Bloomberg News

Chevron Resuming Gulf of Mexico Operations as Karen Weakens

October 05, 2013

Chevron Corp. (CVX:US) began returning workers to shuttered Gulf of Mexico operations and Anadarko Petroleum Corp. said it expected to follow suit as Tropical Storm Karen weakened off Louisiana.

San Ramon, Calif.-based Chevron, which produces oil and gas from the Tahiti and Blind Faith fields and has a stake in the Perdido development, said on its website at 1 p.m. Eastern time today that it would be resuming normal operations. It didn’t say how long that would would take.

The storm “doesn’t seem to be as significant as was once thought, but we’re still monitoring the situation,” Vincent Piazza, a Princeton, New Jersey-based oil production analyst for Bloomberg Industries, said today.

He said it was unclear how long the disruptions would last.

Anadarko (APC:US), based in The Woodlands, Texas, halted production and cleared employees from the Independence Hub and the Neptune, Constitution and Marco Polo platforms. Workers on the latter two may return later today, John Christiansen, a spokesman at Anadarko’s headquarters, said by e-mail.

Other companies with Gulf operations, including London-based BP Plc (BP/), the largest leaseholder in the deepwater there, kept energy production offline. Those producers and refiners planned to remobilize as conditions allowed.

Almost 62 percent of Gulf oil production, some 866,000 barrels of oil per day, and 48 percent of natural gas output, or 1.8 billion cubic feet daily, was offline today, according to the U.S. Bureau of Safety and Environmental Enforcement.

BP Operations

BP secured wells being drilled by rigs it operates in the Gulf. The company also halted production at all four of its platforms there -- Thunder Horse, Atlantis, Na Kika and Mad Dog -- and evacuated non-essential workers. Royal Dutch Shell Plc (RDSA) cut rates at Louisiana and Alabama plants. BHP Billiton Ltd. (BHP), Exxon Mobil Corp. (XOM:US), Marathon Oil Corp. (MRO:US) and the Williams Cos. (WMB:US) were also among the companies curbing energy output.

The storm, with top winds holding at 40 mph (60kph), was 130 miles south-southwest of Morgan City, Louisiana, as of 2 p.m. New York time and had stalled, the National Hurricane Center said in an advisory. Karen would be downgraded to a tropical depression if sustained winds drop below 39 mph, which the National Hurricane Center said will probably occur tomorrow.

Energy markets expect the storm to be “kind of a blip,” resulting in short-lived supply disruptions, Dave Hackett, president of consulting firm Stillwater Associates, in Irvine, California, said yesterday.

‘Lessons Learned’

“There were a lot of lessons learned from Hurricane Katrina and subsequent storms,” he said. “A big tropical storm is wet, but don’t think it’ll do any serious damage.”

Gasoline futures for November delivery slid 3.2 cents, or 1.2 percent, to $2.6076 a gallon yesterday on the New York Mercantile Exchange, the lowest settlement since December. Oil gained 0.5 percent, and natural gas rose 0.2 percent.

Shell cut rates at its 85,000-barrel-a-day plant in Mobile, Alabama, and Motiva Enterprises LLC reduced output at the 250,000-barrel-a-day Norco, Louisiana, refinery because of shipment delays caused by Karen, Shell said on its website yesterday. Motiva is a joint venture of Shell and Saudi Aramco.

Shell, based in The Hague, also was removing some nonessential personnel from drilling operations in the eastern Gulf, the company said on its website.

Valero Energy Corp. (VLO:US), Marathon Petroleum Corp. (MPC:US), Chevron and other refinery operators said they were monitoring the storm and hadn’t cut production.

Four Platforms

London-based BP’s four deepwater platforms have a combined capacity to produce 660,000 barrels of oil and 990 million cubic feet of natural gas a day, according to BP’s website.

Marathon halted output and evacuated all workers from its Ewing Bank platform 130 miles south of New Orleans, the Houston-based company said on its website. The company said it shut in a total of 18,000 barrels of oil equivalent a day.

Melbourne, Australia-based BHP ceased production and evacuated its Gulf of Mexico facilities, Jaryl Strong, a spokesman for the company, said by e-mail yesterday. Williams shut and evacuated the Canyon Station, Devils Tower and Blind Faith platforms in the eastern Gulf of Mexico, the company said on its website yesterday.

Destin Pipeline LLC, which can transport 1.2 billion cubic feet of gas a day from the Gulf, declared force majeure Oct. 3, saying in a notice to shippers that it’s incapable of providing services from its offshore receipt points because of the storm.

Enbridge Inc. (ENB)’s Manta Ray and Mississippi Canyon gas pipeline systems in the Gulf also declared force majeure.

LOOP LLC, the only U.S. port capable of offloading ultra-large crude carriers, suspended tanker operations, the Covington, Louisiana-based company said in a statement on its website.

To contact the reporter on this story: Harry R. Weber in Houston at hweber14@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net


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Companies Mentioned

  • CVX
    (Chevron Corp)
    • $115.91 USD
    • -0.28
    • -0.24%
  • APC
    (Anadarko Petroleum Corp)
    • $90.98 USD
    • -1.19
    • -1.31%
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