Hurricane Delta steams across Gulf of Mexico, halting 80% of oil output

October 8, 2020

By Erwin Seba

HOUSTON (Reuters) – Hurricane Delta raked across the prime U.S. offshore oil producing areas in the Gulf of Mexico on Thursday as energy companies pulled workers from offshore platforms and began securing coastal processing plants.

The storm was about 400 miles (645 km) south of Cameron, Louisiana, and grinding toward the Louisiana coast at 14 miles per hour (22 kmh). Its tropical-storm-force winds extend up to 125 miles, the National Hurricane Center said.

Delta is expected to intensify further over the Gulf’s warm waters and become a major hurricane with winds of 115 miles per hour (185 kmh). It has halted 80% of the region’s offshore oil and nearly 50% of its natural gas output.

“It is going to be a large, powerful storm,” said AccuWeather meteorologist Joe Bastardi. Delta will land just east of Cameron, Louisiana, an area still suffering the impact of Hurricane Laura’s 150 mph winds.

Total SA <TOTF.PA> began shutting a small oil-processing unit at its Port Arthur, Texas, refinery, people familiar with plant operation said. Cameron LNG closed its natural gas processing plant ahead of the storms arrival.

U.S. crude oil futures were up 2% at $40.76 a barrel on the shut-ins and prospects for a new U.S. economic stimulus. U.S. natural gas futures recovered earlier losses and were flat.

Offshore producers including Royal Dutch Shell <RDSa.L>, BP <BP.L>, Chevron <CVX.N> and Occidental Petroleum <OXY.N> have pulled workers from production platforms to quarters onshore.

The unusually high number of storms coupled with pandemic safety precautions has made this year a costly and difficult one for offshore producers.

Energy ports from Port Arthur, Texas to New Orleans also were battening down under tropical storm wind advisories and warning of potential closures within 24 hours. Louisiana Offshore Oil Port, the sole deep water port on the Gulf of Mexico, halted seaborne exports and imports.

Shell began preparing three refineries in Convent, Geismar and Norco, Louisiana, for Delta’s arrival. Further west, other refineries were still under maintenance in the wake of prior hurricanes.

The U.S. Gulf Coast is home to 45% of U.S. petroleum refining capacity and about 51% of U.S. natural gas processing plant capacity.

(Reporting by Erwin Seba; Additional reporting by Scott DiSavino in New York; Writing by Gary McWilliams, Editing by Richard Pullin, Andrea Ricci and David Gregorio)