Energy Firms Assessing Damage Following Hurricane Sally

Reuters, September 18, 2020

Storm-tossed U.S. offshore energy producers and exporters began clearing debris on Thursday from Hurricane Sally and booting up idle Gulf of Mexico operations after hunkering down for five days.

The storm toppled trees, flooded streets and left more than 465,000 homes and businesses in Alabama, Georgia and Florida without power. Sally became a tropical depression on Thursday, as it dropped up to 18 inches (46 cm) of rain and caused flash flooding on its trek across Alabama and toward the Atlantic Ocean, the National Weather Service said.

Crews returned to at least 30 offshore oil and gas platforms. Equinor and Chevron Corp began restaffing platforms in the Gulf of Mexico, following Murphy Oil Corp's restart this week.

Bristow Group, which transports oil workers from a Galliano, Louisiana, heliport, resumed crew-change flights to facilities in the west and central Gulf of Mexico.

We are making flights offshore and experiencing a slight increase in outbound passengers,” said heliport manager Lani Moneyhon.

The Louisiana Offshore Oil Port, a deepwater facility that handles supertankers, reopened its marine terminal after suspending operations over the weekend.

Sally shut 31%, or 567,770 barrels per day (bpd), of offshore Gulf of Mexico crude oil production and 24%, or 670 million cubic feet per day (mmcfd), of natural gas on Thursday, according to the U.S. Interior Department.

About 1.4 million bpd of U.S. refining capacity at six refineries were offline on Thursday, according to the U.S. Energy Department, including two plants under repair since Hurricane Laura and another halted by weak demand due to the COVID-19 pandemic.

Crude futures rose 2% on Thursday as the Organization of the Petroleum Exporting Countries promised to crack down on members' exceeding output pledges. U.S. gasoline futures gained about 3% and was near the highest level this month.

Sally drenched a broad area from Florida to the Carolinas with torrential rains that caused widespread flooding.

At 5 p.m. CDT (2200 GMT), it was about 70 miles (115 km) northeast of Augusta, Georgia, moving northeast toward the Atlantic Ocean at 24 miles per hour, the U.S. National Hurricane Center said.

Phillips 66, which shut its 255,600-bpd Alliance, Louisiana, oil refinery ahead of the storm, said it was advancing planned maintenance at the facility and would keep processing halted.

Royal Dutch Shell's Mobile, Alabama, chemical plant and refinery reported no serious damage from an initial survey, the company said. Chevron said its Pascagoula, Mississippi, oil refinery operated normally through the storm.

Shell will keep the crude distillation unit, alkylation unit, and reformer shut for at least a week at its 227,400-bpd Norco, Louisiana, refinery for short-term maintenance work, sources told Reuters. The units were shut due to the threat from Sally.

(Reporting by Erwin Seba; Writing by Gary McWilliams; Editing by Marguerita Choy, Jonathan Oatis and Tom Brown)

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