Oil and gas companies active in the Gulf of Mexico have shut-in almost 58 percent of oil production and 44.6 percent of gas production as a hurricane and tropical storm are approaching the area. The shut-in oil output stands at over 1.065 million bpd and the shut-in gas production is about 1.205 billion cu ft daily.
The staff on 114 production platforms had been evacuated as of Sunday. These platforms represent 1.773 percent of all Gulf of Mexico platforms, the Bureau of Safety and Environmental Enforcement said. Workers were also evacuated from five of the ten drilling rigs in the Gulf, according to a BSEE update. BP (NYSE:BP), Chevron (NYSE:CVX), Shell (LON:RDSa), and Equinor were among the companies evacuating platform staff.
The BSEE said:
“After the storms have passed, facilities will be inspected. Once all standard checks have been completed, production from undamaged facilities will be brought back online immediately. Facilities sustaining damage may take longer to bring back online.”
Two tropical storms, Marco and Laura, are moving in to the Gulf of Mexico. While the National Hurricane Center expected Marco to weaken to a depression, the latest update about its progress includes wind speeds indicating a Category 1 hurricane. Laura is expected to gather strength into a full-blown hurricane before weakening around the middle of the week.
Corona virus continues to pressure oil prices
Oil prices were down at the time of writing but will likely jump later as the market factors in the shut-in production. This is the first significant production shut-in in the Gulf of Mexico this hurricane season. On the flip side, worry about the continued negative effect of the coronavirus pandemic on fuel demand is pressuring prices, so any gain will likely be limited in the absence of more bullish news. Concern about the U.S. economy after pessimistic minutes from the latest Fed meeting released last week will also likely continue to drag prices down.