Reuters.com: UPDATE 1-Oil, gas firms begin to shut U.S. Gulf production on storm threat

http://www.reuters.com/article/2013/10/03/storm-karen-energy-idUSL1N0HT14220131003

Thu Oct 3, 2013 12:36pm EDT

By Kristen Hays

Oct 3 (Reuters) – Energy companies in the Gulf of Mexico started shutting in production on Thursday and were evacuating some workers as Tropical Storm Karen headed toward a region producing nearly a fifth of daily U.S. oil output.

The National Hurricane Center expected the storm to move through one of the most productive areas of the Gulf to reach the Gulf Coast between Louisiana and the Florida Panhandle over the weekend. It said the storm could become a hurricane before hitting the coast.

In the Gulf Coast cash gasoline market, differentials surged about 3.00 cents per gallon on storm concerns, traders said. The Gulf of Mexico accounts for about 19 percent of U.S. daily oil production and about 6 percent of daily natural gas output, according to the U.S Energy Information Administration.

“All storm hype,” a Gulf refined products trader said on the rise in differentials, which came despite a 1.85-million-barrel inventory build last week in the well-supplied region.

Anadarko Petroleum Corp said it halted production at its Neptune platform, with capacity to produce up to 14,000 barrels per day (bpd) of oil and 23 million cubic feet per day of natural gas.

Chevron and Royal Dutch Shell also were evacuating some workers, but said production was not affected.

Chevron did not say which installations were being partially evacuated, but all four of its platforms were in the projected path of the storm. Those include Tahiti, which can produce up to 125,000 bpd of oil and 70 million cubic feet a day of natural gas.

Shell also did not identify affected platforms, but five of the company’s six producing installations were in the storm’s projected path as well as its newest platform, Olympus, which was anchored in the Gulf in August. It is slated to start up next year.

Anadarko was also evacuating workers not essential to production from Neptune and other platforms, including the natural gas-only Independence Hub, with capacity to produce up to 1 billion cubic feet of gas per day.

The Independence Hub is at the easternmost part of the Gulf where oil and gas producers can operate, about 185 miles (297 km) southeast of New Orleans. It and much of Chevron, Shell and BP Plc’s operated platforms are in a Gulf area known as the Mississippi Canyon, which is home to much of the basin’s energy infrastructure.

BP said on Thursday it was continuing evacuations of some workers, but no production had been shut. ConocoPhillips, which operates a single platform far west of Mississippi Canyon, said on Thursday it did not expect any impact from Karen.

Onshore, a crude distillation unit at Chevron’s Pascagoula, Mississippi refinery with capacity of 210,000 bpd was shut early on Thursday, market intelligence service Genscape said, though the company did not confirm the stoppage or say if it was storm-related.

Phillips 66, Shell and Motiva Enterprises also said their refineries in Texas and Louisiana were monitoring the storm.

Destin Pipeline Co LLC on Thursday declared force majeure because it was unable to provide natural gas services from its offshore Gulf of Mexico receipt points due to Tropical Storm Karen. The pipeline receives output from some BP platforms, including Thunder Horse.

Special thanks to Richard Charter

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