Hurricane Delta Halting Oil Production From Platforms, Refineries

HOUSTON — Hurricane Delta raked across the Gulf of Mexico, halting most of the region’s offshore oil output on Thursday after energy companies shut-in wells, pulled staff from offshore platforms and began securing coastal processing plants.

The storm was about 370 miles (595 km) south of Cameron, Louisiana, and grinding toward the Louisiana coast at 13 miles per hour (21 km per hour). Its tropical storm-force winds extend up to 125 miles from the storm’s center, 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 kph) before landfall in southwest Louisiana by Friday evening.

Oil producers withdrew workers from 279 offshore facilities and moved 15 drilling rigs away from Delta’s winds. They have shut 1.69 million barrels per day of oil, or 92% of the region’s offshore oil, and 1.67 billion cubic feet per day, or nearly 62% of its natural gas output.

Energy prices rose on the shut-ins and prospect for a new U.S. economic stimulus. U.S. crude oil futures were up 3% at $41.21, natural gas futures and gasoline futures both rose 2.6%. Natural gas futures reversed course after suffering losses.

“It is going to be a large, powerful storm,” said Weatherbell Analytics 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 also 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 storm’s arrival.

Offshore producers including Royal Dutch Shell, BP , Chevron and Occidental Petroleum 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.