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U.S. Gulf Rig Evacuations in Preparation for Tropical Storm Karen

Earlier this month, Reuters reported that major gas and oil companies were securing offshore rigs and bringing staffers back to shore in preparation for Tropical Storm Karen. Preparations began on October 3, 2013, before officials issued storm warnings on October 4th. Royal Dutch Shell, BP, Chevron and Marathon Oil had helicopters busy shuttling workers back to shore. Anadarko Petroleum, Exxon Mobil and BHP Billiton also reduced production or shut down their offshore rigs completely.

Meteorologists at the National Hurricane Center in Miami tracked the slow-moving storm as it moved toward the Mississippi River and important petroleum facilities located along the Gulf Coast. As the storm approached, winds dropped steadily from 65 miles per hour, to 50 and 30 in the next two days. During the height of the shutdown, petroleum production in the Gulf was cut by 66 percent. This important region accounts for nearly 20 percent of U.S. oil production, which equals 1.3 million barrels a day. The evacuation and slowdown in production affected land-based facilities too. Gas processors and refineries in Louisiana reduced their capacity as new supplies diminished.

By October 7th, workers returned and offshore rigs resumed production. The Louisiana Offshore Oil Port, which is used by oil tankers and importers, also re-opened. Although Tropical Storm Karen never reached hurricane status and missed important land-based facilities, prices for crude oil increased by 88 cents to just over $104 per barrel. This was only the 11th named storm in an unusually slow Atlantic hurricane season, which runs from June 1st through November 30th. There is still time for more storms to hit the Gulf and disrupt oil production. All of this comes amid economic tensions related to the government shutdown.