US Oil Producers Ramp Down Gulf Output 25% on Storm Isaias

Offshore oil and gas producers have begun shutting in wells and evacuating personnel from rigs and platforms near the US Gulf Coast in preparation for the region’s first Atlantic hurricane of the season, arriving by Saturday.

Tropical Storm Isaias is expected to grow into a strong Category 2 hurricane in the coming days, with top winds of 110 miles (177 kilometers) per hour, the US National Hurricane Center said in a 5 p.m. New York time advisory. Forecasters are increasingly confident that the storm will land east of major energy assets off the coast of Louisiana and Texas. But any shift westward would bring more offshore production and energy infrastructure into the storm’s path.

By Wednesday afternoon, producers had already shut in roughly 25% of crude output and 16% of natural gas production through the region, according to statistics compiled by the federal Marine Minerals Administration. Workers at eight platforms and two dynamically positioned rigs had also been evacuated.

Florida Power & Light Company activated its emergency response plan Wednesday in preparation for significant storm surge and tornadoes in the Florida Panhandle. The utility said it will pre-position its own crews to respond to power outages and tap additional personnel from other utilities and electrical contracting companies.

The Midcontinent Independent System Operator, which serves about 45 million people, declared conservative operations in the Gulf Coast region through Oct. 10 at 6 p.m. New York time. The notice is meant to prepare the grid for stressed conditions.

Isaias arrives at a precarious time for oil markets. Amid strain from the war in Iran, there’s little cushion for disruptions to diesel production, the workhorse fuel used by trucks, trains, industry and for heating. Barring a change in the storm’s track, Chuck Watson, a risk modeler with Enki Research, said the disruption to both oil and gas production would likely last no more than a week.

Watson said effects from Isaias could extend eastward to Pensacola, Florida, and Eglin Air Force base in the western Florida panhandle before the storm collapses. If that comes to pass, potential damages and economic impacts may exceed $4.5 billion.

The storm has already triggered the closure of Mexico’s largest gateway for fuel imports. The port of Tuxpan has been closed since late Monday afternoon.

Storm Isaias is poised to intensify quickly in the next day or so as it runs through near-record-warm water and moist air. Though the storm may weaken again, NHC forecaster Eric Blake wrote Wednesday that it’s on track to maintain hurricane strength at landfall.

By Wednesday evening, hurricane watches and storm surge alerts had been posted from Mississippi to Florida. As much as 7 feet (2.1 meters) of water could push inland on top of high tide, the center said.

Forecasters have warned that the risk of damaging winds is rising along the Florida Panhandle, southern Alabama and Mississippi. Heavy rains are expected to extend for miles, bringing a threat of urban flooding and isolated river flooding in the US Southeast.

Isaias was situated 500 miles south-southwest of the mouth of the Mississippi River Wednesday afternoon. By Thursday morning, it’s expected to grow into the first hurricane of the Atlantic season — a milestone normally reached in the second week of August.

This Atlantic season has lagged well behind the usual pace, with eight named storms, none of which became hurricanes. By early October, an average season typically has produced about 11 named storms, including five hurricanes and two major hurricanes.

Strengthening El Niño conditions have increased wind shear that helped suppress activity across the basin. Shear occurs when winds change speed or direction at different altitudes, disrupting a storm’s structure.