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Last Updated: Thursday, 22 September 2005, 21:41 GMT 22:41 UK
Oil workers flee as Rita advances
Oil platform blown ashore by Hurricane Katrina
A hurricane can have a devastating effect on oil production
Oil companies in the US have begun closing Texas refineries threatened by the onslaught of Hurricane Rita.

The production cuts in Texas, which processes a quarter of US oil, come as the industry is struggling to recover from Hurricane Katrina's devastation.

The fear of further damage kept oil prices above $67 a barrel for much of the day, although US light crude closed at $66.50 a barrel in New York trade.

In London, Brent crude fell 13 cents to $64.60 a barrel.

Hot spot

Hundreds of workers have been evacuated by the energy firms as Hurricane Rita heads towards Texas after pounding Florida and Cuba.

At least 16 of the state's 26 refineries are potentially in the hurricane's path, stretching along the Gulf of Mexico coastline. Several have already been closed down, while non-essential staff have been sent home at others.

BP has started shutting its huge refinery in Texas City, the third-largest in the country. With a capacity of 460,000 barrels a day, it alone accounts for 3% of US gasoline supplies.

At least four other refineries in the area have taken the decision to close:

  • Valero Energy Corp's plant in Texas City (210,000 barrels a day)
  • Valero Energy Corp's plant in Houston (90,000)
  • Marathon Oil's 72,000 bpd Texas City plant
  • Shell's refinery in the Houston area (340,000 bpd)

Other companies, including Chevron, Apache, Anadarko, Exxon Mobil and ConocoPhilips, all said they had taken steps to protect staff.

National disaster

The US Minerals Management Service said that more than 70% of oil production in the Gulf had been shut down because of Rita.

According to the service, about half of the manned offshore platforms and oil rigs in the Gulf had been evacuated.

Valero chairman Bill Greehey called Hurricane Rita the type of national disaster that could push oil and gasoline prices much higher.

Prices are going to be driven directly by the projected path of the storm
John Kilduff, an analyst at Fimat USA

Hurricane Rita hit the low-lying Florida Keys island chain late on Tuesday, then gathered strength as it started approaching the main US production facilities in the Gulf of Mexico. It is expected to arrive on Saturday.

Four refineries hit by Katrina are still out of action and oil traders are concerned about how Rita could further affect capacity.

"Prices are going to be driven directly by the projected path of the storm," said John Kilduff, an analyst at Fimat USA.





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