Storm Edouard Shuts Gulf Coast Oil Port, Disrupts Shipping

August 4, 2008

Tropical Storm Edouard forced shut a huge U.S. offshore oil port, a refinery, some oil production and disrupted shipping as the storm raced toward the Texas-Louisiana coast Monday.

Energy companies evacuated staff from offshore platforms due to Edouard, the second named storm of the season to threaten oil operations in the Gulf of Mexico, with Apache shutting a small amount of output.

Marathon shut its 72,000 barrel per day Texas City, Texas refinery and Valero Energy Corpwarned that its plants in the region could be affected after the storm halted inbound traffic to the Houston Ship Channel and the Sabine Pass ship channel.

“We have started an orderly shut-down in preparation for the storm,” said Marathon spokeswoman Angela Graves.

BP expects its Texas City refinery will continue to operate through the storm.

Packing 50 miles per hour winds, Edouard swept across the northern Gulf of Mexico about 80 miles south-southwest of Grand Isle, Louisiana, threatening to come ashore on the Texas-Louisiana coast.

The U.S. National Hurricane Center said Edouard had about a 20 percent chance of becoming a hurricane by the time it reaches land.

The Gulf of Mexico supplies about a quarter of U.S. crude oil output and 15 percent of its natural gas, while Gulf Coast refiners make about a quarter of domestic gasoline.

The Louisiana Offshore Oil Port, the only deep-water U.S. oil port and a major conduit for the country’s crude oil imports, temporarily suspended offloading oil tankers in the Gulf of Mexico due to high waves and winds.

The port’s onshore storage continued to supply refiners with crude on-hand, however, a spokeswoman said.

Crude oil prices fell more than $4 early Monday to below $121 a barrel, extending a steep decline from the July 11 record over $147.

“Edouard doesn’t seem to have much of an impact here, and while the LOOP is temporarily suspended, all it means is that tankers are just sitting out there,” said Kyle Cooper, research director of IAF Advisors.

Apache shut 8,600 bpd of oil output and 130 million cubic feet per day of natural gas production after evacuating 110 personnel from facilities off Louisiana.

Chevron Corp., Anadarko, BP, and Shell Oil said they were evacuating workers from platforms as a safety precaution but added production of oil and natural gas was not affected.

Other oil companies, including Exxon Mobil, El Paso , Citgo and ConocoPhillips, said they were keeping a close eye on the storm.

“We’ve been monitoring the storm track and have considered some evacuations of personnel in the path of the storm,” said Richard Wheatley, spokesman for El Paso Corp.

A series of powerful hurricanes in 2004 and 2005, including Hurricane Katrina, toppled oil rigs and severed pipelines in the Gulf, pushing oil prices to then-record highs.

The six-month hurricane season, which began June 1, has already seen two of its four storms strengthen into hurricanes. Last month was the third most active July for storms since Atlantic hurricane season records began in 1851.

(Reporting by Erwin Seba, Chris Baltimore, Haitham Haddadin, Richard Valdmanis, Robert Campbell; writing by Matthew Robinson and Richard Valdmanis; Editing by Marguerita Choy)

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