US energy companies cut production as Gulf Coast awaits twin storms
Forecast U.S. Gulf Coast storms have forced energy companies to, as a matter of urgency, cut oil production as the U.S oil region awaits the coming of the tropical storms.
In response to the forecast of the storms with the potential of Category 2 hurricane, producers have already cut over 1 million barrels per day of Gulf Coast offshore oil production.
Marco and Laura, two powerful tropical storms are forecast to bring heavy rains, and string winds this week.
Storm Laura, as forecast, would by Thursday strike the Texas/Louisiana coast as Category 2 hurricane with 105 mile per hour (169 km/h) winds and heavy rain, while for Storm Marco, up to 5 inches (12.7 cm) of rain is more likely to drop along the Louisiana coast.
On Monday August 24, 2020, Motiva Enterprises has began plan to cut its Port Arthur, Texas, crude oil refinery, with Total SA, following suit as it is reducing its refinery production in the city, according to a source familiar with the operations.
Also, Port Arthur plant of Valero has on Monday seen partial shutdown as the refiner’s preparation for the storms. Exxon’s Beaumont, Texas has begun to put up plans to tackle one of the storms, Storm Laura.
Similarly, on Thursday, Louisiana Offshore Oil Port, oil-export facility which happened to be the largest on the Gulf Coast, has on Sunday stopped operations at its marine terminal.
The deep cut in productions has directly affected gasoline prices which have risen to about 7% to about a six-month high. It has also led to a rise in the U.S. crude futures, according to some traders.
The connection between the unexpected rise in gasoline prices and production cut is understandable as 45% of all U.S. oil processing and 17% of oil output come from Gulf Coast refiners and offshore producers.
Similarly, in places like Ports of New Orleans, Baton Rouge and from the lower Mississippi River to the Gulf of Mexico, Vessel traffic has been temporarily closed.
However, with eminent arrival of the first cyclone on Monday, refiners such as Royal Dutch Shell, Exxon Mobil, and Valero Energy are willing to go ahead with operations at Louisiana plants, some sources familiar with the refiners said.
As the storm forecasts would begin to unfold on Tuesday, the Port Arthur mayor said that “The forecasts are being monitored.”
He added that he is looking into making provisions for evacuation of residents before the storms would arrive.