Precautionary shut-ins add a domestic supply squeeze to a market already pricing heavy Middle East risk, which supports US crude benchmarks while the storm’s track remains uncertain. The duration of the outage is the key variable: brief shut-ins usually reverse quickly, but damage to platforms or pipelines could extend losses and tighten Gulf Coast sour crude supply. Traders will watch whether other operators follow suit and whether the storm threatens onshore refining and export terminals, which would widen the impact to fuel prices and product cracks. Natural gas markets may also react if associated gas output is curtailed.
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Yesterday:
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With the Gulf of Mexico now joining the Middle East as a supply worry, oil traders have a storm to track as well as a war.
Summary:
- Chevron has begun shutting in production at four of its operated US Gulf facilities in preparation for Tropical Storm Isaias
- Output at Chevron’s other five Gulf facilities remains at normal levels, and some additional personnel are being moved onshore
- Shell is evacuating all personnel and shutting in production at its Mars, Olympus, Ursa, Vito and Appomattox assets
- Shell has already moved non-essential staff from its Stones asset
- Both companies said they are closely monitoring the storm’s projected path; Chevron is following storm procedures at onshore sites
Chevron and Shell have begun shutting in oil and gas production at offshore facilities in the US Gulf of Mexico as Tropical Storm Isaias approaches, the companies said, taking output offline at nine sites between them as a precaution.
Chevron said it had initiated shut-in procedures at four of its operated facilities in the region, which the US government refers to as the Gulf of America, and was moving some additional personnel onshore. Production at its five other Gulf facilities was continuing at normal levels. At onshore sites, the company said it was following established storm response procedures and closely monitoring the projected path of the storm.
Shell went further at several of its key deepwater operations. The company said it was evacuating all personnel and shutting in production at its Mars, Olympus, Ursa, Vito and Appomattox assets. It had already removed non-essential staff from its Stones asset and said it would continue to monitor the storm for potential impacts on its assets and operations.
Neither company disclosed how much production had been affected. Shut-ins of this kind are standard practice when tropical storms threaten offshore platforms, allowing operators to secure wells and evacuate crews before conditions deteriorate. Output typically resumes once a storm has passed and facilities have been inspected, although the timing depends on the storm’s track and whether any damage occurs.
The disruption comes at a sensitive time for oil markets. Crude prices are already elevated by supply risks in the Middle East, where attacks on tankers have intensified, and any extended loss of US offshore output would add to pressure on supply.
The next steps hinge on Isaias itself. The storm’s strength and path will determine whether more operators follow Chevron and Shell in curtailing output, how long the shut-ins last, and whether onshore energy infrastructure along the Gulf Coast is also at risk.
This article was written by Eamonn Sheridan at investinglive.com.