U.S. Issues Hurricane Watch as Tropical Storm Moves Across Gulf

By Margot Habiby and Aaron Sheldrick

Aug. 4 (Bloomberg) -- U.S. authorities issued a hurricane watch after Tropical Storm Edouard formed south of Louisiana in the Gulf of Mexico and moved west along the coastline with winds of 50 miles per hour.

The hurricane watch extends from west of Intracoastal City to Port O'Connor in Texas, the U.S. National Hurricane Center said in its latest advisory. Edouard was located about 75 miles (120 kilometers) south-southwest of the mouth of the Mississippi River at 1 a.m. New Orleans time today, according to the Miami- based Hurricane Center.

``We can't rule out the possibility that it will strengthen to a Category 1 hurricane,'' Rebecca Waddington, a meteorologist with the Miami-based center, said in an interview yesterday.

Edouard is forecast to strengthen and cross the coast near Galvesto in Texas tomorrow. Hurricanes Katrina and Rita, both Category 5 storms with wind speeds of more than 155 miles an hour, devastated New Orleans and the U.S. Gulf's oil output and refineries in August and September 2005, roiling oil and natural-gas markets.

``It's really almost too late to evacuate many of the offshore platforms,'' Andy Lipow, president of Lipow Oil Associates LLC in Houston, said yesterday.

A hurricane watch means hurricane conditions are possible within about 36 hours. Edouard was moving west at about 9 miles an hour and is expected to head west-northwest later today.

A tropical storm warning was issued for parts of Louisiana from the mouth of the Mississippi River west to Cameron. This type of warning means conditions include winds of more than 39 miles an hour.

Storm Prediction

There is a 24 percent chance Edouard will strengthen to a hurricane, the center said earlier. A storm reaches hurricane status when its wind speeds are 74 miles an hour.

Andy Mussoline, a meteorologist at Accuweather.com, projected that the storm would make landfall on Aug. 5 between the Texas-Louisiana border and Corpus Christi, Texas, about a 300-mile stretch of coastline.

Oil and gas operators in the Gulf ``have to be prepared for enhanced rainfall and gusty winds, but as far as damage to the rigs or anything of the sort, that's unlikely at this point,'' Mussoline said yesterday from State College, Pennsylvania. ``They will have to take precautions to be prepared for gusty winds of tropical-depression or tropical-storm strength.''

The storm hasn't affected operations at the Louisiana Offshore Oil Port, spokeswoman Barb Hestermann said yesterday.

The LOOP, as it is known, is the biggest U.S. crude-oil import terminal, with the capacity to receive 1 million barrels a day, or about 11 percent of U.S. imports.

Monitoring Storm

``We're just kind of keeping an eye on it,'' Hestermann said. ``We don't feel like we need to take action.''

Danny Holder, director of helicopter operator Air Logistics Inc. in New Iberia, Louisiana, said yesterday his company hasn't lifted any workers from oil and natural-gas rigs in the Gulf of Mexico before the storm.

``We're watching it, but to the best of my knowledge, we haven't started any evacuations yet,'' he said in a telephone interview. Air Logistics is a unit of Bristow Group Inc., the second biggest helicopter operator in the Gulf.

Exxon Mobil Corp.,Chevron Corp. and Royal Dutch Shell Plc are among oil producers and drillers that evacuated personnel from offshore rigs and platforms when Dolly, the season's first hurricane in the Gulf, swept through the region in late July.

The U.S. Gulf of Mexico produces about 1.3 million barrels a day of crude oil and 7.7 billion cubic feet of natural gas, according to the U.S. Minerals Management Service, part of the Interior Department.

Safeguarding Installations

``The recommendation we give is to keep a close eye on the storm,'' the Hurricane Center's Waddington said. ``We do expect it to strengthen over the next couple of days before it makes landfall. The industry knows better than we do how to safeguard their installations. I'd advise them to act early.''

Crude oil for September delivery rose as much as $1.25, or 1 percent, to $126.35 a barrel in electronic trading on the New York Mercantile Exchange and traded at $126.21 at 11:58 a.m. in Singapore.

The hurricane center is also tracking a low-pressure system about 525 miles east of the Northern Leeward Islands. It was moving west-northwest at 15 to 20 mph.

To contact the reporters on this story: Margot Habiby in Dallas at mhabiby@bloomberg.net; Aaron Sheldrick in Tokyo at asheldrick@bloomberg.net.