Hurricane Laura poses biggest threat to U.S. oil in 15 years

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HOUSTON — Oil production shutdowns in the U.S. Gulf of Mexico are approaching the level of 2005’s Hurricane Katrina, and coastal refiners on Tuesday scrambled to cut processing ahead of a major hurricane approaching the Texas/Louisiana coast.

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LARGEST US REFINERY SHUTS DOWN DURING STORMS

Hurricane Laura will rapidly gain strength over the warm waters of the Gulf of Mexico and is expected to become a major hurricane with sustained 115 miles per hour (185 kph) winds before striking the U.S. coast, according to the National Hurricane Center.

On Monday, the storm had shut 1.5 million barrels per day (bpd) of crude oil output, 82% of Gulf of Mexico’s offshore production, near the 90% outage that Katrina brought 15 years ago. Refiners are halting facilities that process at least 1.17 million bpd of oil processing, 6% of the U.S. total capacity, according to Reuters tallies.

The expected intensification will bring at least 10-foot (3-meter) storm surge to coastal areas and could produce a category 4 hurricane with devastating impact, said Chris Kerr, a meteorologist at agriculture, energy and weather data provider DTN.

WHY TROPICAL STOMRS LAURA, MARCO WON'T CAUSE GASOLINE PRICES TO SURGE

“There will be a significant storm surge from Galveston (Texas) to the Sabine River,” said Kerr, an area encompassing some of the region’s largest refineries. “There are ideal conditions in central and west Gulf for rapid intensification.”

Motiva Enterprises, [MOTIV.UL] Total SA and Valero Energy began cutting operations at their Port Arthur, Texas, refineries, according to people familiar with the matter. The three combined process more than 900,000 bpd of oil.

Total and Motiva confirmed the shutdowns of their refineries. Valero declined to comment.

Officials in Port Arthur, a city of 54,000 people, and similar-sized Galveston, Texas, ordered mandatory evacuations as Laura began its march up the central Gulf of Mexico.

Exxon Mobil Corp also reduced production at its 369,000 bpd refinery in Beaumont, Texas, ahead of a possible shutdown on Tuesday, people familiar with the matter said. Exxon did not immediately reply to a request for comment. If it closes, it would bring down total shutdowns more than 1.5 million bpd.

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