This Memorial Day subtropical storm Alberto is expected to hit north in the Gulf of Mexico, hitting Mississippi to Florida and affecting offshore energy production. Onshore energy production is also expected to be affected due to high flooding risks. The storm is expected to have a top wind speed of 65 miles (105 kilometers) per hour (mph), which is below the hurricane level of 74 mph. The storm is anticipated to make landfall along Florida Panhandle.
What’s at Stake?
Several energy producers in the region have taken safety measures and evacuated their offshore facilities. Exxon Mobil Corporation (XOM - Free Report) , the world’s largest publicly traded energy major, has withdrawn its non-essential personnel from Gulf of Mexico’s Lena production platform. However, the company expects production at its site to remain unaffected. To ensure uninterrupted production, Exxon has transferred its offshore operations’ control to a control room on land from Mobile Bay, AL.
Another oil major BP p.l.c. (BP - Free Report) is also continuing with its offshore operations, keeping the workers prepared for emergencies. The company is closely monitoring the storm. The company has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Other major producers like Royal Dutch Shell plc (RDS.A - Free Report) and Chevron Corporation (CVX - Free Report) have also stalled production at their eastern Gulf of Mexico platforms and evacuated workers. Shell has closed its Ram Powell Hub in the Viosca Knoll area. It has also closed the Appomattox Hub’s production platform, which arrived recently. The company is developing the site and production has not started yet. Meanwhile, Chevron’s Blind Faith platform in the Mississippi Canyon region and the Petronius platform in Viosca Knoll area witnessed stoppage of production.
Notably, per EIA, 17% of the country’s daily oil output and 5% of natural gas production come from the Gulf of Mexico. Moreover, the region holds more than 45% of the country’s refining capacity. Although the refineries are not threatened directly by Alberto, floods can affect their operations.
Flood watches are spread across Alabama, Florida, Louisiana and Mississippi, where several refineries and terminals are located. Valero Energy Corporation (VLO - Free Report) and Phillips 66 (PSX - Free Report) have refineries in Louisiana and are monitoring the storm.
Alberto is this year’s first named Atlantic storm. Local authorities have taken measures to counter any unfavorable situation following the subtropical storm. Florida Panhandle’s Franklin County issued obligatory evacuation for barrier islands’ locales, while Taylor County gave a voluntary evacuation order. As many as 5,500 members of Florida National Guard are ready to be deployed in case of emergencies. Mississippi and Florida governors have issued state of emergencies. The storm is expected to intensify as it heads north to the Gulf of Mexico.
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