August 16, 2007
Shell disclosed yesterday that it has evacuated nearly 200 workers from the Gulf of Mexico, amid escalating fears that the first major hurricane of the season could tear through the region by the end of the week.
World oil prices surged, with US crude up $1.30 at $73.70 a barrel, as Tropical Storm Dean approached the Caribbean.
The storm is expected to become a hurricane by Friday and traders fear it could cripple key platforms and rigs in the Gulf, which accounts for a third of US oil production.
Another storm, Erin, was due to hit southeast Texas today.
Two years ago, hurricanes Katrina and Rita caused $20 billion of damage to the oil and gas industry, and left BP with a $700 million bill from lost production and repairs needed to its flagship Thunder Horse project. Thunder Horse is still not expected to begin production until the end of next year.
Rob Laughlin, a trader at MF Global, said yesterday: “People in the market are getting very twitchy.
“These storms could cause major problems by hitting production and hitting refining capacity.
“The good thing is that a lot of companies are being cautious and beginning to evacuate people already.” Shell was the first major to act, evacuating 88 nonessential staff on Monday night and another 100 yesterday as it closed its North Padre Island natural gas field.
BP said it was “monitoring the storm activity” but added that Tropical Storm Dean was expected to pass to the south of its fields in the Gulf.
Shell and BP are the two biggest producers in the region, with Shell employing a total of 1,400 staff.
US natural gas prices rose 21.5 cents to $7.155 per 1,000 cubic feet. Brent crude in London matched the gains in US oil prices, jumping $1.30 to $71.80.
— The auction for some of Shell’s oldest assets in the North Sea opens next Monday. Bidders have until October 26 to lodge offers for fields including Cormorant South, as well as a stake in the Brent pipeline system. Venture Production is among those tipped as a possible buyer.