Monday, June 28, 2010

Alex may effect Gulf oil production ..

HOUSTON (Dow Jones)--Tropical Storm Alex, expected to become a hurricane Tuesday, seems to be headed on a path away from the bulk of the U.S. Gulf of Mexico's oil and gas production and refining infrastructure. But some production impact will be felt as one of the largest energy producers in the Gulf said Monday it was shutting down several platforms as a precaution.

Royal Dutch Shell PLC (RDSA) said it had pulled 700 workers from its Gulf operations, and some 835 workers remained offshore. The company is shutting in production from its Western and Central Gulf of Mexico assets to prepare for the potential full evacuation of personnel Tuesday. The company started pulling workers from the Gulf over the weekend. The company didn't specify how much production would be shut or how many platforms were being evacuated.

At 11 a.m. EDT, Alex was located about 85 miles west-northwest of Campeche, Mexico, in the western Gulf of Mexico, and was heading towards southern Texas and northern Mexico. Most U.S. offshore oil and gas platforms are located in the eastern part of the Gulf, far from Alex's forecast path.

Alex "is not likely to have a major impact on production or refining in the U.S.," Doug MacIntyre, senior analyst at the Energy Information Administration, told Dow Jones Newswires Monday. "Alex's current path appears to avoid most of the oil and gas production platforms and any of the major refining centers."

Energy markets Monday seemed to take the storm in stride. Light, sweet crude for August delivery ended 61 cents lower at $78.25 a barrel a barrel on the New York Mercantile Exchange.

Natural gas for July delivery on the New York Mercantile Exchange settled 2.96% lower at $4.717 million British thermal units.

Gulf producers Apache Corp. (APA), Exxon Mobil Corp. (XOM), and Anadarko Petroleum Corp. (APC) also said Monday they have started evacuating non-essential workers from the offshore facilities expected to be in the path of the storm but none have so far reported any impact to their production.

BP PLC (BP, BP.LN) said Monday it pulled non-essential personnel from three offshore facilities in the the Gulf, and that production was not affected. The company evacuated workers from Atlantis, Mad Dog and Holstein platforms.

Alex may delay BP PLC's plans to increase the amount of oil collected from a leaking well in the Gulf by a week, a company official said Monday.

While the storm's winds are expected to stay far to the west of the Deepwater Horizon spill, high seas are likely to become an issue this week, said Kent Wells, a senior vice president with BP, in a press briefing. Waves up to between 10 feet and 12 feet would prevent BP from hooking a third rig up to an underwater containment system, a process that needs three days of good weather, Wells said.

Two rigs, the Discoverer Enterprise and Q4000, are already collecting between 20,000 and 25,000 barrels of oil a day from the well, which has gushed ever since a rig working at the site caught fire and sank in April.

Chevron Corp. (CVX) and ConocoPhillips (COP) said that they have not evacuated workers, but that they are closely monitoring the forecast for Alex.

A hurricane watch was issued for parts of the south Texas Gulf coastline area and parts of northern Mexico, the National Hurricane Center reported Monday on its website.

The NHC, in its advisory, also said Alex likely will become a hurricane Tuesday and has increased in strength, now with winds of 60 miles per hour.

The watch area for the U.S. extends from south of Baffin Bay to the mouth of the Rio Grande in Texas, with Mexico issuing a hurricane watch from the Rio Grande to La Cruz.

-By Isabel Ordonez, Dow Jones Newswires; 713-547-9207;

(Brian Baskin and Angel Gonzalez contributed to this article



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