Shell and Chevron have started shutting in platforms in the Gulf of Mexico ahead of an approaching storm that could become a hurricane by the end of the week.
Shell is evacuating all personnel from five platforms, including Mars, Olympus, Ursa, Vito, and Appomattox, and shutting production activities there. Chevron, meanwhile, is doing the same at four offshore platforms in the Gulf, but leaving another five platforms operating normally. Earlier reports said BP was also evacuating staff from offshore platforms in the Gulf.
Tropical storm Isaias is expected to make landfall on Saturday, according to the latest forecasts, after it formed offshore Mexico on Wednesday and made its way to the U.S. Gulf Coast. Meteorologists believe it could strengthen into a hurricane by the end of the week, which would make it the first hurricane in a much weaker-than-usual Atlantic hurricane season.
“We’re expecting multiple dangerous, life-threatening impacts along portions of the northern Gulf Coast beginning Friday and continuing into the weekend,” the director of the U.S. National Hurricane Center, Michael Brennan, said earlier this week.
Offshore fields in the Gulf of Mexico account for about 15% of U.S. total national oil production as well as 5% of total natural gas production. A hurricane, however, would be a lot more dangerous for refineries along the Gulf Coast if it reaches any of them. Right now, refineries in the U.S. are being maxed out to produce as much fuel as possible amid a global fuel crunch.
This crunch has pushed refining margins and retail fuel prices to record highs, and any disruption in refining activity in the U.S. would aggravate the price problem. Yet the news of platform shut-ins may also contribute to higher crude oil prices in a week that has seen intensified Iranian attacks on tankers in the Persian Gulf.
By Charles Kennedy for Oilprice.com
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