Hurricane Delta shuts most U.S. offshore oil output in 15 years

A large and powerful Hurricane Delta dealt the greatest blow to U.S. offshore Gulf of Mexico production in 15 years, halting most of the region's oil and nearly two-thirds of its natural gas output.

Delta was packing 120 mile-per-hour (195 km) winds Friday as it churned through the Gulf's prime oil-producing area toward landfall on coastal Louisiana in the evening. It was about 160 miles south of Cameron, Louisiana, according to a 7 a.m. CDT update from the U.S. National Hurricane Center.

Delta has shut 1.67 MM barrels per day (bpd), or 92% of the Gulf's oil output, the most since 2005 when Hurricane Katrina destroyed more than 100 offshore platforms and hobbled output for months.

Oil prices eased in London trading on Friday, but were on track for gains of about 10% for the week, boosted by outages in the Gulf of Mexico and a labor dispute in the North Sea. The two combined have removed 2 MM barrels per day from the market.

U.S. natural gas prices on Friday were on track to close at the highest since November 2019 on the shut-ins. Front-month gas futures rose 11 cents, or 4.3%, to $2.74 per MM British thermal units.

Workers had evacuated 279 offshore Gulf of Mexico facilities and producers moved 15 drilling rigs away from Delta's large and strong wind field. Tropical force winds stretched up to 160 miles from its center, the NHC said, a sign of its large size.

Delta's force will decrease as it approaches the coast but is expected to remain at or near a Category 3 storm on the 5-step Saffir-Simpson scale. It will bring a 4- to 11-foot (1.2-3.3 meters) storm surge to the coast near landfall, the NHC said.

In addition to oil, producers have halted nearly 62% of the region's natural gas output, or 1.675 billion cubic feet per day. Offshore Gulf of Mexico fields produce about 15% of U.S. crude oil and 5% of its natural gas production.

Total SA on Thursday began shutting an oil processing unit at its 225,500 bpd, Port Arthur, Texas refinery because of the threat from Hurricane Delta, people familiar with plant operations said.

Royal Dutch Shell Plc said it would continue operating its refineries in Convent, Geismar and Norco, Louisiana, through the storm.

(Reporting by Gary McWilliams; Editing by Ana Nicolaci da Costa and Chizu Nomiyama)

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