As Hurricane Sally advances toward the central US Gulf Coast, offshore oil wells and ports were in a hurry to close, disrupting oil activities in the region.
According to the US National Hurricane Center (NHC), Sally was upgraded to a hurricane on Monday but it has shifted trajectory east, toward Mississippi, with a fat chance of sparing some refining operations in Louisiana when it makes the expected landfall on Tuesday.
By 4 PM CDT (21.00 GMT) on Monday, the hurricane was around 105 miles (170 km) east-southeast of the mouth of the Mississippi River, and winds were picking up, with sustained winds of up to 100 mph (155 kph).
Previously on Sunday, the US only offshore terminal, the Louisiana Offshore Oil Port (LOOP), stopped the loading tanker ships’ activity. On Monday, the port of New Orleans followed to close.
According to data from Kpler, both ports’ combined exports are roughly 307,000 bpd of crude oil and 411,000 bpd of refined products. Their accumulative imports are about 342,000 bpd of crude between June and August.
Many offshore production facilities have been closed. Chevron, BP, Equinor, and Murphy Oil Corp. had evacuated their offshore personnel from production platforms. On Monday, Royal Dutch Shell Plc. has halted production at its Olympus, Mars, and Appomattox platforms.
In Mississippi and Louisiana, mandatory evacuations are ordered for residents in low-lying areas. The US Coast Guard had stopped all traffic from the port of New Orleans at 6 PM CDT (23.00 GMT). The ports of Gulfport and Pascagoula, Mississippi, Mobile, Alabama, and Pensacola, Florida, were shut at midday.
At the moment, some refiners in Mississippi and Louisiana have wounded down operations. Phillips 66’s 255,600 bpd Alliance oil refinery shut on Monday as it is located along the Mississippi River on the coast of Louisiana. Shell slashed output to the minimum rates at its 227,400 bpd refinery in Norco, Louisiana on Monday while also idling its crude distillation unit (CDU).
Meanwhile, some others in Louisiana would stay in their normal operations as their facilities would likely be unaffected by the hurricane. Valero Energy Corp.’s 125,000 bpd refinery in Meraux, Louisiana will continue the normal activity as the storm will pass to the east. Likewise, PBF Energy Inc.’s 190,000 bpd refinery in Chalmette, Louisiana would keep its normal operations.
Looking ahead, some industry analysts estimated the impact of Hurricane Sally to last beyond the duration of the storm. Andrew Lipow of Lipow Oil Associates expected that the wind would not bring damage but the onshore flooding could significantly affect infrastructure, which would lead to impacts of the production from the Gulf.
According to the US government, the US Gulf of Mexico makes up roughly 17% of the country’s crude oil output and 5% of natural gas output. Due to the disrupted activities, about 396,000 bpd of offshore crude production, or 21% of the country’s total was shut. For natural gas, around 685 mmcfd or 25% of the total output was disrupted.
