Washington — Chevron, Anadarko and BP on Wednesday morning started shutting in US Gulf of Mexico production and evacuating staff from drilling and production platforms while Shell started evacuating non-essential staff but continued with production, as the National US Hurricane Center says it expects a tropical cyclone to form by Thursday over the northern Gulf of Mexico.
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The NHC issued a tropical storm watch from the mouth of the Mississippi River to Morgan City, Louisiana, and a storm surge watch from the mouth of the Pearl River to Morgan City.
The NHC expects heavy rainfall across Louisiana to continue through the weekend, with some areas forecast to receive 18 inches. Refiners with operations along the Louisiana, Mississippi and Texas coasts are monitoring the storm, concerned that heavy rainfall combined with storm surges could cause flooding at their facilities.
"All MPC refineries have plans in place to ensure the safety and security of our people and facilities in case of inclement weather," said Marathon Petroleum spokesman Jamal Kheiry via email.
Marathon owns and operates the 556,000 b/d Garyville complex, Louisiana's largest refinery.
ExxonMobil said its Gulf Coast refineries are operating normally, but are keeping an eye on the storm's progress.
"We are closely monitoring weather conditions, and determining which of our facilities may potentially be in the path of the storm to prepare for severe weather at our coastal operations in the Gulf of Mexico," said ExxonMobil spokesman Jeremy Eikenberry.
ExxonMobil has three of the USGC's largest refineries -- the 502,500 b/d Baton Rouge, Louisiana; 560,500 b/d Baytown, Texas; and 365,644 b/d Beaumont, Texas, facilities.
Crude futures were trading sharply higher Wednesday afternoon. Prompt-month NYMEX WTI was up $2.30 at $60.13/b. Prompt NYMEX RBOB was up 7.09 cents at $1.9978/gal and NYMEX August ULSD was up 7.55 cents at $1.9861/gal. The storm was only partly responsible for stronger futures, however, as US Energy Information Administration data also released Wednesday showed a larger-than-expected 9.5 million barrel drawdown in US commercial crude stocks in the week that ended July 5.
"This storm will add to the bullish momentum this week, but will act as a headwind for bulls next week," Price Futures Group senior market analyst Phil Flynn said in a morning note, adding that it could influence production, imports and exports in the coming weeks.
US Gulf Coast sour crude benchmark Mars continued to strengthen Wednesday, a day after jumping 80 cents/b due to the incoming storm. Mars, which is produced offshore in the Gulf of Mexico, was heard bid Wednesday morning in Houston at WTI cash plus $3.60/b and offered at plus $3.80/b, 20-40 cents higher than Tuesday's S&P Global Platts assessment.
Chevron is shutting production at its Big Foot, Blind Faith, Genesis, Petronius and Tahiti platforms, spokeswoman Veronica Flores-Paniagua said, but production will continue at the Jack St. Malo deepwater project.
"At our onshore facilities, we are following our storm preparedness procedures and paying close attention to the forecast and track of the storm," Flores-Paniagua said.
Anadarko is shuttering production at its Constitution, Heidelberg, Holstein and Marco Polo platforms in the central Gulf of Mexico and removing all staff from the facilities, it said Wednesday on its website.
Anadarko also removed non-essential staff from its eastern Gulf of Mexico facilities.
BP said it has started removing staff and shutting in production at BP-operated platforms "across the Gulf," without giving further details.
Shell is evacuating non-essential staff and securing drilling operations in the eastern Gulf of Mexico, but continuing production, it said Wednesday on its website.
"At this time, we anticipate minimal impacts to production as a result of this weather disturbance and will continue to monitor weather reports, taking further action if necessary," Shell said.
Shell has slowed production at its Olympus project by 1,835 b/d and at its Mars project by 700 b/d.
The US Department of Interior's Bureau of Safety and Environmental Enforcement said Wednesday that Gulf of Mexico drillers had shuttered 32% of oil production and 18% of natural gas output ahead of storm.
The weather system has a 100% chance of developing into a tropical depression within 48 hours, the NHC said at 2 pm EDT Wednesday. Forecasters expect it to reach tropical storm strength Thursday evening and increase to hurricane strength on Friday, with landfall near the Texas-Louisiana border. Once it reaches tropical storm strength, it would be called Barry.
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