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Hurricane Michael enters Gulf of Mexico, could track US Atlantic Coast

   date:2018-10-11     Author:S&P Global Platts    Browse:0    
Core tips:Houston — Hurricane Michael entered the Gulf of Mexico Monday, with BP, ExxonMobil, Chevron and Anadarko evacuating per
Houston — Hurricane Michael entered the Gulf of Mexico Monday, with BP, ExxonMobil, Chevron and Anadarko evacuating personnel from key offshore platforms in advance of the storm.

Michael was about 50 miles south of Cuba's western tip and 140 miles east-northeast of Cozumel, Mexico, midday Monday and was on track to move up the US Atlantic Coast, according to National Hurricane Center maps.
Maximum sustained winds were 75 mph, and the storm was moving north at 7 mph. It is expected to pick up speed and intensity Tuesday, with rapid strengthening expected during the next 24 hours, the hurricane center said.

Refined product futures clawed back early declines during Monday US trading. prompt NYMEX November RBOB settled 76 points higher at $2.0937/gal, well-up from an overnight low of $2.0484/gal. prompt ULSD settled 19 points higher at $2.3942/gal, up from a low of $2.3586/gal.

Spot gasoline market indications ahead of the Platts Market on Close assessment process suggested there was little additional strength.

prompt NYMEX crude settled 5 cents lower at $74.29/b.

PLATFORM CLOSURES
ExxonMobil said Monday it is removing crews from the Lena platform, which is undergoing decommissioning, and also keeping staffing of its Mobile Bay operations offshore Alabama at "minimal" levels, spokeswoman Julie King said.

BP is evacuating crews and has shut in production from its four operated platforms Atlantis, Mad Dog, Na Kika and Thunder Horse, the company said in a statement.

Chevron said it has evacuated all crews and shut in production from two of its US Gulf platforms, Blind Faith and Petronius. Production from our other Chevron-operated Gulf of Mexico assets remains at "normal levels," the company said in a statement.

The companies said they will continue to monitor offshore conditions.

Also, big independent operator Anadarko Petroleum said it has shut in production and removed all personnel at its operated Horn Mountain and Marlin platforms in the Gulf of Mexico.

"All other Anadarko-operated and producing platforms remain on production as we continue to watch the potential path of Tropical Storm Michael," the company said in a statement.

As of 2 pm EDT (1800 GMT), a total of 324,190 b/d of oil and 283,880 Mcf/d of natural gas was shut in, or 19% and 11%, respectively, of total Gulf of Mexico production for those commodities, according to the US Bureau of Safety and Environmental Enforcement.

A total of 10 US Gulf producing platforms have been evacuated so far, or about 1.5% of total platforms in the region, BSEE said.

The US Coast Guard put in effect Port Condition X-Ray for Pascagoula, and Gulfport, Mississippi; Mobile, Alabama; and the Gulf Intracoastal Waterway, with expectations of gale force winds within 24 hours.

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.

USAC REFINERIES
Michael is forecast to become a major hurricane by Tuesday or Tuesday night, with winds above 110 mph. The storm should begin tilting to the northeast on Wednesday and Thursday.

The region is home to multiple refineries, including PBF's Delaware City, Delaware (182,200 b/d); PBF's 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); and Philadelphia Energy Solutions' Philadelphia, Pennsylvania 335,000 b/d.

While it remains to be seen what impact the storm will have on either supply and demand, with Irving Oil's 300,000 b/d Saint John, Newfoundland, refinery--the largest on the Atlantic Coast--suffering an explosion Monday.

The Irving refinery was already under planned work, but the explosion could make it all the more difficult for the refinery to make up for any regional supply shortfall due to Michael. This could open the door to increased product imports from Europe.

While Atlantic Coast gasoline stocks at just under 70 million barrels, almost 20% above the five-year average of US Energy Information Administration data, regional diesel stocks are tight.

Combined low- and ultra low-sulfur diesel stocks at just over 40 million barrels are almost 7% below the five-year average of EIA data.
 
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