Tropical Storm Francine Threatens Gulf Coast: Energy Sector on High Alert

Tropical Storm Francine is poised to become a hurricane, prompting evacuations in Louisiana and major disruptions in Gulf of Mexico oil and gas production. The storm's projected path threatens critical LNG export plants and has caused companies to evacuate staff and halt operations, raising natural gas prices amid global oil demand concerns.

Tropical Storm Francine was on track Tuesday to become a hurricane overnight, according to the U.S. National Hurricane Center, prompting Louisiana residents to flee inland and forcing oil and gas companies to shut down Gulf of Mexico production. Francine is developing more slowly than expected but could still hit the Louisiana coast on Wednesday with life-threatening winds, heavy rains, and a storm surge of up to 10 feet.

The latest National Hurricane Center update reduced peak wind expectations to 90 miles per hour, making it a Category 1 hurricane. The storm, moving off the southern Texas coast, is anticipated to make landfall near Thibodaux, Louisiana. This will test recently built liquefied natural gas export plants in the region.

Energy companies have shut down 412,070 barrels per day of oil production—around 24% of U.S. Gulf of Mexico production—and evacuated staff from 130 platforms, according to the Bureau of Safety and Environmental Enforcement. About 494 million cubic feet per day, or 26% of Gulf natural gas production, is offline. U.S. natural gas prices rose 3% due to production worries, while global oil demand concerns pushed U.S. crude futures down over 4%.

Oil refiners and fuel distributors along the Louisiana coast are bracing for the storm. Citgo Petroleum's Lake Charles refinery has implemented its hurricane plan. The port of Brownsville and other smaller Texas terminals closed Tuesday, while larger ports, including Houston and Galveston, are operational but restricted.

Ports between Texas and Louisiana have enforced traffic restrictions, the Coast Guard reported. New Orleans ports were set to close, with service resuming post-assessment on Thursday. Mississippi and Alabama ports, including Pascagoula, started storm preparations and remained open on Tuesday. Following landfall, Francine is expected to move into Mississippi by Wednesday night or Thursday.

Louisiana, housing three of the nation's seven major LNG export plants, is on high alert. New plants like Sempra's Cameron LNG and Venture Global LNG's Calcasieu Pass LNG are along Francine's path. Natural gas flow to Cameron LNG dropped significantly, and companies like Exxon Mobil and Chevron evacuated offshore staff. Freeport LNG initiated storm preparations at its Texas plant.

(With inputs from agencies.)