Storm Dolly Shuts Some Gulf Oil, Gas Facilities

U.S. Gulf of Mexico producers had shut 5 percent of natural gas production and nearly as much oil output on Tuesday ahead of Tropical Storm Dolly, which is expected to hit the U.S.-Mexican border on Wednesday, the U.S. government said.

U.S. crude oil futures bounced back from 6-month lows set on Tuesday after the U.S. Minerals Management Service announced the shut production, settling down $3.09 at $127.95 a barrel.

Dolly was forecast to miss the heart of offshore oil and gas production but oil companies have evacuated some staff and shut down some production as a precaution.

By the numbers, Dolly has shut 395 million cubic feet per day (cfd) in natural gas production out of a total 7.7 billion cfd and 60,631 barrels of crude oil output out of 1.3 million barrels taken daily from the Gulf, according to the MMS.

Announcements throughout the morning from pipeline operator Williams, producers Apache and Anadarko Petroleum along with energy giant Exxon Mobil pointed to Dolly making a bigger dent in the Gulf's natural gas output.

Williams said its giant Transco pipeline system would be carrying 250 million cfd less in natural gas due to shut offshore wells.

Tracking Dolly's Path vs. Oil Rigs

Apache has shut 56 million cfd while Exxon has shut 40 million cfd and 10,000 barrels per day (bpd) in oil output. Anadarko has shut the equivalent of 30,000 bpd in oil production.

Other producers were flying workers from offshore platforms throughout the day, though they said 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 LP 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 then-record highs.

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