Times Online: Storm fears force Shell to evacuate Gulf of Mexico

The Anglo-Dutch group withdraws staff from one of its Gulf of Mexico rigs as hurricane forecasts send the price of oil higher

August 15, 2007
Steve Hawkes

Shell has become the first oil and gas major to close down part of its operations in the Gulf of Mexico amid escalating fears that the first hurricane of the season could tear through the region at the end of the week.

World oil prices rose again today, with US crude 36 cents higher at $72.74, as Tropical Storm Dean approached the Caribbean.

Experts believe that it could develop into a hurricane within three days.

US oil prices rose 1 per cent yesterday, the biggest one-day gain for two weeks.

Two years ago hurricanes Katrina and Rita caused more than $20 billion of damage to oil rigs and platforms in the Gulf of Mexico, including BP’s Thunder Horse project.

Thunder Horse, located 150 miles (240km) southeast of New Orleans, is expected to begin production at the end of next year.

Kevin Norrish, a Barclays Capital analyst, said: “Dean is not a hurricane yet, but it could develop into one, and the concern is that it’s pointing in the right direction to head towards the Gulf.”

Shell said that it was evacuating 100 non-essential staff from the Gulf today after bringing back 88 yesterday.

It has shut-in daily production of 5 million cubic feet of natural gas a day at its North Padre Island field.

Other energy companies, including BP and the US-based Apache, are understood to be monitoring the situation.

The Gulf of Mexico produces roughly a third of all US domestic oil and gas production.

US oil prices hit a record high of $78.77 on August 1 but have fallen on the back of the market sell-off triggered by fears of a global credit crunch.

The Organisation of Petroleum Exporting Countries (Opec) gave warning on Tuesday that the slowdown in the US economy could cut oil consumption this year.

Brent crude was trading 35 cents higher at $70.86 in London.

A fire that forced the partial evacuation of a North Sea rig located 125 miles off the coast of Aberdeen caused tremors in the market last night on fears that further production may be lost.

However, the Ocean Guardian platform owned by the US-based Diamond Offshore was only drilling an exploration well for the London-listed Canadian firm Oilexco.

Shares in Oilexco fell 9p to 575p today.

http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article2262784.ece

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