(Updates offshore oil, gas production shut-ins)
By Erwin Seba and Stephanie Kelly
HOUSTON/NEW YORK, Sept 16 (Reuters) - More than a quarter of
U.S. Gulf of Mexico offshore oil and gas production remained
shut on Wednesday by Hurricane Sally, which moved inland dumping
heavy rains and cutting fuel demand in the U.S. Southeast.
The storm made landfall early on Wednesday morning near Gulf
Shores, Alabama, as a powerful Category 2 hurricane, swamping
the region with up to 20 inches (50 cm) of rain and boosting
U.S. crude oil and gasoline prices.
Some 508,000 barrels per day of oil production and 805
million cubic feet per day (mmcfd) of natural gas output were
shut in the U.S. Gulf of Mexico, according to the U.S. Interior
Department. That is roughly a third of the shut-ins caused by
Hurricane Laura, which landed further west in August.
The storm toppled trees, flooded streets and left 500,000
homes and businesses without electricity. The outages could
reduce fuel sales in coming days, said Patrick De Haan, head of
petroleum analysis at GasBuddy.
Oil and chemical ports along the Mississippi River were
moving to reopen with restrictions, and oil and gas producers
were returning workers to offshore platforms in the western and
central Gulf of Mexico. Unstaffed offshore platforms declined by
30 to 119 on Wednesday, the Interior Department said.
The hurricane was over the Florida Panhandle and heading
northeast at 5 miles per hour (8 kph) with sustained winds of 75
mph (120 kph), the National Hurricane Center said at noon CDT
(1700 GMT).
Chevron Corp's Pascagoula, Mississippi, refinery,
about 50 miles west of the storm's landfall, ran through the
night, a spokesman said. Phillips 66's 255,600-bpd
Alliance, Louisiana, refinery remained shut and Royal Dutch
Shell cut production to minimum at its 227,400-bpd
Norco, Louisiana, refinery.
There were 1.1 million bpd of U.S. Gulf Coast refining
capacity offline on Wednesday, according to the U.S. Energy
Department, including two plants under repair since Laura and
another halted by weak demand due to the COVID-19 pandemic.
OIL PRICES RISE
U.S. crude and gasoline futures soared nearly
5% due to the storm impact and an unexpected drop in crude
stockpiles and a larger-than-expected draw in motor fuel
inventories.
"Even if the weather keeps production shut for a couple of
days, the sheer volume of its size is enough for the market to
breathe a bit," said Rystad Energy senior oil markets analyst
Paola Rodriguez-Masiu in a comment.
The Colonial Pipeline, which brings fuel from refineries to
the U.S. East Coast, was operating normally, its operator said.
The NHC warned Sally had produced "catastrophic and
life-threatening" flooding along portions of the North-Central
Gulf and up to 30 inches in some spots.
(Reporting by Erwin Seba in Houston and Stephanie Kelly in New
York; editing by Marguerita Choy and Steve Orlofsky)
