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US Gulf Oil Production Grinds To A Halt As Cindy Makes Landfall

Courtesy of ZeroHedge. View original post here.

Update: *STORM CINDY HAS 16% OF GULF OF MEXICO OIL OUTPUT SHUT IN: BSEE

*  *  *

Tropical Storm Cindy made landfall along the Gulf Coast Thursday as meteorologists called for a third day of heavy rains and viciously fast winds in the region. Cindy – the first storm to reach the Western Gulf coast since Tropical Storm Bill made landfall in June 2015 – has already been blamed for the death of a young boy in Alabama who was struck and killed Wednesday by a log washed ashore by the storm, according to local news reports.

But the storm has also brought the energy industry in the Gulf of Mexico to a halt as it forces producers across parts of four states – Louisiana, Mississippi, Alabama and Florida – to suspend shipping and production due to heavy rains, high winds and choppy waters, as Bloomberg reports.

“The storm has shut one-sixth of the oil production in the Gulf of Mexico, halted vessel unloadings at a major oil-import terminal and triggered a force majeure on a system that collects natural gas from offshore platforms. Once Cindy makes landfall, it could threaten to disrupt even more energy operations in a region that accounts for about half of the nation’s oil-refining capacity.”

“The biggest impact would be on shipping activity which will remain suspended through Friday,” said Andy Lipow, president of Lipow Oil Associates in Houston. “Storm sets off high winds and waves that will impact ability of ships to go through open water.”

But the impact of the storm isn’t limited to oil. According to Bloomberg, LNG production has fallen to six week lows as the storm has disrupted output of the power-plant fuel. Gas shipments from the Destin pipeline system in the Gulf were curtailed. About 0.3 percent of gas production in the Gulf of Mexico has been shut-in.

“Tropical Storm Cindy looks to have restricted production from offshore rigs as the storm approaches the coastline,” said Het Shah, an analyst with Bloomberg New Energy Finance. However, the impact on LNG is expected to be short-lived.

We anticipate production to rebound midday tomorrow as the storm makes landfall.”

Here’s a breakdown of how the storm is affecting oil producers via Bloomberg:

  • “Vessel offloadings at the Louisiana Offshore Oil Port marine terminal were suspended. The rest of the company’s operations, including deliveries from its Clovelly, Louisiana, hub, were expected to continue.”
  • “Pilots have stopped guiding ships into Sabine Pass, which also funnels traffic to the ports of Beaumont and Port Arthur in Texas. The Coast Guard has decided to keep the Houston Ship Channel open.”
  • “Anadarko Petroleum Corp. shut in two fields in the Gulf, and BP Plc was diverting crude from its platforms to an alternative pipeline after the Cameron Highway Oil Pipeline System, known as CHOPS, was closed.”
  • “Enbridge Inc. evacuated nonessential workers from some platforms in the Gulf. Royal Dutch Shell Plc suspended ‘some well operations’ in the region, though production is unaffected, according to company spokesman Curtis Smith.”
  • “Billiton Ltd suspended nonessential operations and ‘demobilized’ nonessential workers.”
  • “The storm had shut in 17 percent of oil production and 10.1 million cubic feet a day of gas output in the Gulf of Mexico as of 11:30 a.m. local time Wednesday, according to the U.S. Bureau of Safety and Environmental Enforcement.”
  • “The Destin natural gas line declared force majeure on Tuesday, saying in a notice to shippers that it’s unable to provide transportation from all offshore receipt points because of the storm.”


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