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Hurricane Gustav Hits Haiti; Gulf Coast Faces Threat



Hurricane Gustav Hits Haiti; Gulf Coast Faces Threat (Update3) 

By Brian K. Sullivan

Aug. 26 (Bloomberg) — Hurricane Gustav weakened as it moved across Haiti today and headed for open water, where it may pick up strength and threaten oil rigs and refineries in the Gulf of Mexico. Crude oil fell after rising earlier.

Gustav packed sustained winds of 75 miles (145 kilometers) per hour, down from 90 mph earlier in the day, the U.S. National Hurricane Center said in an advisory at 8 p.m. Miami time. The system, about 60 miles west of the Haitian capital of Port-au- Prince, was heading northwest at 7 mph.

“Some fluctuations in strength are possible tonight as Gustave interacts with land,” the weather agency’s advisory said. “Restrengthening is forecast to begin when the center emerges over the Windward Passage on Wednesday.”

Gustav is expected to move into the waters just north of Haiti’s southern peninsula and move through the Caribbean Sea south of Cuba. The hurricane center’s longer-term forecast predicts Gustav will enter the Gulf by Aug. 31. The storm may threaten U.S. oil production next week, private forecasters say.

“The entire Gulf is under the gun from Gustav,” said Jim Rouiller, a senior energy meteorologist with Planalytics Inc., a forecaster based in Wayne, Pennsylvania, whose clients include oil companies. “Gustav represents a real and potentially dangerous storm for the entire Gulf energy production region.”

Hurricane Warning

A hurricane warning was in effect for southeastern Cuba. The storm may bring as much as 20 inches (51 centimeters) of rain to Haiti, Dominican Republic, Jamaica and Cuba the Hurricane Center said. One person in Haiti died today in a landslide caused by the hurricane, the Associated Press reported.

Gustav, a category 1 storm, has the potential to reach category 4 with winds of at least 131 miles per hour by the time it enters the Gulf, Rouiller said. The area is home to about one-fifth of all U.S. oil production and about 14 percent of natural gas output.

Development into a category 5 storm is possible, said Steve Gregory, senior risk analyst for private forecaster WeatherIntel Services in Chicago. Hurricanes are rated on the 5-step Saffir- Simpson scale, with categories 3 or higher deemed “major” storms with winds of more than 111 mph.

In August and September 2005, U.S. crude oil and fuel production plunged and prices rose to records when hurricanes Katrina and Rita shut refineries and platforms as they struck the Gulf coast. Oil rose to about $70 a barrel at the end of August that year, touching a record high and up from about $60 a month earlier.

Oil Futures Up

Katrina closed 95 percent of offshore output in the region. Almost 19 percent of U.S. refining capacity was idled because of damage and blackouts caused by the hurricanes.

Crude oil for October delivery fell 31 cents to $115.96 a barrel on the New York Mercantile Exchange today. Earlier, oil rose $1.16, or 1 percent, to settle at $116.27 a barrel. Prices are up 61 percent from a year ago. Futures have dropped 21 percent since touching $147.27 barrel on July 11, the highest since trading began in 1983.

Royal Dutch Shell Plc may start evacuating non-essential staff from the Gulf of Mexico as early as tomorrow, spokeswoman Destin Singleton said in an e-mail.

Transocean Inc., the world’s largest offshore oil driller, suspended operations at a rig “as a precaution in case they need to evacuate or take other action,”Guy Cantwell, a spokesman for Houston-based Transocean, said today in an interview.

“The latest odds have gone up significantly that it will track across the producing areas,” Gregory said.

The storm may be poised to strike New Orleans or Houston next week, Rouiller said. Based on current information, Gustav will most likely make landfall in Louisiana just west of New Orleans, Gregory said.

Coastal Gas Threatened

“What is really critical is that is natural gas country,” Gregory said by telephone. “A lot of the natural gas pulled from the Gulf is off Louisiana.”

Three areas of low pressure are following Gustav in the Atlantic, marking the start of what will probably be an active three-week period, he said.

“Gustav is the forerunner of what could become a very nasty hurricane season for the U.S.,” Rouiller said.

The hurricane comes on the heels of Tropical Storm Fay, which last week left a trail of death and flooding in the Caribbean and Florida, where it made an unprecedented four landfalls.

Gustav formed yesterday as a depression and then a tropical storm, before reaching the 74 mph threshold for a hurricane early today.

Gustav is the seventh named storm of the Atlantic hurricane season, which runs from June 1 through Nov. 30. The National Oceanic and Atmospheric Administration’s forecasters predict 14 to 18 named storms will develop this year.

To contact the reporters on this story: Brian K. Sullivan in Boston at[email protected].

Last Updated: August 26, 2008 21:14 EDT

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