08/29/2012 10:45 am ET Updated Oct 29, 2012

Isaac 2012: Refineries And Oil Platforms Largely Unscathed By Passing Storm

* Category 1 hurricane prompts flooding close to refining belt

* No plant damages reported so far

* Storm drives waters over levee near New Orleans

* Energy experts say offshore output may resume soon

By Kristen Hays and Erwin Seba

HOUSTON, Aug 29 (Reuters) - Hurricane Isaac continued to batter the Gulf Coast on Wednesday, causing flooding in Southern Louisiana but no discernible damage to refineries. The storm's passage left offshore oil and gas platforms largely unscathed.

Isaac, currently a Category 1 hurricane, was centered 40 miles (70 km) southwest of New Orleans as of 9:00 a.m. (1300 GMT), provoking a dangerous storm surge and pelting coastal Louisiana with heavy rain that could prompt flooding through the day, the National Hurricane Center said.

Louisiana's Plaquemines Parish reported flooding after storm waters flowed over a levee designed to protect the area. The 247,000-barrel-per-day Phillips 66 Alliance refinery, which is located in the parish, reported no damage, but had shut down to brace for the storm.

Isaac lingered on the Gulf Coast, packing winds up to 80 miles (130 km) per hour and raising the specter of further flooding. But the storm's passage left the Gulf's offshore oil and gas platforms without reported damages, which could allow production to restart in coming days following sharp cuts in recent days as oil firms evacuated them.

The flooding in coastal Plaquemines "is horrible for the people there, but I do not think this affects any oil and gas infrastructure," said Kenneth Medlock, an energy expert at Rice University's Baker Institute in Houston.

"The rigs offshore should be up in about a week," Medlock said. "The offshore facilities should be OK with regard to major damage ... I would not expect a prolonged production outage."

Offshore production in the U.S. Gulf of Mexico, which accounts for nearly one-fourth of domestic oil production and 7 percent of the nation's natural gas output, was largely shut down in recent days as crews evacuated rigs to brace for Isaac. U.S. government figures showed 93 percent of offshore Gulf oil and around two-thirds of gas output offline as of Tuesday.

Early Wednesday, U.S. oil futures fell by 1 percent to $95.40 a barrel. U.S. gasoline futures were down 0.2 percent as many traders bet that Isaac would not cause major damage to regional refineries.

"It is expected that oil production in the Gulf of Mexico will quickly return to normal," said oil analyst Carsten Fritsch of Commerzbank in Frankfurt.

Initial reports on refinery operations in Louisiana did not indicate damage to plants, although energy analysts said that could remain a concern through Wednesday.

Emergency management officials in Garyville, Louisiana, said there were no reports of flooding or damage at Marathon Petroleum Corp's 490,000 bpd refinery.

Louisiana typically processes around 3 million bpd in its plants, many of which are located in low-lying areas near the coast. The broader Gulf Coast region is home to a refining hub with 7.8 million bpd capacity, or 45 percent of the U.S. total.

As of Tuesday afternoon, about 12 percent, or 936,000 bpd, of Gulf Coast refining capacity was closed down due to Isaac, the U.S. Department of Energy said.



Hurricane Isaac