Tropical storm Lee strengthens, heads to Louisiana Coast

Tropical storm Lee strengthened in the Gulf of Mexico as it moved north towards Louisiana's coast, shutting as much as half the oil production in the Gulf of Mexico and a third of natural gas output.

Lee is about 24 kilometre s south-southeast of Intracoastal City, Louisiana, heading north-northwest at seven miles per hour and "producing heavy rains" over the south of the state, the National Hurricane Center said in an advisory before 8 am East Coast time. The storm's maximum sustained winds strengthened to 60 mph with "some slight" strengthening possible before it makes landfall, according to the Miami-based centre's forecast.

"This will be an extensive, slow-moving system, capable of affecting the same area for days with downpours, stormy seas and rough surf conditions," said Alex Sosnowski, an AccuWeather Inc. meteorologist, on the State College, Pennsylvania-based forecaster's website. "Considering potential for damage, impact to the petroleum industry and commerce in the Gulf Coast region, the system could be the next billion-dollar disaster."

Companies including Anadarko Petroleum Corp., BP Plc, Exxon Mobil Corp. and Noble Corp. evacuated workers from Gulf rigs and platforms. About 47.6 per cent of Gulf oil production and 33 per cent of natural gas output has been shut by the storm, according to the Bureau of Ocean Energy Management, Regulation and Enforcement.

GULF OUTPUT
The Gulf accounts for 27 per cent of US oil output and 6.5 per cent of natural gas production. As much as 91 per cent of gas and 98 per cent of oil output in the Gulf may be shut in the next five days, according to Kinetic Analysis Corp., a Silver Spring, Maryland-based company that predicts the effects of disasters.

Oil and natural gas producers will be watching wind speeds and wave heights to determine whether and how long to shut operations, said Jan Vermeiren, chief executive officer of Kinetic Analysis. All production affected so far has been the result of precautionary measures, he said.

"Neither wind nor wave should cause much damage at this point," Vermeiren said.

Jim Shugart, executive vice president for sales and marketing North America at ERA Helicopters LLC, said his company may return workers to rigs and platforms today.

"We're going to start putting people back out if this weather doesn't circle on us," Shugart said in a telephone interview from Lake Charles, Louisiana. "In a situation like this, you start putting people back out the minute you can."

HURRICANE GUSTAV
Lee isn't strong enough to cause any significant damage to energy assets at this point, said James Williams, an economist at WTRG Economics, an energy research firm in London, Arkansas.

"We're not talking about Hurricane Gustav here, moving pipelines up and down Louisiana like it was spaghetti," Williams said in a telephone interview. "This one isn't a big story. It's a wet story." Gustav struck in 2008.

Ten to 15 inches (25 to 38 centimetres) of rain is expected to fall over southern Louisiana, Mississippi and Alabama, with as much as 20 inches in some areas, according to the hurricane center. The Florida Panhandle may see as much as eight inches of rain through tomorrow, the center said.

The center of Lee is expected to "cross the Louisiana coast this afternoon or tonight, then slowly cross southern Louisiana on Sunday," the hurricane center said.