The storm surge and waves from Hurricane Michael batter the beachfront homes on October 10 2018 in the Florida Panhandle community of Shell Point Beach, Florida. Picture: GETTY IMAGES/AFP/MARK WALLHEISER
The storm surge and waves from Hurricane Michael batter the beachfront homes on October 10 2018 in the Florida Panhandle community of Shell Point Beach, Florida. Picture: GETTY IMAGES/AFP/MARK WALLHEISER

Nearly 40% of daily crude oil production and more than one third of natural gas output was lost from offshore US Gulf of Mexico wells on Wednesday because of platform evacuations and shut-ins ahead of Hurricane Michael.

Michael intensified to a Category 4 storm and is expected to hit the Florida Panhandle later on Wednesday with maximum sustained winds of 233km/h.

Since Monday, oil producers — including Anadarko Petroleum, BHP Billiton, BP and Chevron — have evacuated personnel from 75 platforms as the storm makes its way through the central Gulf.

The country’s largest privately owned crude terminal, the Louisiana Offshore Oil Port, halted operations at its marine terminal. The facility is the only port in the US capable of fully loading and unloading a tanker with a capacity of 2-million barrels of oil.

Companies had turned off daily production of about 670,800 barrels of oil and 20.5-million cubic metres of gas by midday on Tuesday, according to the federal offshore regulator, the Bureau of Safety and Environmental Enforcement (BSEE). The evacuations affected about 11% of the occupied platforms in the Gulf, it said.

On Wednesday, ExxonMobil said it evacuated non-essential personnel from its Mobile Bay offshore facility and transferred control onshore in addition to evacuating staff from its Lena platform. It expects minimal impact to production.

A week ago, drillers were pulling about 1-billion cubic metres a day of gas out of the offshore Gulf of Mexico. On Tuesday, that was down to just 0.6-billion, according to data from Refinitiv.

Southern, the biggest power company in Georgia and Alabama, said on Wednesday that it was reducing power in two units at the Farley nuclear power plant in Alabama as a precautionary measure.

The reduced operating level will allow personnel to continue monitoring the storm’s progress and, if necessary, shut the 1,751MW Farley plant, which is about 145km north of the coast. Farley is the company’s reactor closest to where Hurricane Michael is expected to make landfall.

US crude futures were trading down more than 2% at $73.20 a barrel on Wednesday morning, reflecting the declining importance of Gulf of Mexico output that has resulted from the growth of production from the nation’s onshore shale fields.

Crude output lost in the two days of storm shut-ins represents about 9% of the US production of 11.1-million barrels per day (bpd), according to data from the Energy Information Administration (EIA).

The BSEE said that, in addition to shutting in wells, oil producers halted most offshore drilling operations by evacuating three drilling rigs and moving eight others out of the storm area.

Reuters