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US Gulf producers cut operations ahead of storms

US oil companies in the Gulf of Mexico cut production this month as a rare, back-to-back pair of tropical storms was due to hit the region. Figures from the Bureau of Safety and Environmental Enforcement put the cut in reduction at about 82%, which is equivalent to about 1.5 million barrels per day.

Onshore, meanwhile, refineries were weighing up their options ahead of the incoming storms. Five feet of rain fell on east Texas during Hurricane Harvey in 2017, forcing many refineries to shut down temporarily, including a two-week halt for Motiva’s Port Arthur plant.

Motiva began preparations to swiftly idle the same plant for the 2020 storms. Total, which also has a refinery in Port Arthur, also reduced production there. Refiners in Louisiana – such as Shell, ExxonMobil, and Valero Energy – were instead expecting to continue production during the first storm’s arrival, according to sources that were reported by Reuters as being familiar with the plants.

Refineries on the Gulf Coast account for 45% of total oil processing in the US, which covers not just fuel, but also petrochemicals and base oils for products like spindle oil and grease. The shutdowns triggered a modest rise in US crude oil futures and benchmark gasoline prices.

Many ports in the area also closed to vessel traffic in preparation for the storms, including the Louisiana Offshore Oil Port, the biggest facility for exporting oil on the Gulf Coast. The ports at Baton Rouge and New Orleans, as well as the Lower Mississippi River, also closed to marine traffic.

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