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More than 30% of US Gulf offshore oil still offline after Hurricane Sally

More than 30% of US Gulf of Mexico offshore oil and 25% of natural gas output remained offline Sept. 17 after Hurricane Sally made landfall the day prior, according to the US Bureau of Safety and Environmental Enforcement.

Oil producers began to redeploy evacuated crews, but even more oil was reported shut in than on previous days. Crude producers have shut in 567,770 b/d of crude and 670 MMcf/d of gas output, 30.69% and 24.73% of total offshore US Gulf output, respectively. A total of 70 platforms and rigs were still evacuated as of Sept. 17, down from more than 150 facilities in advance of the storm, according to BSEE.

Chevron said it has begun to “redeploy personnel and restore production at our Blind Faith and Petronius platforms that were shut-in for Hurricane Sally.”

Other producers have been slower to signal startup, keeping facilities offline. Shell on Sept. 15 shut in production at its Appomattox platform, while also curtailing oil volumes at its large Olympus, Mars and Ursa facilities. Late on Sept. 16, Shell said, “There are no impacts to drilling operations, and production remains shut in at Appomattox.”

Murphy Oil confirmed it evacuated multiple platforms and took production volumes offline, but a spokeswoman declined to specify which facilities were impacted.

In addition, BP had evacuated nonessential personnel from its Na Kika and Thunderhorse platforms.

Sally did not impact oil operations as heavily as Hurricane Laura did at the end of August. Laura managed to shutter nearly 85% of Gulf oil production — more than 1.5 million b/d — and 2.3 million b/d of refining capacity.

However, there’s already another disturbance offshore of Mexico that the National Hurricane Center gives a 90% chance of developing into a depression or named storm as it moves toward the US Gulf this weekend and into next week. This is the busiest Atlantic hurricane season since 2005 when hurricanes Katrina, Rita and others devastated the USGC.

Refining, terminals

Phillips 66’s 255,600 b/d Alliance refinery in Belle Chasse, Louisiana, was shut in advance of Sally. And, although the storm missed almost all of southeastern Louisiana, Phillips 66 said the Alliance refinery will remain closed for now.

“Phillips 66 can confirm that our Alliance Refinery is preparing to begin planned maintenance work originally slated for October, during which much of plant operations will remain down in order to conduct the work safely,” the Houston refiner said.

Chevron spokesman Sean Comey said the company’s 356,400 b/d Pascagoula Refinery in Mississippi is still operating. Chevron also resumed operations at its Empire and Fourchon terminals in Louisiana and brought back online the related pipeline systems.

The Louisiana Offshore Oil Port restarted operations on Sept. 16 at its marine terminal.

Shell reduced rates at its Mobile refinery in Alabama during the storm, but found no serious damage afterward.

“The Shell Mobile Refinery is running normally. Rain, storm surge and winds from Hurricane Sally had only minimal operational impact,” Shell said in a Sept. 17 statement.

However, two major refineries — Phillips 66’s and Citgo Petroleum’s Lake Charles refineries in southwestern Louisiana — still remain shuttered after sustaining damage and the loss of power from Laura.

Phillips 66 spokeswoman Melissa Ory said the company’s 260,000 b/d Lake Charles refinery, which was shut ahead of Laura, could start up in two weeks after it has reliable electricity and operate while repairs are being made, which are expected to take several months. Electricity provider Entergy, which is rebuilding the destroyed transmission lines to the refinery and other facilities, said it hopes to restore power by the end of September.

All told, that is close to 1 million b/d of crude refining capacity currently offline in Louisiana.

Likewise, the Cameron Highway Oil Pipeline System, known as CHOPS, has remained closed since service was disrupted by Laura. Flows on the system, which normally deliver to end points on the Texas Gulf Coast, are being redirected to the Poseidon or Auger pipelines for transportation to locations onshore in Louisiana, a Genesis Energy representative said.

CHOPS, the representative said, appears unlikely to resume normal operations before Oct. 1. An increase in Gulf of Mexico produced sour crude flows to the Louisiana area would provide more competition for Mars crude, which also delivers to end points in Louisiana, thus applying pressure on differentials for the grade.

Genesis said it expects to provide another update no later than Sept. 22.
Source: Platts

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