CNBC / Gary McWilliams and Liz Hampton / October 8

 

(Adds Anadarko Petroleum cutbacks)

HOUSTON, Oct 8 (Reuters) – Energy companies on Monday halted nearly a fifth of Gulf of Mexico oil production and evacuated staff from 13 platforms as Hurricane Michael intensified and headed for a path up the eastern U.S. Gulf.

Offshore producers including Anadarko Petroleum Corp , BHP Billiton, BP and Chevron Corp evacuated workers from oil and gas platforms in the Gulf.

Forecasters predicted the storm would become a Category 3 hurricane with sustained winds of 111 to 129 miles per hour (178 to 208 km per hour) and bring heavy seas to producing areas.

Companies turned off 324,190 barrels per day of oil and nearly 284 million cubic feet of natural gas at midday on Monday, according to a survey of producers. Five drilling rigs were moved out of the storm’s path, the Bureau of Safety and Environmental Enforcement said.

U.S. oil prices ended mostly flat as traders discounted any long-term effect on output by the storm, projected to be the first major hurricane to enter the U.S. Gulf this year. Crude futures on Monday settled at $74.29 a barrel, down 5 cents.

The storm’s current path is taking it away from refinery-heavy areas along the central and western Gulf.

Anadarko, Chevron and BHP Billiton shut-in production and evacuated staff at two platforms each. BP shut down production at four.

The platforms evacuating personnel and stopping production include Anadarko’s Horn Mountain and Marlin, Chevron’s Blind Faith and Petronius, BHP’s Shenzi and Neptune and BP’s Atlantis, Mad Dog, Na Kika and Thunder Horse facilities, the companies said.

Norwegian state oil company Equinor evacuated its Titan production platform and Exxon Mobil Corp removed staff from its Lena production platform, the companies said. Exxon said it did not expect the staff reduction to affect output.

Hess Corp and Royal Dutch Shell said they were monitoring the storm and would take action as needed. Shell was securing some drilling operations on Monday but facilities were staffed and operating, spokeswoman Kimberly Windon said.

The storm’s intensity is being fed by warm sea surface temperatures and a lack of upper-level windshear, forecasters said. Those conditions should result in 15-foot to 20-foot waves, “enough to be disruptive of oil production operations” west of the storm track, said John Tharp, operations supervisor at Weather Decision Technologies.

Shipping ports including Gulfport and Pascagoula, Mississippi; Mobile, Alabama, and Pensacola, Florida, were open on Monday, but the U.S. Coast Guard warned of gale-force winds in the next 48 hours.

Offshore production in the Gulf accounts for 17 percent of total U.S. crude oil output, according to the U.S. Energy Information Administration. Natural gas production from Gulf offshore operations provides 5 percent of the U.S. total.

Over 45 percent of U.S. refining capacity is located along the Gulf Coast, along with 51 percent of the nation’s natural gas processing plant capacity, the EIA said. (Reporting by Gary McWilliams and Liz Hampton in Houston Editing by Jonathan Oatis and Dan Grebler)

 

CNBC / Gary McWilliams and Liz Hampton / October 8