Financial Post (Canada): Ivan shuts down oil production: Crude prices jump as 13,000 workers abandon drilling rigs in Gulf of Mexico: “Motiva Enterprises LLC, a joint venture between Royal Dutch/ Shell Group and Saudi Refining Inc., began shutting its oil refinery in Norco, La., which can process 225,000 barrels of crude oil a day. Motiva is reducing production at Convent, La., which also has a 225,000 barrel a day capacity.” (ShellNews.net)
Sep 15, 2004
NEW YORK - Crude oil prices rose for a second day yesterday as Hurricane Ivan prompted Gulf of Mexico producers to pull out about 13,000 rig workers and shut platforms in the biggest disruption of the region's output in at least two years.
U.S. oil production was reduced by about one million barrels a day, or 61% of Gulf output, according to the U.S. Minerals Management Service.
Crude oil for October delivery rose US52 cents, or 1.2%, to US$44.39 a barrel on the New York Mercantile Exchange as nervous traders watched Ivan approach.
Ivan is forecast to come ashore between Louisiana and Florida by tomorrow. Hurricane Lili, the last storm of similar strength to reach the region, caused US$300-million to US$400-million of damage to oil platforms.
Calgary-based Nexen Inc. said it is suspending drilling at two exploration wells in the Gulf.
"We're taking the precaution of securing those rigs and pulling anchors because it takes some time to get that done," Nexen spokesman Kevin Finn said.
"We'll continue monitoring the storm and we'll evaluate production operations as we go forward."
The exploration wells include a continental shelf natural gas prospect off the Louisiana coast and the Crested Butte play in Nexen's deep-water Aspen region.
Nexen's Gulf of Mexico production averaged 42,000 barrels of oil equivalent a day after royalties in the second quarter, representing about one-quarter of the company's total output.
"With a storm at this intensity you have to worry about damage," said Kyle Cooper, an analyst with Citigroup Inc. in Houston. "Platforms are designed to withstand hurricanes but something is going to break."
Oil in New York has closed above US$40 since July 13.
In London, the October Brent crude-oil futures contract was up US67 cents, or 1.6% , to US$41.73 a barrel on the International Petroleum Exchange.
Most of the service boats and helicopters that ferry supplies and personnel to rigs and platforms in the gulf are based in Port Fourchon, which is accessed by a single highway that is just four feet above sea level.
Port Fourchon itself will be shut because of the hurricane.
BP PLC pulled 83% of the workers off its facilities in the gulf, which accounts for a quarter of U.S. production, and declined to say how much output was idled. Shell said it shut 444,800 barrels per day.
Exxon Mobil Corp., ChevronTexaco Corp., Apache Corp. and Anadarko Petroleum Corp. also were among companies that pulled their personnel.
Ivan moved into the Gulf yesterday with maximum sustained winds close to 225 kph. Hurricane Lili followed a similar path from Sept. 30 to Oct. 18, 2002, and producers lost 9.9 million barrels of oil output from Gulf platforms from shutdowns. Lili was a Category 4, but weakened as it approached the coastline. The Louisiana Offshore Oil Port, the biggest U.S. oil import terminal, stopped offloading tankers yesterday. States along the Gulf receive more than half of U.S. oil imports and are home to 50% of the country's refining capacity.
Motiva Enterprises LLC, a joint venture between Royal Dutch/ Shell Group and Saudi Refining Inc., began shutting its oil refinery in Norco, La., which can process 225,000 barrels of crude oil a day. Motiva is reducing production at Convent, La., which also has a 225,000 barrel a day capacity.
"We are staring to get refinery shut-ins," said Marshall Steeves, energy analyst with Refco Group Inc. in New York. "Flooding will probably be the main problem for the refiners. Once people return, they will need to check all systems before they are able to run at the level they were at."
The reduction in output and imports comes as U.S. inventories are falling. The Energy Department reported last week that U.S. crude oil supplies declined 1.4 million barrels to 285.7 million in the week ended Sept. 3, for a sixth week.