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HOUSTON - ENERGY companies began shutting production on Monday as Hurricane Ike threatened to cross the US offshore oil patch before output shut by Hurricane Gustav last week could be restored.
The one-two punch from Gustav and Ike will likely carve deeply into US energy inventories in the coming weeks, potentially raising fuel prices as the source of a quarter of domestic crude and 15 per cent of its natural gas lies dormant for a fresh blow of high winds and waves.
Leading producer Shell, along with BP, Conoco, Anadarko, Apache and Marathon said they were evacuating workers ahead of Ike, which could hit the Gulf Coast by this weekend.
The US Minerals Management Service said 79.4 per cent of 1.3 million barrels per day in oil production remained shut on Monday because of Hurricane Gustav.
Natural gas production increased by 5.8 per cent with only 64.2 per cent remaining shut.
US crude oil futures settled up US$0.11 at US$106.34 (S$15.19) per barrel due to fears about Ike's impact.
Energy companies were working to restore as much production as possible while preparing shutdowns where needed, said a company spokesman.
'It's this balancing act that's going on right now,' said Chevron's Mickey Driver.
Offshore producers were trying to avoid complete production shutdowns to allow for faster restarts after Ike passes, said Glenn Cannon, assistant administrator for disaster operations for the US Federal Emergency Management Agency.
Producers could theoretically use systems on their production platforms to operate from a remote location, if they have been pre-qualifed to do so, said MMS spokesman Eileen Angelico.
'But, remember, during Gustav we had nearly 100 per cent of oil production shut in,' Ms Angelico said.
Hurricane Ike struck Cuba late on Sunday on a track that would take it into the Gulf of Mexico by Wednesday - slightly more than one week after Hurricane Gustav crossed the same waters and triggered a nearly complete shutdown of the region's energy production.
Three refineries with a combined capacity of 330,000 bpd, amounting to 1.8 per cent of US capacity were still completely shut on Monday. At the peak of Gustav's impact, 15 refineries were shut down.
Shutdowns triggered by Gustav have cut nearly 11 million barrels of cumulative US crude oil output so far, the equivalent of about half of what Americans consume in a day, according to data from the Minerals Management Service.
They have also cut between 13 million and 15 million barrels of refined fuel production, according to a Reuters survey. -- REUTERS
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