US Gulf Oil Production Grinds To A Halt As Cindy Makes Landfall

Thursday, June 22, 2017
By Paul Martin

by Tyler Durden
ZeroHedge.com
Jun 22, 2017

Update: *STORM CINDY HAS 16% OF GULF OF MEXICO OIL OUTPUT SHUT IN: BSEE

* * *

Tropical Storm Cindy made landfall along the Gulf Coast Thursday as meteorologists called for a third day of heavy rains and viciously fast winds in the region. Cindy – the first storm to reach the Western Gulf coast since Tropical Storm Bill made landfall in June 2015 – has already been blamed for the death of a young boy in Alabama who was struck and killed Wednesday by a log washed ashore by the storm, according to local news reports.

But the storm has also brought the energy industry in the Gulf of Mexico to a halt as it forces producers across parts of four states – Louisiana, Mississippi, Alabama and Florida – to suspend shipping and production due to heavy rains, high winds and choppy waters, as Bloomberg reports.

“The storm has shut one-sixth of the oil production in the Gulf of Mexico, halted vessel unloadings at a major oil-import terminal and triggered a force majeure on a system that collects natural gas from offshore platforms. Once Cindy makes landfall, it could threaten to disrupt even more energy operations in a region that accounts for about half of the nation’s oil-refining capacity.”

“The biggest impact would be on shipping activity which will remain suspended through Friday,” said Andy Lipow, president of Lipow Oil Associates in Houston. “Storm sets off high winds and waves that will impact ability of ships to go through open water.”

But the impact of the storm isn’t limited to oil. According to Bloomberg, LNG production has fallen to six week lows as the storm has disrupted output of the power-plant fuel. Gas shipments from the Destin pipeline system in the Gulf were curtailed. About 0.3 percent of gas production in the Gulf of Mexico has been shut-in.

“Tropical Storm Cindy looks to have restricted production from offshore rigs as the storm approaches the coastline,” said Het Shah, an analyst with Bloomberg New Energy Finance. However, the impact on LNG is expected to be short-lived.

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