Sunday, June 23, 2024

Offshore oil and gas production is crimped by Gulf storms

by Associated Press

Oil and gas production in the Gulf of Mexico was slowed Sunday by the approach of two storms that led companies to remove workers from more than 100 offshore platforms.

The Interior Department said that based on company reports at midday, 114 platforms had been evacuated. That is 18% of the staffed platforms in the Gulf, but they account for 58% of Gulf oil production and 45% of its natural gas output.

Energy companies are also moving drilling rigs used to explore for oil and gas.

Hurricane Marco is closer to the Gulf coast, but forecasters are more concerned about Tropical Storm Laura, which is expected to reach hurricane status before slamming the coast around midweek.

A spokesman for Norway’s Equinor said Sunday that workers were taken off the company’s Titan platform, and production was stopped.

Over the last few days, Exxon, Chevron, BP and Shell also began evacuating some platforms and drilling rigs. A Shell spokesman said workers will be screened for COVID-19 before returning to offshore facilities.

Operators in the Gulf often evacuate offshore workers when the forecast calls for hurricanes or tropical storms. The impact on production is usually short-lived.

Patrick DeHaan, an analyst for GasBuddy, said gasoline inventories are high, and the storms are unlikely to move pump prices unless refineries on land are damaged.

“Gasoline demand is weakening seasonally, and along with COVID-19, demand is running around 15% below last year,” he said. “There is likely enough breathing room that even if a few refineries had to slow production of gasoline down, there should not be much if any impact to retail gasoline prices in the region or nationally.”

The Gulf Coast is home to many major refineries that are near sea level. In 2017, Hurricane Harvey stalled over Houston, dumping so much rain that flooding knocked out nearly one-fourth of the nation’s refining capacity. That led to gasoline shortages, panic buying and long lines at service stations throughout Texas.

Offshore, the Gulf accounts for a little less than one-fifth of U.S. oil production.

It has been a volatile year for the oil industry. Crude prices plunged from January into April before rebounding after OPEC and its allies agreed to curb production.

Prices have stalled lately because of ample supplies and continuing weak demand during a pandemic. West Texas Intermediate, the benchmark U.S. crude, settled at $42.34 per barrel on Friday.

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