[Editor’s note: This story was updated from a previous version posted at 11:05 a.m. CT Aug. 24.]
Energy companies moved to cut production at U.S. Gulf Coast oil refineries on Aug. 24 after shutting 82% of the area's offshore crude oil output as back-to-back storms took aim at the coast.
Tropical Storms Marco and Laura, a rare double-team assault on key U.S. oil regions, threaten to bring days of heavy rains and strong winds this week. Producers have shut more than 1.5 million bbl/d of Gulf Coast offshore oil production, nearly 14% of the nation's total output, facing a storm that is forecast to become a damaging Category 2 hurricane.
Motiva Enterprises on Aug. 24 began to idle its large Port Arthur, Texas, crude oil refinery, said people familiar with plant operations. Total SA also reduced production at its refinery in the same city, according to people familiar with its operation. Motiva and Total did not immediately reply to requests for comment.
Hurricane Laura Poses Biggest Threat to US Oil in 15 Years (Posted 10 a.m. CT Aug. 25)
Nearly 58% of US Gulf of Mexico Oil Production Shut Due to Twin Storm Threat (Posted 4 p.m. CT Aug. 23.)
Benchmark gasoline prices rose 7% to a six-month high and U.S. crude futures also climbed on the production cuts, traders said. Gulf Coast refiners and offshore producers account for 45% of all U.S. oil processing and 17% of crude oil output.
Vessel traffic was closed at the Ports of New Orleans, Baton Rouge and from the lower Mississippi River to the Gulf of Mexico. Louisiana Offshore Oil Port, the largest Gulf Coast oil-export facility, also halted operations at its marine terminal on Sunday.
Other refiners, including Exxon Mobil Corp., Valero Energy Corp. and Royal Dutch Shell Plc, are planning to maintain operations at Louisiana plants as the first cyclone arrives on Aug. 24, people familiar with those refineries said. Storm Marco is expected to drop up to 5 inches (12.7 cm) of rain along the Louisiana coast.
Storm Laura is forecast to strike the Texas/Louisiana coast by Aug. 27 as a Category 2 hurricane with 105 mile per hour (169 km/h) winds and heavy rain. Oil production shut-ins have exceeded that of 2017's Hurricane Harvey, which cut fewer than 400,000 bbl/d.
On Aug. 24, Valero began a partial shutdown of its Port Arthur plant, the people said, while Exxon Mobil's Beaumont, Texas, plant was weighing plans for dealing with Storm Laura. Valero declined to comment.
During 2017's Hurricane Harvey, which occurred three years ago this week, 5 ft (1.52 m) of rain fell on East Texas, forcing Motiva to halt its Port Arthur plant operations for nearly two weeks and others to take shorter shut-downs.
The mayor of Port Arthur on Aug. 24 said he was monitoring storm forecasts and was considering a mandatory evacuation of residents that would begin on Aug. 25 at 6 a.m.
Despite this week’s decline, the total rig count was up 237, or 94%, over this time last year, according to Baker Hughes data going back to 1940.
A new Walker Ridge discovery in the U.S. Gulf by Chevron plus two more Wolfcamp Shale producers from CrownQuest’s Avogadro prospect in the Permian Basin top this week’s oil and gas drilling activity highlights from around the world.
As public E&Ps stay disciplined and privates take an ‘aggressive approach’ across the U.S. shale patch, analysts see continued efficiency gains and rising costs from oilfield service companies.