Opinion

S&P Global Platts FACTBOX: Utilities, Oil Producers Brace for Hurricane Michael Along US Gulf

Posted by OilVoice Press - OilVoice

09-Oct-2018


With Hurricane Michael expected to make landfall on the Florida Panhandle as a Category 3 storm Wednesday, offshore oil and gas producers were busy evacuating crews and shutting in production Monday.

By mid-day, nearly 20% of Gulf of Mexico oil production had been taken offline. That number will likely have risen when reported Tuesday as operators continued to shut down platforms Monday afternoon.

Meanwhile, just 24 days after Hurricane Florence made landfall, electric utilities were gearing up for Hurricane Michael restoration efforts by staging crews and supplies in the storm's path. Lost power demand is likely to have a knock-on effect on natural gas demand and prices.

After it brings over 100 mph winds to the western-most portion of Florida, Hurricane Michael is expected to turn northeast, bringing wind and rain to Alabama, Georgia and the Carolinas before heading back out to sea. Here are the key takeaways across commodities:

OIL

TRADE FLOWS

  • As of late Monday morning, 324,190 b/d of Gulf of Mexico oil production had been shut in, 19% of total output, according to the US Bureau of Safety and Environmental Enforcement.
  • Ports remained open, but the US Coast Guard put in effect "Port Condition Yankee" for Pascagoula and Gulfport in Mississippi; Mobile, Alabama; and the Gulf Intracoastal Waterway, with expectations of gale force winds within 24 hours. During Yankee, "all affected ports are under vessel traffic control measures," according to the USCG.

PRICES

  • Lost production from Michael has not had a material impact on the oil market, with prompt NYMEX crude falling 5 cents to $74.29/b.

INFRASTRUCTURE

  • ExxonMobil is removing crews from its Lena Platform, which is undergoing decommissioning, spokeswoman Julie King said. The company is also keeping staffing levels at Mobile Bay at "minimum."
  • BP is evacuating crews and has shut in production at its four operated platforms: Atlantis, Mad Dog, Na Kika, and Thunder Horse.
  • Chevron has evacuated crews and shut in production at its two US Gulf platforms, Blind Faith and Petronius.
  • Anadarko has shut in production and removed all personnel at its Horn Mountain and Marlin platforms.
  • BHP Billiton is "ramping down and shutting in" its Shenzi and Neptune platforms. Evacuation of both platforms has been completed.
  • The extended storm path is home to multiple refineries, including PBF Delaware City, Delaware (182,200 b/d); PBF Paulsboro, New Jersey (160,000 b/d); Phillips 66's Bayway refinery in Linden, New Jersey (258,000 b/d); Monroe Energy's Trainer, Pennsylvania (190,000 b/d) plant; and Philadelphia Energy Solutions' Philadelphia, Pennsylvania (335,000 b/d) refinery.
  • Chevron's 330,000 b/d Pascagoula refinery is "following hurricane procedures and paying close attention to the track and forecast of Hurricane Michael. We cannot speculate on any possible impact to operations," Chevron spokesman Braden Reddall said in an email.

NATURAL GAS

TRADE FLOWS

  • As of late Monday morning, 283,880 Mcf/d of Gulf of Mexico natural gas production was shut in, 11% of total, according to BSEE.
  • Gas consumption for power burn could be negatively impacted by the storm initially, but potentially offset by nuclear outages if plants are taken offline, according to S&P Global Platts Analytics.

PRICES

  • Spot market natural gas prices had not had any appreciable movement because of the incoming storm. The Henry Hub next-day cash price rose 5 cents to $3.295/MMBtu.

POWER

PRICES

  • Into Southern day-ahead was bid in the low $40s/MWh Monday morning on Intercontinental Exchange, down $20 from Friday.
  • Balance of the week packages were in the high $30s/MWh, as temperatures and loads were expected to fall later in the week.

INFRASTRUCTURE

  • Personnel at Southern Company subsidiary Alabama Power's 1,776-MW Joseph M. Farly nuclear plant in Columbia, Alabama, are closely monitoring the storm. There is no plan to shut the plant at present, according to Alabama Power spokesman Michael Sznajderman.
  • Duke Energy and Southern Company utility have crews in place, anticipating power outages.

S&P Global PlattsOilutilitiesHurricaneUS GulfUnited StatesGusarOffshoreProducerGOMGul of Mexico

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