[Editor’s note: This story was updated from a previous version posted at 12:05 p.m. CT Sept. 15.]
More than a quarter of U.S. offshore oil and gas production was shut and key exporting ports were closed on Sept. 15 as Hurricane Sally churned off the U.S. Gulf Coast, flooding coastal cities and pelting states with heavy rains.
Sally continued to weaken to a Category 1 hurricane on Sept. 15 and largely stalled offshore with sustained winds of 80 mph (128 kph). It is expected to bring life-threatening flooding through Sept. 16 from Mississippi to Florida, the U.S. National Hurricane Center said.
The storm's trajectory takes it through the prime U.S. offshore production areas on a path toward western Alabama, sparing some larger Gulf Coast refineries from high winds.
Royal Dutch Shell Plc said it shut its Appomattox oil platform about 80 miles off the coast of Louisiana, joining BP Plc, Chevron Corp. and Equinor ASA in closing facilities less than one month after Hurricane Laura forced up to 1.5 million bbl/d of output to close temporarily.
Nearly 500,000 bbl/d of offshore crude oil production and 28%, or 759 MMcf/d, of natural gas output were shut in the U.S. Gulf of Mexico (GoM), according to the U.S. Interior Department.
U.S. crude oil futures rose nearly 3% and gasoline futures climbed 2.2% on Sept. 15 on the hurricane-related oil production and refinery shut-ins despite demand losses from the COVID-19 pandemic.
The nation's sole offshore terminal, the Louisiana Offshore Oil Port (LOOP), stopped loading tankers on Sept. 13, while ports from the lower Mississippi River east to Pensacola, Fla., were closed. That will cut off roughly 307,000 bbl/d of crude and 411,000 bbl/d of refined products, according to Kpler data.
As of 1 p.m. CDT (18 GMT) on Sept. 15, Sally was about 105 miles (165 km) south of Mobile, Ala., and crawling toward the northwest at 2 mph (3 kph).
Refiners in the region have wound down operations. Phillips 66 shut its Alliance oil refinery, which processes 255,600 bbl/d at a site along the Mississippi River on the coast of Louisiana.
Shell cut production to minimum rates on Sept. 14 at its 227,400-bbl/d Norco, La., refinery.
However, Murphy Oil Corp. said it was beginning to restore production at its eastern-most GoM oil platforms, and Equinor said it expected to return workers to its Titan platform on Sept. 17.
U.S. natural gas production is declining as domestic consumption falls but global demand, including for LNG, is adding to optimism.
Most of the growth over the next year or so is expected to come from the Permian Basin and Eagle Ford Shale along with notable growth this year from some gas plays, analysts say.
The supermajors are focused on specific developments and improving efficiency in the Permian Basin as market conditions recover.