Tropical Storm Chris, Likely Hurricane, Aims for Gulf by Monday

NEW YORK, Aug 02, 2006, Dow Jones Newswires

Tropical Storm Chris will likely cross the threshold into the Gulf of Mexico as a hurricane early next week, possibly developing into the first serious threat this year to U.S. oil and natural gas facilities.

As of 2 p.m. EDT, the center of the storm was about 100 miles northeast of St. Thomas in the U.S. Virgin Islands and moving west-northwest at about 10 miles per hour, the National Hurricane Center said in an advisory. Maximum sustained winds are near 65 mph with higher gusts.

"Chris could become a hurricane during the next 12 to 24 hours," the NHC said. NHC forecasts place Chris in the Gulf Monday morning.

The timing of Chris' arrival coincides with the start of the hurricane season's most intense period - the months of August and September. Although the storm is still several days away from the network of offshore wells and pipelines that feed the U.S. Gulf Coast refining hub, it's sparked fears of a possible repeat of the devastating 2005 season that culminated with the double-whammy of hurricanes Katrina and Rita.

"At the expense of comparing Chris to a historical hurricane, it should be pointed out that Chris will be following closely in the path footsteps of Rita last year," private weather forecaster Weather 2000 said in a note.

Predictions for Chris' strengthening and trajectory pushed energy futures higher on Wednesday. The front-month crude oil contract rose almost $1 to settle at $75.81 a barrel on the New York Mercantile Exchange. Natural gas futures, which had rallied all week on record heat across the U.S., settled 22.5 cents higher at $7.799 a million British thermal units.

Rita, which made landfall in September, knocked out the heart of the U.S. refining hub, home to the nation's largest crude oil processing plants.

Both Katrina and Rita wreaked extensive damage to facilities both on- and offshore.

Energy major Royal Dutch Shell PLC (RDSB.LN) said Wednesday it's monitoring Tropical Storm Chris "closely," although the weather system hasn't yet had an impact on drilling or producing operations.

"No evacuations of personnel are taking place at this time," Shell said in a statement. "Plans are in place to begin evacuating personnel non-essential to drilling or producing operations, if warranted."

In the U.S. Gulf of Mexico, Shell produces 267,000 barrels a day of oil and 1.1 billion cubic feet of natural gas, 70% of the company's U.S. hydrocarbons volumes.

Whether or not Tropical Storm Chris intensifies - and by how much - will depend on how well it navigates through islands in the Caribbean. If there's no further intensification, the storm should move toward the south Texas Gulf Coast will landfall late next week, said Jim Rouiller, senior meteorologist with forecaster Planalytics.

"If sea surface temperatures result in intensification to a Category 2 or higher hurricane, then the winds are not in control of the steering, which opens the threat to the entire Gulf Coast and western Florida," Rouiller said in a note.

Copyright (c) 2006 Dow Jones & Company, Inc.

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