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The Wall Street Journal: Oil: On the Gulf Coast, Helplessly Awaiting the Hurricane

Saturday August 18, 2007; Page A2

It’s late August in the oil belt, which means thoughts are turning once again to hurricanes.

Hurricane Dean, which is expected to land near U.S. coasts in the next few days, is already roiling oil markets, pushing up prices and forcing exploration companies to start evacuating workers from the massive platforms dotting the Gulf of Mexico.

Last year, the Gulf oil complex went through the hurricane season largely untouched. But industry officials and investors are still wary of a repeat of 2004 and 2005, when three nasty storms did millions of dollars of damage to offshore platforms, underwater pipelines and onshore refineries, pushing up oil and gasoline prices for months.

Forecasters already are predicting that this year is likely to be a more active hurricane season because the warm waters and calm winds prevailing in the Caribbean are more likely to spawn hurricanes. “The stage is set, and we’re just seeing the beginnings of a very active season,” said Jim Rouiller, senior energy meteorologist at Planalytics Inc., a Wayne, Pa., company that offers weather advice to the energy sector.

Enter Hurricane Dean, which is currently bearing down on the Caribbean and could strike the Gulf Coast Thursday or Friday. At this point, the storm is thought most likely to touch shore west of Houston, missing much of the oil infrastructure. But if the storm takes a more-eastward path, as did Hurricane Ivan in 2004 or hurricanes Katrina or Rita in 2005, watch out.

Over the past couple of days, Transocean Inc. has evacuated 75 people from four of its rigs and plans to evacuate 92 more from its most-westerly rig on the Gulf. Noble Corp. evacuated 175 workers from a rig ahead of tropical storm Erin earlier this past week, and plans to evacuate 650 more people from all of its rigs in the central Gulf of Mexico through the weekend. Royal Dutch Shell PLC, which expects to evacuate about 275 employees, has shut in some of its oil and gas production.

The U.S.’s Mineral Management Service said about 0.17% of the oil production in the Gulf, or 2,163 barrels of oil a day, has been “shut in,” oil lingo for idled. It also estimated the shut-in of about 0.1% of the natural-gas production, or eight million cubic feet of gas a day. That’s just a drop in the barrel, however. More than 70% of the Gulf’s oil production was idled ahead of Ivan’s landfall, pushing up oil prices world-wide. Oil markets are likely to be particularly jumpy over the next few days as meteorologists keep changing their predictions for where Hurricane Dean will make landfall.

“The price effects are really going to depend on how the forecast develops minute by minute and hour by hour,” said Michael Waldron, energy research analyst at Lehman Brothers.

Write to Ana Campoy at [email protected] and its sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

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