Disruption Due to Hurricane Francine

By Marianna Parraga, Erwin Seba, and Tom Polansek

HOUSTON/CHICAGO (Reuters) – Energy production and agricultural exports from the U.S. Gulf of Mexico faced partial disruptions on Wednesday, with oil refineries in Louisiana slowing operations ahead of Hurricane Francine's impending landfall.

Port Fourchon, Louisiana, a hub for marine and equipment supplies to offshore oil producers, and the Louisiana Offshore Oil Port (LOOP), the only U.S. deepwater port for very large crude carriers (VLCCs), were closed to vessel traffic.

The U.S. Coast Guard reported that New Orleans, Plaquemines, Cameron, Lake Charles, and Houma ports also remained closed, halting the transport of fuel, soybeans, and grains for export. Agriculture officials noted that heavy rains from Francine could threaten the region's cotton crops.

Six refineries in eastern Louisiana, primarily around New Orleans, were operating with reduced staff to weather the storm. Exxon Mobil's Baton Rouge refinery reduced output to 20% of its 522,500-barrel-per-day capacity in preparation for the hurricane.

U.S. crude oil prices increased by over 2% due to concerns over extended production shutdowns in the offshore oil sector. Nearly 39% of oil and about half of natural gas production in the U.S. Gulf of Mexico was offline, leading to a loss of approximately 675,000 barrels of oil and 907 million cubic feet of natural gas per day.

According to analyst Alex Gafford, oil and gas production might be impacted for up to two weeks, depending on the hurricane's effects upon landfall.

Hurricane Francine Details

As a Category 2 hurricane, Francine was approaching southern Louisiana with maximum sustained winds of up to 100 mph (155 kph). The storm's center is anticipated to pass over Mississippi on Thursday, bringing heavy rain and flooding risks across southeastern Louisiana, Mississippi, southern Alabama, and northern Florida.

Governor Jeff Landry of Louisiana and President Joe Biden declared a state of emergency for the state. Fortunately, liquefied natural gas plants in the region are likely to be spared as the storm's projected path shifts eastward.

Impact on Texas Ports

With the hurricane advancing toward Louisiana, some Texas ports, previously closed, began assessments for reopening, while others lifted navigation restrictions.

Francine has influenced crop shipments to the Mississippi Gulf region, which accounts for about 55% of U.S. soy exports. As noted by Mike Steenhoek, Director of the Soy Transportation Coalition, barge companies are delaying their movements until the storm subsides.

The ultimate impact of the hurricane will hinge on its severity. Traders are closely monitoring for both disruptions and potential beneficial rainfall for low water levels affecting grain transport along the Mississippi River.

Farmers in the central Gulf Coast and the Mississippi Delta are working to harvest crops, such as rice and soybeans, as they prepare for the storm. The USDA reported that the cotton crop is particularly vulnerable to rain and wind damage as it nears harvest.