Nate brews in Gulf of Mexico as energy ops resume

Reuters News
Posted: Sep 07, 2011 5:43 PM
Nate brews in Gulf of Mexico as energy ops resume

By Kristen Hays and Erwin Seba

HOUSTON (Reuters) - Tropical Storm Nate formed over the Bay of Campeche in the Gulf of Mexico Tuesday afternoon as oil and gas producers in the prolific basin restarted operations in the wake of Tropical Storm Lee.

Companies said they were monitoring Nate, which the National Hurricane Center said could become a hurricane by Friday.

Widely divergent forecasting models showed the slow-moving storm could move west into Mexico or north-northwest toward the U.S. Gulf Coast in the coming days.

Nate is the 14th named storm of the 2001 Atlantic hurricane season.

U.S. crude oil prices rose more than $3 a barrel on Wednesday, bolstered in part by the slow recovery post-Lee and the threat of further weather-related disruptions to energy infrastructure from Nate.

On Wednesday, 516,451 barrels per day of Gulf oil output, or 36.9 percent, and 958.4 million cubic feet per day of natural gas production, or 18.1 percent, remained shut, the U.S. Bureau of Ocean Energy Management said.

Those figures represented substantial decreases from Tuesday, when BOEM said 60.5 percent of oil and 41.6 percent of natural gas output was shut in the basin.

Lee came ashore and weakened on Sunday, but high winds and rough seas lingered, hampering restart efforts in areas south of Louisiana and Mississippi. Helicopters needed to ferry workers were grounded and support ships were idled.

The weather improved early Tuesday and companies began to bring workers back to platforms and restart production.

Before markets closed on Wednesday, Gulf Coast refined products traders said they saw no weather effects on differentials. "Nothing in the Gulf," one Gulf trader said.

Gulf cash crude markets were flat to stronger on Wednesday. "Crude is tight, period, so everyone is watching closely," a trader said of the weather in the Gulf.

Kelly op de Weegh, a spokeswoman for major Gulf oil and gas producer Royal Dutch Shell, said Wednesday the company was continuing to redeploy workers to Gulf platforms and was ramping up production.

"We are also monitoring the system in the southern Gulf of Mexico and will take pre-storm precautionary measures if necessary," she said.

Other companies, including the Gulf's biggest oil producer BP Plc, Chevron Corp and Exxon Mobil Corp also said they were monitoring the yet-unnamed system. If it strengthens into a storm, it would be named Nate.

The Gulf's two areas with the heaviest concentrations of oil and gas infrastructure -- Mississippi Canyon and Green Canyon -- are south of Louisiana.

Tropical cyclones become named tropical storms when their winds exceed 39 miles per hour and become hurricanes when their winds reach more than 74 mph. (Additional reporting by Bruce Nichols; Editing by John Picinich and David Gregorio)