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Hurricane Francine disrupts Louisiana energy hubs, crop exports
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Hurricane Francine disrupts Louisiana energy hubs, crop exports
Sep 11, 2024 1:44 PM

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Ports in Louisiana, including deepwater LOOP, shut

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Six Louisiana oil refineries slow operations

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Exxon's Baton Rouge cuts rates to 20%

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Cotton at risk from heavy rain and flooding

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Crop shipments to the Mississippi Gulf region disrupted

(Adds latest offshore oil, gas output declines, analyst comment

on extent of disruption in paragraphs 6-8)

By Marianna Parraga, Erwin Seba and Tom Polansek

HOUSTON/CHICAGO, Sept 11 (Reuters) - Energy production

and agricultural exports out of the U.S. Gulf of Mexico were

disrupted on Wednesday, and oil refineries in Louisiana slowed

operations ahead of Hurricane Francine's landfall later in the

day, according to official and operator reports.

Port Fourchon, Louisiana, home to marine and equipment

suppliers to offshore oil producers, was closed to vessel

traffic as was the Louisiana Offshore Oil Port (LOOP), the only

U.S. deepwater port that can handle very large crude carriers

(VLCCs) for oil imports and exports.

New Orleans, Plaquemines, Cameron, Lake Charles and Houma

ports remained closed on Wednesday, the U.S. Coast Guard said,

tying up fuel, soybean and grains headed for export. Francine's

rains could threaten the region's cotton crop, agriculture

officials said.

Six eastern Louisiana refineries, most around New Orleans,

were operating with minimal staff to ride out the storm in the

plants. Exxon Mobil's ( XOM ) Baton Rouge refinery cut output to

as low as 20% of its 522,500-barrel-per-day (bpd) capacity in

preparation for Francine's landfall later on Wednesday.

U.S. crude oil climbed as much as $2 a barrel on

Wednesday, driven by fears of lengthy production shutdowns in

the offshore oil patch as Francine barreled through.

Nearly 39% of oil and almost half of natural gas production

in the U.S. Gulf of Mexico was offline on Wednesday, according

to the offshore regulator. A total of 171 production platforms

and three rigs had been evacuated.

The shut-ins cut nearly 675,000 barrels per day of oil, and

907 million cubic feet of natural gas from offshore production,

according to the U.S. Bureau of Safety and Environmental

Enforcement.

Oil and gas production could be affected for about two weeks

depending on the severity of the hurricane on landfall, said

Alex Gafford, an analyst at East Daley Analytics.

Francine was moving northeast on Wednesday with maximum

sustained winds of 90 mph (145 kph), the U.S. National Hurricane

Center said in an afternoon update. Its center is expected to

move across Mississippi on Thursday.

The storm is expected to bring heavy rainfall and the risk

of considerable flooding across southeastern Louisiana,

Mississippi, far southern Alabama and northern Florida.

Louisiana Governor Jeff Landry and U.S. President Joe Biden

declared state of emergency for Louisiana.

The hurricane could spare liquefied natural gas plants

recently built or expanded near the U.S. Gulf of Mexico, which

is home to about 15% of U.S. oil production and 2% of natural

gas output. The storm track was farther east than many of the

coastal plants.

TEXAS RELIEVED

As the hurricane moved north along the Texas coast, some

ports that had closed to vessel navigation earlier this week

including Beaumont, Port Arthur, Sabine and Brownsville began

post-storm assessments in preparation for reopening, the Coast

Guard said.

Francine has disrupted crop shipments to the Mississippi

Gulf region, responsible for about 55% of U.S. soy exports, said

Mike Steenhoek, executive director of the Soy Transportation

Coalition, an industry group.

"The barge companies are not directing their barge flotillas

to go down into that area until the storm exits the region,"

Steenhoek said.

Francine's ultimate impact will depend on how severe the

storm is, Steenhoek said. While hoping for minimal disruptions

and damage, traders also are watching to see whether Francine

brings needed precipitation to the Mississippi River at a time

when low water levels have slowed grain transportation.

Farmers in the central Gulf Coast region and the Mississippi

Delta were preparing for the storm's arrival by harvesting

crops, including rice and soybeans, where possible, the U.S.

Department of Agriculture said in a weather report.

Much of the region's cotton crop is vulnerable to damage

from rain and winds as their bolls are opening, USDA said.

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