(MarketWatch) -- The National Hurricane Center said Hurricane Ike is
expected to emerge from land and strengthen in the southeastern Gulf of
Mexico later Tuesday.
If the hurricane hits the Texas-Mexico border as expected under some
projections, Ike 's core will avoid the refinery-rich coastline north
between Texas and Louisiana, but oil and gas companies are still
evacuating personnel and shutting down offshore production.
maximum sustained winds of more than 80 miles per hour as a Category 1
hurricane on the Saffir-Simpson scale, Ike moved across Cuba and
sparked tropical-storm advisories in the Florida Keys and elsewhere.
Ike is moving
west-northwest at a speed of about 13 miles an hour. The storm made
landfall in Cuba at 10:30 a.m. Eastern and was last tracked about 55
miles southwest of the capital Havana at 11 a.m. Eastern.
Oil and gas drillers began evacuating platforms in the Gulf of Mexico,
but crude prices nevertheless fell below $105 a barrel for the first
time in several months, with OPEC expected to keep production stable at
a key meeting in Vienna. See Futures Movers.
The warm water of the Gulf of Mexico will allow Ike to regain strength,
likely reaching at least Category Three status before landfall,
according to AccuWeather.com. The weather service projects Ike to slam
into the extreme south side of Texas over the weekend.
Linda Rafield, senior
oil analyst at Platts and editor of Platts Futures & Derivatives
Review, said that the latest projections have Ike coming to shore near
the Mexico-Texas border, which would put it south of much of the
coastal oil and gas infrastructure.
However, she noted that the path could change as the storm moves into the Gulf of Mexico.
On Monday, the Minerals Management Service said personnel have been
evacuated from a total of 200 production platforms, equivalent to 28 %
of the 717 manned platforms in the Gulf of Mexico.
Personnel from 15
jack-up and other shallow-water rigs also have been evacuated; this is
equivalent to 12.4 % of the 121 rigs currently operating in the gulf.
Ike first made
Caribbean landfall on Saturday as a Category Four giant, plowing across
Turks and Caicos and the southern Bahamas. Haiti also suffered damage
from Ike, which was the fourth major storm to affect the impoverished
nation in recent weeks. More than 600 people have died in Haiti as a
result of tropical storms so far this year, according to reports.
For the oil and gas
industry, Ike represents a further possible selling point for the
sector, beaten up of late on costs tied to Hurricane Gustav last month.
Jacques Rousseau of
BackBayResearch.com said Tuesday that low-utilization rate and large
inventory declines are being tied to Gustav. The storm caused the
shutdown of approximately 2.5 million barrels per day of refining
capacity, and another 1.4 million barrels per day of capacity to run at