Houston — Energy producers shut down almost 35% of the US Gulf of Mexico's crude oil production and more than 32% of natural gas supplies ahead of Tropical Storm Cristobal making a southern Louisiana landfall on June 7.
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More than 635,000 b/d of crude and 878 MMcf/d of gas were shut in ahead of Cristobal's move onshore, according to the US Bureau of Safety and Environmental Enforcement, as operators evacuated 188 platforms and rigs in the Gulf -- roughly 30% of the US Gulf's total platforms with working personnel.
Cristobal battered southern Mexico and shut down ports over the past week, before moving through the Gulf and spreading heavy rainfall from Louisiana to Florida. The storm is hitting just as oil prices are moving up with the OPEC+ group agreeing to extend deeper production cuts at least through July and front-month NYMEX WTI flirting with hitting $40/b for the first time since early March.
BP, Occidental Petroleum and other Gulf producers were busy temporarily shutting oil and gas production from their platforms that are near the path of the storm.
Total Gulf oil production was nearly 2 million b/d before the coronavirus pandemic cratered global demand and oil prices. BSEE is now estimating Gulf oil production at closer to 1.85 million b/d.
However, S&P Global Platts Analytics data estimates that Gulf crude oil production will fall to an estimated 1.62 million b/d average for June as some producers reduced their volumes because of lower prices.
After Cristobal passes, offshore oil and gas facilities will be inspected and, once the standard checks are completed, production from undamaged facilities will be brought back online immediately, BSEE said. Facilities sustaining damage may take longer to bring back online.
BP said June 3 it was reducing output at its Thunder Horse, Atlantis and Na Kika platforms. Those three BP-operated platforms churn out more than 200,000 boe/d.
Royal Dutch Shell has evacuated nonessential workers but hadn't reduced production volumes as of early June 7.
"There are currently no impacts to our production, and we expect minimal impacts to our drilling operations," Shell said in a prepared statement.
The last major hurricane to significantly interrupt production from the US Gulf of Mexico was Barry, which made landfall last July. Barry caused the shut-in of close to 1.4 million b/d of crude oil, about 73% of the US Gulf crude output, according to BSEE. On a monthly basis, Barry caused US Gulf production to dip by about 330,000 b/d for the month.
Some offshore drillers such as Transocean evacuated nonessential personnel from their moored drilling rigs and repositioned any drillships in the path of the storm. BSEE estimated that seven drillships were temporarily relocated in the Gulf.
Gas and onshore
Estimated US offshore natural gas production dipped below 2 Bcf/d on June 5, down from a prior 30-day average at nearly 2.5 Bcf/d, S&P Global Platts Analytics data showed. The Louisiana offshore sample has taken the biggest hit, recently falling by more than 350 MMcf/d. The data showed a more modest decline of around 80 MMcf/d in the Alabama offshore, while Mississippi samples weren't impacted.
Declining offshore gas production in recent years, which has fallen from an average 4 Bcf/d in 2015, has limited the impact that hurricanes and tropical storms have on the US upstream gas industry.
In October 2017, Hurricane Nate followed a similar path to that projected for Cristobal. The category 1 storm briefly cut US production by nearly 2.5 Bcf/d. By comparison, in 2005 Hurricane Katrina – a massive category 5 storm – cut US offshore production by some 8 Bcf/d.
Onshore, gas liquefaction terminals in Louisiana and Texas also were monitoring Cristobal to determine if they need to implement contingency plans.
The US Coast Guard tightened shipping restrictions as the Louisiana ports in New Orleans and Houma were closed, while the ports of Mobile, Alabama and Pascagoula, Mississippi switched to "Yankee" status to shut down port access to ships without specific permission.
The tropical storm watch stretched from Intracoastal City, Louisiana, to the Alabama/Florida border, impacting ports that serve most of Louisiana's refining capacity. Shipping sources expect the Mississippi River to crest at 17 feet on June 8.
In Mexico, ports in the coastal states of the Gulf of Mexico resumed operations for major ships on June 7 after three days of closure, according to the Communications and Transport Secretariat.
Ports in the States of Veracruz, Tabasco, Campeche and Yucatan will reopen for major ships, the Secretariat said in a press release.
Activities for minor ships will resume June 8, the agency said.