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Business

US Gulf oil platforms shutting as Hurricane Delta strengthens

  • Hurricane Delta, the 25th named storm of the 2020 Atlantic Hurricane season, was churning in the Caribbean with sustained winds of 140 miles per hour.
  • Royal Dutch Shell Plc said on Tuesday it was evacuating nonessential workers from all nine of its offshore Gulf of Mexico operations and preparing to shut production.
07 Oct 2020

HOUSTON: Energy companies were securing offshore production platforms and evacuating workers on Tuesday, some for the sixth time this year, as a major hurricane took aim at US oil production in the Gulf of Mexico.

Hurricane Delta, the 25th named storm of the 2020 Atlantic Hurricane season, was churning in the Caribbean with sustained winds of 140 miles per hour (225 kph), already a dangerous Category 4 storm that is expected to scrape across Mexico's Yucatan peninsula and re-enter the Gulf of Mexico.

Royal Dutch Shell Plc said on Tuesday it was evacuating nonessential workers from all nine of its offshore Gulf of Mexico operations and preparing to shut production.

Equinor ASA and BHP Group Ltd also shut in production and evacuated workers from platforms as the storm aimed for the heart of the US offshore oil patch, the companies said.

Oil prices rose more than 3% on Tuesday, boosted by the hurricane shut-ins, an oil workers' strike in Norway and prospects for further fiscal stimulus. US gasoline futures rose 2% and were trading at the highest level since Sept. 28.

Delta forced the closure of 29.2% of offshore crude oil production in the US-regulated northern Gulf of Mexico by midday on Tuesday, the US Bureau of Safety and Environmental Enforcement (BSEE) said.

Oil production from the Gulf was 1.65 million barrels per day in July, according to the US Energy Information Administration. In January, production was nearly 2 million bpd, the agency said.

The storm also turned off 8.6% of natural gas output from the Gulf of Mexico, BSEE said. A total of 2.1 billion cubic feet per day was taken from the Gulf in July, according to the EIA.

US Gulf of Mexico offshore oil production accounts for 17% of total US crude oil production and 5% of total US dry natural gas production.

While the growth of US shale oil output has generally tamed the market impact of hurricane shut-ins, there have been six storms starting with Tropical Storm Cristobal in June that have affected US offshore oil operations this year.