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Michael Shuts Nearly 40% of U.S. Gulf of Mexico Oil Output

By  AOG Staff Wednesday, 10 October 2018 05:54
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© bomboman / Adobe Stock
© bomboman / Adobe Stock

Nearly 40 percent of daily crude oil production and more than one-third of natural gas output was lost from offshore U.S. Gulf of Mexico wells on Wednesday because of platform evacuations and shut-ins ahead of Hurricane Michael.

Michael is a Category 4 storm expected to hit the Florida Panhandle later Wednesday with maximum sustained winds of 145 miles (233 kilometers) per hour.

Oil producers - including Anadarko Petroleum Corp, BHP Billiton, BP and Chevron Corp - have since Monday evacuated personnel from 75 platforms as the storm made its way through the central Gulf.

The country's largest privately owned crude terminal, the Louisiana Offshore Oil Port LLC, said on Tuesday it had halted operations at its marine terminal. The facility is the only port in the United States capable of fully loading and unloading a tanker with a capacity of 2 million barrels of oil.

Companies turned off daily production of about 670,800 barrels of oil and 726 million cubic feet of gas by midday on Tuesday, according to the federal offshore regulator, the Bureau of Safety and Environmental Enforcement (BSEE).

The evacuations affected about 11 percent of the occupied platforms in the Gulf, it said.

A week ago, drillers were pulling about 3.4 billion cubic feet per day (bcfd) of gas out of the offshore Gulf of Mexico. On Tuesday, that was down to just 2.2 bcfd, according to data from Refinitiv.

Southern Co, the biggest power company in Georgia and Alabama, said all of its nuclear power plants were operating at or near full power early Wednesday.

Southern said it was waiting for the latest weather reports before deciding whether to shut the 1,751-megawatt Farley plant in southern Alabama. Farley is the company's reactor closest to where Hurricane Michael is expected to make landfall.

U.S. crude futures were trading down over 1 percent at $74.14 per barrel Wednesday morning, reflecting the declining importance of Gulf of Mexico output that has resulted from the growth of production from the nation's onshore shale fields.

Crude output lost in the two days of storm shut-ins represents about 9 percent of the U.S. production of 11.1 million barrels per day, according to data from the Energy Information Administration.

In addition to shutting in wells, oil producers halted most offshore drilling operations by evacuating three drilling rigs and moving eight others out of the storm area, BSEE said.

Reporting by Gary McWilliams and Scott DiSavino

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