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Chevron, BP each shut output at 2 platforms in US Gulf as Hurricane Ian advances

Highlights

Companies' USG output hubs nearest to storm path

Chevron 'paying attention' to Pascagoula refinery area

Storm should drift northwest before turning northeast

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Chevron and BP have each shut in two key producing platforms in the US Gulf of Mexico in advance of Hurricane Ian's race toward the western Florida coast, the companies said Sept. 26.

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Even though the hurricane's track is projected in a northeasterly direction away from the US Gulf's major producing regions, upstream producers with output within 100 miles or so of a storm's trajectory typically begin to take precautions a few days before it makes landfall.

Chevron said in an email is has "begun transporting all personnel from our Petronius and Blind Faith platforms and are shutting in the facilities. Production at our other Chevron-operated Gulf of Mexico assets remains at normal levels."

The company said produced 207,000 boe/d from the US Gulf of Mexico during in Q2 2022.

At its 346,400 b/d Pascagoula, Mississippi refinery, the company is "paying close attention" to Ian's track and forecast, Chevron said, adding it doesn't comment on refinery operations.

BP said it has shut in production and evacuated all personnel from its Na Kika platform, and is shutting in production and evacuating all essential personnel from its Thunder Horse platform.

Watching, waiting, eyeing Ian

Other E&P companies are watching Hurricane Ian as it prepares to enter the eastern US Gulf of Mexico.

Murphy Oil is monitoring the forecast closely, the company said in an email, adding it does not anticipate any impact to its operated assets.

Big independent producer Occidental Petroleum on its website said Sept. 26 there were "no active storms" affecting its operations. Most of the 10 production platforms Oxy acquired from Anadarko Petroleum in 2019 are located in the Central US Gulf , although two—Marlin and Horn Mountain—are relatively east of the Louisiana toe and about 80 south of the Mississippi/Alabama border.

Woodside Energy said over the weekend it had begun planning for crew evacuations, but given the current trajectory of the storm, it does not plan to evacuate and does not anticipate "any production impacts."

Ian is a Category One Hurricane whose winds have increased to 85 miles per hour from 80 earlier Sept. 26, according to the US' National Hurricane Center.

Ian, a Category 1 hurricane, was forecast by the US National Hurricane Center at 2 p.m. EDT Sept. 26 to become a major hurricane late Sept. 26 or early Sept. 27 when it is near western Cuba, and remain a major hurricane over the southeastern Gulf of Mexico on Sept. 28. An upper-level trough over the eastern US should cause the hurricane to turn more north-northeastward through Sept. 29, the agency said.

A major hurricane, defined as Category 3 or higher, packs winds of at least 111–129 miles per hour.

First oil, gas threat

Ian could be the first hurricane to present a threat to US Gulf Coast oil and gas infrastructure.

Earlier, GasBuddy's Patrick De Haan said their data shows 97% of Florida's gas station have fuel. However, the US Coast Guard has declared Port Condition Yankee for the port of Tampa, limiting access for supply of gasoline from USGC refineries to be blended in region's blending centers.

About 11.3 million barrels, or about 376,433 b/d, of motor gasoline blending components, primarily CBOB, travelled via barge and tanker from the USGC to the lower USAC in June 2022, according to the most recent EIA data.

One shipper familiar with the situation said the impact on gasoline blending would depend on the extent of flooding and disruption to power supply.

"If I had to guess right now, I would estimate five to seven days of limited service, with gradual restoration of full capacity during the first two weeks of October," he said.

The US Gulf produces just shy of 1.6 million b/d of oil, according to S&P Global Commodity Insights estimates. By midday Sept. 26, the US Bureau of Ocean Energy Management had not yet issued any daily US Gulf production shut-in advisories.

"Given its current path, Hurricane Ian is not expected to impact US Gulf output," S&P Global said. "With the expectation of up to 20 named storms this season, risk of supply loss in the US Gulf remains high. We assume up to 75,000 b/d will be curtailed on an annual basis."

Strom path east of natural gas fields

Ian's projected path is just east of Mississippi and Alabama's offshore production fields, where natural gas output has averaged nearly 1.2 Bcf/d in September. In 2021, Category 4 Hurricane Ida tracked significantly further east, making landfall in Port Fourchon, Louisiana. Still, the storm managed to slash production in the neighboring states' offshore fields to about 270 MMcf/d, S&P Global data shows.

Upon moving inland, Hurricane Ian is likely to bring down power lines and other vulnerable electric infrastructure, taking gas-fired power demand with it. Given the shoulder season timing of the storm, the impact on cooling and other power demand in the region is likely to be more limited than that of Hurricane Ida, which knocked out upwards of 7 Bcf/d in early September 2021.

Additional demand destruction for the gas market may come from a full or even partial shut-in at Kinder Morgan's Elba Island LNG export terminal, located along the coast of northeast Georgia.

In an emailed statement Sept. 26, Kinder Morgan responded to an inquiry about the terminal's status saying it would activate the company's hurricane preparedness plans as necessary.

"Our Elba facility is currently operational, and we will continue to monitor the storm's progress and prepare for any impacts," the company said.