FurloughedAgain
Cabin Heating & Air Tech.
- Joined
- Jun 5, 2002
- Posts
- 1,657
Katrina targeting U.S. oil operations
By JUSTIN BACHMAN
AP BUSINESS WRITER
[font=Arial,Helvetica][/font]NEW YORK -- With crude oil prices already at record levels, a hurricane targeted the heart of America's oil and refinery operations Sunday, shutting down an estimated 1 million barrels of daily production and threatening to curtail refining activity in the region.
Katrina, a Category 5 storm expected to strike near New Orleans early Monday, was churning through the Gulf of Mexico. The area is crucial to the nation's energy infrastructure - offshore oil and gas production, import terminals, pipeline networks and numerous refining operations throughout southern Louisiana and Mississippi.
The hurricane followed a path similar to the one taken last September by Ivan, which caused heavy damage and reduced the region's output for months. Yet Katrina's 175-mph wind was fiercer.
Oil companies have evacuated workers and closed at about 1 million barrels of daily production in the Gulf, but that amount could be higher because not every producer reports data, said Peter Beutel, an oil analyst with Cameron Hanover.
"It's not looking real friendly here. This is unmitigated, bad news for consumers," he said.
Gasoline prices could see the largest spikes because so many refineries in the region could be shut down by flooding, power outages, or both, energy analysts said.
The U.S. has ample crude oil supplies, even if major hurricane destruction trims Gulf oil output and foreign imports, but refining capacity is extraordinarily tight. As a result, prices for gasoline, heating oil, jet fuel and other products have flirted with records and could go even higher this week.
"If this thing knocks out significant quantities of refining capacity ... we're going to be in deep, dark trouble," said Ed Silliere, vice president of risk management at Energy Merchant LLC in New York.
The market has been on edge for months, with traders and speculators buying on the slightest fear. With Katrina, all those fears could be realized, Beutel said.
"Basically I could spill a can of oil at my local gas station and you'd see the price of crude go up by $1 per barrel," he said, predicting futures would likely top $70 per barrel in coming sessions.
Crude settled at $66.13 a barrel Friday on the New York Mercantile Exchange, down $1.36 after hitting $68 last week.
In many ways, Katrina was expected to be inconsequential to the energy industry, with many traders selling on Friday as the storm moved across Florida and was seen as moving north and striking the Florida Panhandle as a tropical storm with little impact. That all changed Saturday, when the system gained power and charged west, directly into areas of offshore oil production.
ChevronTexaco Corp. completed evacuations of all workers in the eastern and central Gulf of Mexico and nonessential workers in the western Gulf late Saturday, company spokesman Matt Carmichael said.
Chevron has about 2,100 employees and contractors working in the Gulf, Carmichael said. Chevron will continue to produce 90 percent of its normal production by remote as long as weather cooperates, he said.
The Louisiana Offshore Oil Port, which processes loads from tankers too large for mainland ports, evacuated all workers and stopped unloading ships on Saturday morning said Mark Bugg, the terminal's manager of scheduling. The LOOP, 20 miles offshore, is the nation's largest oil import terminal and handles 11 percent of U.S. oil imports.
Royal Dutch-Shell Group evacuated more than 1,000 offshore workers by Saturday. Only those in the far west remained, the company said on its Web site. BP PLC and ExxonMobil Corp. also brought workers ashore Saturday.
Shell estimated 420,000 barrels of oil and 1.35 million cubic feet of gas per day will be shut in at its central and eastern Gulf facilities. Exxon Mobil said it has ceased daily production of 3,000 barrels of oil and 50 million cubic feet of gas.
Valero Energy Corp. evacuated all but a few workers at its 260,000-barrel-a-day St. Charles refinery on Saturday. Murphy Oil Corp. also shut down its 120,000-barrel-a-day Meraux, La., refinery, and Exxon Mobil Corp. planned to shut down its 183,000-barrel-a-day refinery in Chalmette, La.
Motiva Enterprises, a joint venture of Royal Dutch Shell PLC and state-owned Saudi Arabian Oil Co., began implementing hurricane contingency plans at its 225,000-barrel-a-day Norco refinery on Saturday. Motiva also was exploring contingencies for its 235,000-barrel-a-day Convent refinery, about 45 miles west of New Orleans, Dow Jones Newswires reported.
By JUSTIN BACHMAN
AP BUSINESS WRITER
[font=Arial,Helvetica][/font]NEW YORK -- With crude oil prices already at record levels, a hurricane targeted the heart of America's oil and refinery operations Sunday, shutting down an estimated 1 million barrels of daily production and threatening to curtail refining activity in the region.
Katrina, a Category 5 storm expected to strike near New Orleans early Monday, was churning through the Gulf of Mexico. The area is crucial to the nation's energy infrastructure - offshore oil and gas production, import terminals, pipeline networks and numerous refining operations throughout southern Louisiana and Mississippi.
The hurricane followed a path similar to the one taken last September by Ivan, which caused heavy damage and reduced the region's output for months. Yet Katrina's 175-mph wind was fiercer.
Oil companies have evacuated workers and closed at about 1 million barrels of daily production in the Gulf, but that amount could be higher because not every producer reports data, said Peter Beutel, an oil analyst with Cameron Hanover.
"It's not looking real friendly here. This is unmitigated, bad news for consumers," he said.
Gasoline prices could see the largest spikes because so many refineries in the region could be shut down by flooding, power outages, or both, energy analysts said.
The U.S. has ample crude oil supplies, even if major hurricane destruction trims Gulf oil output and foreign imports, but refining capacity is extraordinarily tight. As a result, prices for gasoline, heating oil, jet fuel and other products have flirted with records and could go even higher this week.
"If this thing knocks out significant quantities of refining capacity ... we're going to be in deep, dark trouble," said Ed Silliere, vice president of risk management at Energy Merchant LLC in New York.
The market has been on edge for months, with traders and speculators buying on the slightest fear. With Katrina, all those fears could be realized, Beutel said.
"Basically I could spill a can of oil at my local gas station and you'd see the price of crude go up by $1 per barrel," he said, predicting futures would likely top $70 per barrel in coming sessions.
Crude settled at $66.13 a barrel Friday on the New York Mercantile Exchange, down $1.36 after hitting $68 last week.
In many ways, Katrina was expected to be inconsequential to the energy industry, with many traders selling on Friday as the storm moved across Florida and was seen as moving north and striking the Florida Panhandle as a tropical storm with little impact. That all changed Saturday, when the system gained power and charged west, directly into areas of offshore oil production.
ChevronTexaco Corp. completed evacuations of all workers in the eastern and central Gulf of Mexico and nonessential workers in the western Gulf late Saturday, company spokesman Matt Carmichael said.
Chevron has about 2,100 employees and contractors working in the Gulf, Carmichael said. Chevron will continue to produce 90 percent of its normal production by remote as long as weather cooperates, he said.
The Louisiana Offshore Oil Port, which processes loads from tankers too large for mainland ports, evacuated all workers and stopped unloading ships on Saturday morning said Mark Bugg, the terminal's manager of scheduling. The LOOP, 20 miles offshore, is the nation's largest oil import terminal and handles 11 percent of U.S. oil imports.
Royal Dutch-Shell Group evacuated more than 1,000 offshore workers by Saturday. Only those in the far west remained, the company said on its Web site. BP PLC and ExxonMobil Corp. also brought workers ashore Saturday.
Shell estimated 420,000 barrels of oil and 1.35 million cubic feet of gas per day will be shut in at its central and eastern Gulf facilities. Exxon Mobil said it has ceased daily production of 3,000 barrels of oil and 50 million cubic feet of gas.
Valero Energy Corp. evacuated all but a few workers at its 260,000-barrel-a-day St. Charles refinery on Saturday. Murphy Oil Corp. also shut down its 120,000-barrel-a-day Meraux, La., refinery, and Exxon Mobil Corp. planned to shut down its 183,000-barrel-a-day refinery in Chalmette, La.
Motiva Enterprises, a joint venture of Royal Dutch Shell PLC and state-owned Saudi Arabian Oil Co., began implementing hurricane contingency plans at its 225,000-barrel-a-day Norco refinery on Saturday. Motiva also was exploring contingencies for its 235,000-barrel-a-day Convent refinery, about 45 miles west of New Orleans, Dow Jones Newswires reported.
