Oil refineries brace for Tropical Storm Don

Galveston, oh Galveston, I still hear your sea winds blowing. Tropical storm Don looks like it is headed towards Galveston right in the heart of refinery row not to mention the home to hundreds of offshore oil platforms and rigs. At least 10 refineries are in the storm path and some of the largest ones in the country. The storm is already causing oil companies to take precautions. Reuters News reported, “Tropical Storm Don, the fourth named storm of the U.S. Atlantic hurricane season…should move through the southern and central Gulf of Mexico through Thursday …Interests in the northwestern Gulf of Mexico should monitor the progress of Don as watches and warnings may be required for portions of the Texas Coast tonight or Thursday….. While Don currently holds no hazards to land, it poses a threat to the region that is home to thousands of oil and gas production platforms, producing about 29 percent of U.S. oil output and more than 10 percent of domestically produced natural gas….. Several offshore energy operators, including Shell Oil Co, and Apache Corp have been forced to evacuate support workers on Wednesday, but have not undertaken measures to shut production yet…… Refiners along the Gulf Coast, home to 40 percent of the nation's refining capacity, were also watching the system….. An Air Force reserve hurricane hunter aircraft is investigating the storm the NHC report said.

Dow Jones says that “The Gulf accounted for about 30% of all U.S. oil production last year, with more than 606 million barrels. Gulf wells also account for about 7.2% of U.S. natural gas production. Shell, one of the largest producers in the Gulf of Mexico, said it has evacuated some non-essential personnel from its southwest operations due to the threat of a possible storm. The company said it evacuated about 70 people and that production isn't affected. Evacuation started Tuesday and continued Wednesday, the company said."These personnel are not essential to core producing," the company said.

Shell said it began securing operations on the Perdido platform, which it operates in partnership with Chevron and BP. About 200 miles south of Galveston, Texas, in about 8,000 feet of water, the Perdido platform is the world's deepest drilling and production platform. Its peak production is the equivalent of about 100,000 barrels of oil per day. …….Shell also said it is securing operations on the Noble Danny Adkins, a deep-water drill ship it is leasing from Noble which is working in the vicinity of the Perdido platform. Noble spokesman John Breed said the company isn't evacuating workers from the rig but is "securing operations" aboard the ship. Other major Gulf of Mexico producers BP, Chevron and Conoco Phillips said Wednesday said they are monitoring the weather and developing plans should it “threaten their operations.”……..Galveston, oh Galveston, I still hear your sea waves crashing, While I watch the cannons flashing, I clean my gun and dream of Galveston.

Phil Flynn is senior energy analyst for PFGBest Research and a Fox Business Network contributor. He can be reached at (800) 935-6487 or at pflynn@pfgbest.com.

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About the Author
Phil Flynn

Senior energy analyst at The PRICE Futures Group and a Fox Business Network contributor. He is one of the world's leading market analysts, providing individual investors, professional traders, and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline, and energy markets. His precise and timely forecasts have come to be in great demand by industry and media worldwide and his impressive career goes back almost three decades, gaining attention with his market calls and energetic personality as writer of The Energy Report. You can contact Phil by phone at (888) 264-5665 or by email at pflynn@pricegroup.com. Learn even more on our website at www.pricegroup.com.


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