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Michael shuts nearly 40% of U.S. Gulf of Mexico oil output

Michael shuts nearly 40% of U.S. Gulf of Mexico oil output

(Reuters) — Hurricane Michael on Wednesday cut 42% of U.S. Gulf of Mexico daily crude oil production and nearly a third of natural gas output, the largest reductions in a year.

Michael slammed into the Florida Panhandle on Wednesday as a fast-moving Category 4 storm bringing heavy rains and winds of 155 miles per hour to the U.S. Southeast.

Companies turned off daily production of 718,877 barrels of oil and 812 million cubic feet of natural gas by midday on Wednesday, according to the federal offshore regulator, the Bureau of Safety and Environmental Enforcement.

U.S. crude futures settled down more than 2% at $73.17 per barrel Wednesday, reflecting the declining importance of Gulf of Mexico output from the growth of onshore shale fields.

Wednesday’s cuts represent about 6.5% of the nation’s daily output of 11.1 million barrels of crude. It is the most since Hurricane Nate a year ago curtailed more than 90% of Gulf oil production.

Total crude output lost in the last three days from shut-ins amounted to 1.7 million barrels, according to BSEE data.

Oil producers including Anadarko Petroleum Corp., BHP Billiton PLC, BP PLC, Chevron Corp. and Exxon Mobil Corp. evacuated workers before the storm entered the Gulf.

They pulled staff from 89 Gulf production platforms, or 13% of those occupied, and three drilling rigs, BSEE said. It can take several days after a storm passes to restaff and evaluate equipment before production can resume.

U.S. Gulf Coast oil refineries were not in the path of the storm and continued to operate. The Louisiana Offshore Oil Port LLC, the only port in the United States capable of fully loading and unloading supertankers, halted operations at its marine terminal.

A week ago, drillers were pulling about 3.4 billion cubic feet per day of natural gas from offshore Gulf of Mexico wells. On Tuesday, that was down to just 2.2 bcfd, according to data from Refinitiv.

Southern Co., the biggest power company in Georgia and Alabama, on Wednesday reduced power in two units at the Farley nuclear power plant in Alabama as a precautionary measure.

The reduced operating level will allow personnel to continue monitoring the storm’s progress and if necessary shut the 1,751-megawatt Farley plant, which is about 90 miles north of the coast. Farley is the company’s reactor closest to where Hurricane Michael is expected to make landfall.

More than 162,000 customers in Florida, Georgia and Alabama were without power on Wednesday, according to local power companies, and the outages were expected to rise as the storm moved farther inland.

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