close to 1 million b/d of crude refining capacity currently offline in Louisiana.

Chevron also has shut its Empire and Fourchon terminals and related pipeline systems, the company said.

The Louisiana Offshore Oil Port also suspended operations Sept. 13 at its marine terminal.

Likewise, the Cameron Highway Oil Pipeline System, known as CHOPS, has remained closed since service was disrupted by Laura. Flows on the system, which normally deliver to end points on the Texas Gulf Coast, are being redirected to the Poseidon or Auger pipelines for transportation to locations onshore in Louisiana, a Genesis Energy representative said.

CHOPS, the representative said, appears unlikely to resume normal operations before Oct. 1. An increase in Gulf of Mexico produced sour crude flows to the Louisiana area would provide more competition for Mars crude, which also delivers to end points in Louisiana, thus applying pressure on differentials for the grade.

Genesis said it expects to provide another update no later than Sept. 22.