Hurricane Laura biggest threat to U.S. oil since Katrina

The U.S. energy industry is preparing to be hit by Hurricane Laura which could cut crude production at a rate approaching the level of 2005’s Hurricane Katrina and stop oil refining at plants along the Texas-Louisiana coast.

The U.S. National Hurricane Centre stated that the storm would rapidly gain strength and become a major hurricane with sustained 185 kph winds when it strikes the Gulf of Mexico coast by early Thursday.

Chris Kerr a meteorologist at agriculture, energy and weather data provider DTN, said that the intensification would bring at least a three-metre storm surge to the upper Texas coast and could produce a devastating category 4 hurricane.

As a result, refiners halted facilities that process at least 1.8 million bpd of oil processing, 10 per cent of the U.S. total capacity.

“There will be a significant storm surge from Galveston (Texas) to the Sabine River“, an area encompassing some of the region’s largest refineries, said DTN’s Kerr. “There are ideal conditions in central and west Gulf for rapid intensification“.

Officials in Port Arthur, an energy city of 54,000 people, and similar-sized Galveston each ordered mandatory evacuations as Laura began its march up the central Gulf of Mexico.

According to the Energy Information Administration (EIA), the storm will make landfall in an area that accounts for more than 45 per cent of total U.S. petroleum refining capacity and 17 per cent of oil production.

Some companies like the largest U.S. exporter of liquefied natural gas Cheniere Energy evacuated staff and suspended operations at its Sabine Pass LNG export terminal.

Similarly, Motiva Enterprises, Total, and Valero Energy began cutting operations at their Port Arthur refineries, Reuters said in an article quoting sources close to the matter. The three combined process more than 900,000 bpd of oil.

Also, ExxonMobil began shutting production at its large Beaumont refinery and reduced output at its Baytown plant ahead of a possible shutdown. If its Baytown plant fully halts processing, total shutdowns would hit more than 2.3 million bpd.

The Bureau of Safety and Environmental Enforcement (BSEE) said in an announcement on Tuesday that the Hurricane Response Team was still monitoring the Gulf as a result of Hurricane Laura and Post-Tropical Cyclone Marco.

Based on data from offshore operator reports personnel have been evacuated from a total of 299 production platforms, 46.5 per cent of the 643 manned platforms in the Gulf of Mexico.

The BSEE added that personnel have also been evacuated from eleven non-dynamically positioned rigs, equivalent to 91 per cent of the 12 rigs of this type currently operating in the Gulf. All of the 16 dynamically positioned rigs have moved off location out of the storms’ projected paths.

As part of the evacuation process, personnel activated the applicable shut-in procedure, which can frequently be accomplished from a remote location.

This involves closing the sub-surface safety valves located below the surface of the ocean floor to prevent the release of oil or gas, effectively shutting in production from wells and protecting the marine and coastal environments.

BSEE estimates that approximately 84.3 per cent of the current oil production and 60.94 per cent of natural gas production in the Gulf of Mexico has been shut-in.

These numbers are close to the 90 per cent outage that Hurricane Katrina brought 15 years ago making Hurricane Laura the biggest threat to U.S. oil production since 2005.

The BSEE added that, after the storms have passed, facilities will be inspected. Once all standard checks have been completed, production from undamaged facilities will be brought back online immediately. Facilities sustaining damage may take longer to bring back online.