Tropical Storm Harvey, which has shut oil and natural gas platforms and triggered a rally in cotton prices, is on track to develop into a major hurricane as it approaches the Texas coast late Friday.
Harvey’s top winds strengthened to 65 miles (105 kilometers) per hour, up from 45 mph earlier, as it bears down on the Texas coast about 365 miles southeast of Corpus Christi, according to a National Hurricane Center advisory. It is on track to become a Category 3 storm, the first major hurricane to hit the U.S. since Wilma in 2005.
Texas Governor Greg Abbott declared a state of disaster for 30 Texas counties so emergency crews will be prepared to rescue stranded residents. In addition to the potential loss of life, flooding can close roads and knock out power to homes, businesses and refineries. There are about 30 plants along to the coast to Louisiana that collectively can process 7 million barrels of oil a day and flooding can shut units, spark fires and create supply disruptions.
“We think the primary impacts will be from widespread and potentially catastrophic flooding, with total rainfall amounts over the next week exceeding a foot in a large area from Corpus Christi to the Louisiana coast and then up to 100 miles inland from there,” said Todd Crawford, chief meteorologist at The Weather Company in Andover, Massachusetts. “Many locations in those areas may exceed two feet. Clearly Houston is at risk for historic rainfall amounts over the next week.”
The U.S. Weather Prediction Center is calling for more than 20 inches (51 centimeters) of rain from Corpus Christi to Houston in the next seven days.
“Biggest impact of this storm will be a significant reduction of crude oil imports into the Texas Gulf Coast, resulting in refineries cutting crude rates,” Andy Lipow, president of Lipow Oil Associates in Houston, said by email Wednesday. “There will also be a significant impact on petroleum product exports impacting supplies into Mexico.”
How to Track Harvey’s Path Through Texas and Its Refineries
Houston wholesale conventional gasoline rose 1.9 percent to $1.5926 a gallon Wednesday, data compiled by Bloomberg show.
While oil supplies could be disrupted, natural gas demand could fall, said Matt Rogers, president of the Commodity Weather Group LLC in Bethesda, Maryland. When hurricane Ike hit Texas in 2008, power outages cut electricity demand, reducing the need for gas and depressing prices.
Ike, a Category 2 storm when it struck near the mouth of the Houston Ship Channel, killed 103 people across the Caribbean and the U.S., including at least 21 in Texas, Louisiana and Arkansas. It caused about $29.5 billion in damage, according to a 2009 National Hurricane Center report.
Anadarko Petroleum Corp. shut in production and evacuated its Boomvang, Gunnison, Lucius and Nansen oil and gas production platforms in Gulf of Mexico ahead of Harvey, according to statement on the company website Wednesday. Noble Corp Plc. evacuated its Noble Paul Romano rig, Jeff Chastain, a company spokesman, said Thursday by email.
Exxon Mobil Corp. had said it’s cutting output at its Hoover production platform in the Gulf of Mexico ahead of the storm. The company’s also working on plans to evacuate staff in stages from offshore facilities, Suann Guthrie, a spokeswoman, said by email Wednesday. Royal Dutch Shell Plc shut production at its Perdido platform and evacuated the facility.
Along the coastline, seas could rise 5 to 7 feet (1.5 to 2.1 meters) above ground level.
Cotton rallied on speculation the storm will threaten U.S. crops. On ICE Futures U.S. in New York, cotton for December delivery climbed 1.6 percent on Wednesday to settle at 68.89 cents a pound after earlier reaching the highest since Aug. 10. Prices were little changed at 9:49 a.m. New York time.
American Airlines Group Inc. is allowing people traveling through Houston and nine other cities on certain dates to re-book their flights without a fee because of the storm. United Continental Holdings Inc. is offering the same in eight cities, while Delta Air Lines Inc. is offering a similar waiver for Houston flights.
Policyholder-owned State Farm Mutual Automobile Insurance Co. has the largest share in the market for home coverage in Texas, followed by Allstate Corp., Farmers Insurance and United Services Automobile Association, according to data compiled by A.M. Best Co.