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Some Oil Platforms Shut as Dolly Storm Nears

Gulf of Mexico producers began shutting a small amount of oil and natural gas output from offshore platforms Tuesday ahead of Tropical Storm Dolly, which is expected to hit the U.S.-Mexican border Wednesday.

At one point, U.S. crude oil futures fell over $5 a barrel to a six-week low as forecasters expected Dolly to miss major oil and gas installations.

However, Dolly, which is expected to become a hurricane before hitting land, could put a dent in natural gas supplies from offshore platforms. Pipeline operator Williams said its giant Transco pipeline system would be carrying 250 million cubic feet less in natural gas due to Gulf shut-ins.

Energy giant Exxon Mobil said it shut 10,000 barrels per day (bpd) of oil output and 40 million cubic feet per day in natural gas production. Producer Anadarko Petroleum said it had shut the equivalent of 30,000 bpd of oil production in the western Gulf of Mexico.

That's a fraction of Gulf production which provides 1.3 million barrels of oil or one-quarter of U.S. production and 7.7 billion cubic feet or 15 percent of U.S. natural gas output.

Producers including Apache, BP, Chevron and Shell Oil said they were flying workers from Gulf platfomrs, but output was unaffected.

While Dolly's path will take the threat away from the heaviest offshore production areas, the storm still poses a potential threat to three refineries in Corpus Christi, Texas.

Valero Energy and Citgo Petroleum said they were monitoring the storm and readying the refineries, but production remained as before the forecast.

Flint Hills Resources said it was monitoring Dolly.

While the 2006 and 2007 hurricane seasons had little impact on offshore production areas, the companies have prepared for a possible repeat of 2005 when hurricanes Katrina and Rita temporarily shut a quarter of U.S. oil and fuel production, sending prices to record highs.

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