Bloomberg News

Tropical Storm Lee Cuts Gulf Oil Output, May Bring Tornadoes

September 04, 2011

(Updates position of storm in second paragraph. Run BMAP 95086 <GO> for Gulf of Mexico energy platforms.)

Sept. 4 (Bloomberg) -- Tropical Storm Lee is close to landfall on the Louisiana coast as it lashes the state with heavy rain and wind and shuts more than half of the oil and natural gas production from the resource-rich Gulf of Mexico.

Lee was about 85 miles (135 kilometers) west of Morgan City, Louisiana, and moving north at 2 mph, the U.S. National Hurricane Center said in its latest advisory before 2 a.m. New York time. The storm’s maximum sustained winds slowed to 45 mph from 50 mph and tropical storm-force winds stretched as far as 260 miles from its center, the advisory said.

“New Orleans is in the bulls-eye of the flooding rain,” said Matt Alto, an AccuWeather.com meteorologist, on the State College, Pennsylvania-based forecaster’s website.

Companies including Anadarko Petroleum Corp., BP Plc, Exxon Mobil Corp. and Noble Corp. evacuated workers from Gulf rigs and platforms. About 60.3 percent of Gulf oil production and about 55 percent of natural gas output has been shut by the storm, according to the Bureau of Ocean Energy Management, Regulation and Enforcement.

The Gulf accounts for 27 percent of U.S. oil output and 6.5 percent of natural gas production. As much as 91 percent of gas and 98 percent of oil output in the Gulf may be shut in the next four days, according to Kinetic Analysis Corp., a Silver Spring, Maryland-based company that predicts the effects of natural disasters.

Production Outlook

Oil and gas producers will be watching wind speeds and wave heights to determine whether and how long to shut operations, said Jan Vermeiren, chief executive officer of Kinetic Analysis.

James Williams, an economist at WTRG Economics, an energy research firm in London, Arkansas, said Lee isn’t strong enough to cause any significant damage to energy assets at this point.

“We’re not talking about Hurricane Gustav here, moving pipelines up and down Louisiana like it was spaghetti,” Williams said in a telephone interview. “This one isn’t a big story. It’s a wet story.” Gustav struck in 2008.

Ten to 15 inches (25 to 38 centimeters) of rain is expected to fall in an area from the central Gulf coast northward into the Tennessee Valley, with as much as 20 inches in some areas, according to the hurricane center. The Florida panhandle may see as much as eight inches of rain over the next several days.

“A few tornadoes will be possible” over portions of southern Louisiana, southern Mississippi, southern Alabama and the far western Florida panhandle, the center said.

Heavy Rain

The center of Lee is expected to move slowly across Louisiana today, causing many residents to lose power supplies. Bobby Jindal, the state’s governor, declared a state of emergency, saying the storm threatens “extremely heavy, prolonged” rain over the state and may cause flash flooding and high tides.

Thirty-five Louisiana parishes declared states of emergency and officials urged voluntary evacuations in parts of some areas in the southern part of the state. Yesterday, Jindal deployed some troops from the Louisiana National Guard to respond to any emergencies.

New Orleans Mayor Mitch Landrieu extended a state of emergency he declared last week after a fire broke out in the eastern part of the city.

Storm warnings were posted for the Gulf coast from Destin, Florida, westward to Sabine Pass, Texas. Mississippi Governor Haley Barbour declared a state of emergency in several counties expected to be hit with heavy rain and floods.

--Editors: Paul Gordon, Paul Tighe

To contact the reporters on this story: Lynn Doan in San Francisco at ldoan6@bloomberg.net; Dan Hart in Washington at dahart@bloomberg.net

To contact the editor responsible for this story: Sylvia Wier at swier@bloomberg.net


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