Gulf Offshore Energy Operations Brace for Hurricane Francine’s Impact
Posted on Sep 15, 2024 at 09:09 PM
With Tropical Storm Francine churning through the energy region and headed towards the U.S. mid-South with high winds and torrential rains, Gulf of Mexico offshore oil and gas firms have evacuated personnel and halted drilling recently.
Forecasted to become the fourth hurricane of the Atlantic season, it will approach the US Gulf of Mexico waters on November 30.
Before making landfall on the Louisiana coast last week, Francine has the potential to strengthen into a Category 1 hurricane with winds of up to 85 mph (137 kph), according to the National Hurricane Centre.
Storm's Risk on Infrastructure and Energy Markets
Storm surge is predicted to hit upper Texas and Louisiana coasts, with hurricane-force winds in Southern Louisiana. New Orleans offers flood-preventing sandbags, while Grand Isle calls for evacuation and school cancellations.
The storm's path poses a threat to US oil and gas facilities and coastal LNG export plants, with potential 5-10-foot storm surges along Louisiana's coast, the NHC said.
US crude oil prices rose 1.5% after falling to multi-month lows last week due to concerns about a storm disrupting production and refining along the Gulf Coast, which accounts for 15% of total crude oil and 2% of natural gas production.
U.S. natural gas futures fell 5% due to concerns Francine could reduce demand by reducing Gulf Coast LNG export plant flows and potentially causing power outages.
Offshore and Onshore Effects
Exxon Mobil (XOM.N) has shut down production and evacuated employees from its Hoover offshore production platform, located approximately 150 miles (241 kilometres) east of Corpus Christi, Texas.
Shell (SHEL.L), said it was evacuating non-essential personnel from three offshore oil platforms and suspending drilling operations at two more.
Chevron (CVX.N), is evacuating non-essential personnel from four offshore platforms, but production remains at normal levels, according to a spokesman.
BP (BP.L), stated that it did not anticipate any significant impacts to its Gulf facilities.
Occidental Petroleum (OXY.N) and Woodside Energy (WDS.AX) stated that they were prepared to implement storm plans as needed.
Freeport LNG, which operates the country's second-largest export plant for super-chilled gas, said it had begun storm preparations at its Texas facility without providing further information.
Cheniere Energy (LNG.N) did not immediately respond to questions about its Sabine Pass LNG facility. Sempra (SRE.N), and Venture Global LNG did not respond to requests for comment on their Louisiana liquefaction plants.
Tropical Storm Francine's Route
Heavy rainfall and flash flooding are expected from northeast Mexico to the Texas coast, southern Louisiana, and southern Mississippi ports. The U.S. Coast Guard has imposed restrictions on vessel navigation in Texas ports, including Brownsville, Corpus Christi, and Freeport, which handle oil imports and exports.
Texas ports Houston, Galveston, and New Orleans are open for vessel traffic, while the Louisiana Offshore Oil Port is operating normally. Residents are advised to prepare for flash flooding and heavy rain, and local outages may occur if the storm hits the state.
Hurricane Beryl in July caused power outages for over two million people in Texas, resulting in eight deaths and affecting energy infrastructure, with hundreds of petrol stations affected.
As Tropical Storm Francine draws closer to U.S. shores, the energy industry is in a state of high alert. With evacuation efforts underway and drilling halted, companies are preparing for the storm’s potential escalation into a hurricane. The looming threat to offshore platforms and coastal infrastructure highlights the vulnerability of the region, where the balance between energy production and natural forces is continually tested. As the Gulf prepares for Francine's arrival, the industry is taking precautions to mitigate disruptions, while communities brace for the storm’s heavy rains and potential flooding.
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