Chevron shuts Petronius platform as Gulf storm threatens 2 million barrels

Tropical Depression Two is expected to strengthen into a named storm Monday, threatening the heart of U.S. offshore crude production.

Chevron shut-in its Petronius facility Monday and evacuated all personnel as Tropical Depression Two churned toward the U.S. Gulf Coast, threatening to disrupt as much as 2 million barrels of crude output from the region.

"About 2 million barrels of oil could be lost across the U.S. Gulf through the duration of the storm, a marked increase from the 10,000 barrels impacted by Tropical Storm Arthur last month," Earth Science Associates said in a model forecast.

The U.S. Gulf produced nearly 2 million barrels of crude oil per day in March, accounting for roughly 14 percent of total U.S. crude output, with Shell, BP, Chevron and Occidental Petroleum among the largest deepwater operators. The region's refining corridor, which runs from Corpus Christi, Texas to Pascagoula, Mississippi, holds around half of total U.S. refining capacity of 18.4 million barrels per day.

The storm system, which could strengthen into Tropical Storm Bertha later Monday, is expected to bring 2 to 4 inches of rainfall — with isolated totals around 8 inches — through Friday along the Gulf Coast from western Florida to the Middle Texas Coast, the National Hurricane Center said. Chevron said production from its other operated Gulf assets remained at normal levels.

Storm path and industry response

The depression was centered about 110 miles south of Panama City, Florida, with sustained winds of 35 mph, moving northwest near 3 mph, the NHC said. A tropical storm watch is in effect from the Ochlockonee River in Florida westward to the Jefferson and Plaquemines parish line in Louisiana, with a storm surge watch extending from the mouth of the Mississippi River to the Alabama-Florida border.

Chevron also said it is transporting nonessential personnel from its Tubular Bells and Blind Faith platforms. The company's Petronius facility produces about 27,000 barrels of oil per day and 28 million cubic feet of natural gas, based on historical operating data.

The last time a comparable storm threatened Gulf production was Tropical Storm Arthur in June, which disrupted roughly 10,000 barrels of output — a fraction of the projected impact from the current system. Earth Science Associates noted there are more higher-production oil platforms in the path of Tropical Depression Two, explaining the larger expected disruption.

Refining and power sector on alert

U.S. utility CenterPoint Energy on Monday activated its Emergency Operations Center, preparing for potential weather-related outages as the storm is forecast to reach the Greater Houston area by Friday. The National Weather Service office in New Orleans warned of wind gusts of 40 mph and noted a possible life-threatening storm surge for the Alabama, Mississippi and southeastern Louisiana coasts, with surges of up to 4 feet possible.

The refining corridor along the Gulf Coast processes about half of the nation's 18.4 million barrels per day of refining capacity, meaning any prolonged disruption could ripple into gasoline and diesel markets. Areas of flash flooding are possible through Friday along the coast from western Florida to middle Texas, with rainfall of 3 to 5 inches along the Louisiana coastline and higher amounts expected south of Lake Pontchartrain.

This article is for informational purposes only and does not constitute investment advice.