U.S. Gulf of Mexico Oil Production Halted Due to Hurricane Threat

The Strengthening of Hurricane Delta Delivered the Biggest Blow to US Offshore Production in the Gulf of Mexico in 15 Years, Interrupting Most of the Region’s Oil and Almost Two-Thirds of Its Natural Gas Production.

A storm already large and powerful, Delta may further intensify on Friday as it stirs in the main oil production area of the Gulf of Mexico in the US. Its winds reached 120 miles per hour (195 km/h), according to the National Hurricane Center.

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Oil Prices Are Falling

Delta shut down 1.67 million barrels per day, or 92% of US Gulf of Mexico oil production, the largest since 2005, when Hurricane Katrina destroyed more than 100 offshore platforms and halted production for months.

Oil prices fell early in the session in Asia on Friday but were on track for gains of about 10% for the week, driven by disruptions in the Gulf of Mexico and a labor dispute in the North Sea. The two combined removed 3.17 million barrels per day from the market.

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279 Oil Production Facilities in the Gulf of Mexico Were Closed

Workers evacuated 279 offshore facilities in the Gulf of Mexico, and producers moved 15 drilling rigs away from Delta’s large and strong wind field. Tropical force winds extend up to 160 miles from its center, the NHC said, a sign of its large size. Delta will weaken as it approaches the coast but is expected to remain a Category 3 storm on the 5-step Saffir-Simpson scale.

It will bring a storm surge of 1.2-3.3 meters (4 to 11 feet) to the coast near landfall, the NHC said. In addition to oil, producers shut down almost 62% of the region’s natural gas production, or 1.675 billion cubic feet per day. Offshore fields in the Gulf of Mexico produce about 15% of US crude oil and 5% of natural gas production.

Finally, Total began shutting down a 225,500-barrel per day (bpd) petroleum processing unit at its refinery in Port Arthur, Texas, on Thursday due to the threat from Hurricane Delta, people familiar with the plant’s operations said. Royal Dutch Shell Plc said it would continue operating its refineries in Convent, Geismar, and Norco, Louisiana, during the storm.