Katrina cuts oil output by a third
Saturday August 27, 8:36 pm ET
By Erwin Seba and Mark Babineck
HOUSTON (Reuters) - U.S. energy companies said U.S. Gulf of Mexico crude oil output was cut by more than one-third on Saturday as Hurricane Katrina appeared poised to charge through central production areas toward New Orleans.
The Gulf of Mexico is home to roughly a quarter of U.S. domestic oil and gas output, with a capacity to produce about 1.5 million barrels per day of crude and 12.3 billion cubic feet per day of gas.
As of Saturday, 563,000 barrels daily crude output had been shut in due to the threatening storm.
Shell Oil Co. (London:RDSA.L - News), which was evacuating all 1,019 of its offshore workers in the central and eastern Gulf on Saturday, had the bulk of closed Gulf daily oil production, with 420,000 barrels turned off.
Shell also said 1.345 billion cubic feet per day, or Bfd, of natural gas had been shut by Saturday.
Total daily Gulf natural gas output shut on Saturday was 1.9 billion cubic feet.
Chalmette Refining LLC, which operates a New Orleans-area refinery, was shutting down production in preparation for the approach of the hurricane, which is predicted to produce winds near 131 mph (210 kph) when it charges ashore on Monday.
Chalmette is a joint venture between Exxon Mobil Corp. (NYSE:XOM - News) and Venezuelan state oil company Petroleos de Venezuela SA and operates a 190,000-bpd refinery 9 miles east of downtown New Orleans.
The shutdown was to be completed by Katrina's predicted landfall on Monday afternoon, said Chalmette spokeswoman Nora Scheller.
Other southeast Louisiana refineries were operating on Saturday but were reducing staff and preparing for possible shutdowns, the companies said.
Ship traffic along the Mississippi River from the Gulf of Mexico to New Orleans was halted on Saturday when ship pilots said conditions were already unsafe to continue moving vessels along the waterway.
The U.S. Coast Guard was warning mariners of possible waterway closures along the Louisiana, Mississippi and Alabama coasts as early as Sunday afternoon.
The Louisiana Offshore Oil Port LLC stopped offloading tankers in the Gulf of Mexico at midday on Saturday. The LOOP, which is the only U.S. offshore oil port, takes an average 1 million barrels in foreign crude from tankers in the Gulf.
While offloading is halted, the LOOP is supplying refiners via pipeline with crude stored on shore.
Katrina, which was a major Category 3 hurricane on Saturday afternoon, according to the Saffir-Simpson scale of intensity, is expected to strengthen to a Category 4 by Monday afternoon.
The storm could even reach the rare Category 5, meaning it would likely produce catastrophic damage with winds of at least 155 mph (249 kph).
Katrina was originally projected to take a path west across southern Florida, turn north in the eastern Gulf and strike the Florida Panhandle as a minimal hurricane.
As late as Friday afternoon, many producers were taking a wait-and-see approach common with eastern Gulf storms, where oil and gas drilling and production are sparse.
But the storm's long drift westward Friday afternoon and evening meant it was gaining intensity from deep, warm Gulf waters and would not turn north in time to avoid production areas.
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