Storm Francine Prompts US Oil Firms to Evacuate Workers and Reduce Drilling Activities

On Monday, offshore oil and gas producers in the U.S. Gulf of Mexico began evacuating staff and scaling back drilling activities as Tropical Storm Francine approached the region, as per several media reports. The storm, which is expected to intensify into the fourth hurricane of the Atlantic season, is projected to reach the Louisiana coast by Wednesday evening as a Category 1 hurricane with winds up to 85 mph (137 kph). This could bring severe weather conditions, including life-threatening storm surges and hurricane-force winds, particularly affecting Southern Louisiana.

In anticipation of the storm, New Orleans and surrounding communities have started distributing sandbags to help prevent flooding. Grand Isle, located at the southern tip of Louisiana, has called for a voluntary evacuation and canceled school sessions for Tuesday. The storm's trajectory poses a significant risk to U.S. oil and gas facilities, as well as coastal liquefied natural gas (LNG) export plants. The National Hurricane Center (NHC) forecasts storm surges of 5-10 feet (1.5-3 meters) along the Louisiana coast.

The Gulf of Mexico is crucial for U.S. energy production, accounting for roughly 15% of the nation’s crude oil and 2% of natural gas output. The storm’s potential impact led to a 1.5% increase in U.S. crude oil prices on Monday, following a recent dip to multi-month lows. Conversely, natural gas futures dropped about 5% due to concerns that the storm could disrupt LNG export operations and lead to power outages affecting homes and businesses.

According to the several media reports, major oil companies have taken precautionary measures. Exxon Mobil has halted production and evacuated staff from its Hoover offshore platform, located around 150 miles (241 km) east of Corpus Christi, Texas. Shell is evacuating non-essential staff from three offshore platforms and has halted drilling operations on two additional platforms. Chevron is also evacuating non-essential staff from four offshore platforms but reports that production levels remain stable. BP, on the other hand, does not anticipate significant disruptions to its Gulf facilities. Occidental Petroleum and Woodside Energy have indicated they are ready to implement their storm response plans as needed. Freeport LNG, which runs the nation’s second-largest LNG export plant, has started storm preparations, though details have not been disclosed. Cheniere Energy and other LNG operators, including Sempra and Venture Global LNG, have not yet provided updates on their facilities.

Heavy rainfall and the risk of flash flooding are expected from northeast Mexico to the Texas coast, southern Louisiana, and southern Mississippi, according to the NHC. In response, the U.S. Coast Guard has implemented navigation restrictions at several Texas ports, including Brownsville, Corpus Christi, and Freeport. However, ports in Houston, Galveston, and New Orleans remained open for vessel traffic as of Monday, and the Louisiana Offshore Oil Port (LOOP) was operating normally. Texas officials have urged residents to prepare for potential flash flooding and heavy rain, while the state’s electric grid has warned of possible local outages if the storm affects the region.