[OIL PRODUCTION] Tropical Storm Edouard Heads for Texas

Tropical Storm Edouard prompted evacuations of some oil and gas rigs in the Gulf of Mexico as it strengthened before an expected landfall near Galveston, Texas, the biggest U.S. petroleum port.

Crude oil sank to a three-month low as traders bet the storm would miss most offshore facilities. Six rigs and 23 production platforms were evacuated in the Gulf, according to the U.S. Interior Department.

The storm had maximum sustained winds of about 60 miles (97 kilometers) per hour at 10 p.m. Houston time, from 45 mph earlier, the National Hurricane Center in Miami said in an advisory on its Web site. The system was 160 miles east- southeast of Galveston and moving west-northwest at 8 mph.

``Edouard is forecast to strengthen,'' the center's bulletin said. ``It is expected to be near hurricane strength by the time it reaches the coastline during the day tomorrow.''

Edouard may affect about 5.4 million residents of Texas and Louisiana, according to a Census Bureau report. Texas Governor Rick Perry, a Republican, earlier issued a disaster declaration covering 17 counties and activated 1,200 National Guard personnel as a precaution. In neighboring Louisiana, Republican Governor Bobby Jindal declared a state of emergency, according to a statement.

Oil Production
Hurricanes Katrina and Rita, both of which reached Category 5 with wind speeds of more than 155 mph over the Gulf before hitting land as weaker storms, devastated New Orleans and the U.S. Gulf coast's oil output and refineries in 2005, roiling oil and natural-gas markets. Category 5 is the highest on the Saffir-Simpson scale of hurricane intensity.

To become a hurricane, Edouard must have maximum sustained winds of at least 74 mph. A hurricane watch remains in effect along the coast from Intracoastal City to Port O'Connor, meaning such conditions are possible within about 36 hours.

Some oil rigs south of the Louisiana coast were reporting sustained winds as high as 55 mph, the hurricane center's advisory said.

Producers have idled 7.2 percent of natural-gas output and 0.87 percent of oil output in the Gulf because of the storm, the U.S. government said.

Marathon Oil Corp. said it is shutting its Texas City refinery. Marathon evacuated some non-essential workers from the Gulf, as did companies including Anadarko Petroleum Corp. and McMoRan Exploration Co.

Oil Falls
The Louisiana Offshore Oil Port, the biggest U.S. oil import terminal, and the Houston Ship Channel, which serves the ports in Houston, Texas City and Galveston, shut down operations because of the storm.

The Louisiana facility has the capacity to receive 1 million barrels of oil a day, or about 10 percent of U.S. imports.

The Gulf produced about 1.3 million barrels a day of crude oil and 7.7 billion cubic feet of natural gas a day in January, according to the Interior Department's Minerals Management Service.

Crude oil for September delivery fell as much as $1.19, or 1 percent, to $120.22 a barrel in electronic trading on the New York Mercantile Exchange, and traded at $120.27 at 9:55 a.m. Singapore time. Yesterday, crude oil fell $3.69 to settle at $121.41 a barrel in New York, the lowest close since May 5.

Campus Shuts
Texas A&M University's Galveston campus shut at mid-day. Classes for about 400 fulltime students and programs for more than 90 children from the surrounding area have been canceled, school spokeswoman Karen Bigley said in a telephone interview. The university's Galveston campus is home to the Texas Maritime Academy, as well as marine biology, engineering and fisheries.

Continental Airlines Inc., the fourth-largest U.S. carrier, will allow passengers flying through Houston, San Antonio and Austin, Texas, to reschedule flights for travel on or before Aug. 13 without additional charges, according to a statement on its Web site.

AirTrans Holdings Inc., the 10th-largest U.S. airline by traffic, is allowing passengers with flights booked to or from Houston to change their travel to today or to Aug. 6 through Aug. 8 without a fee, according to a statement from the Orlando, Florida-based company.

Source: Bloomberg| By Brian K. Sullivan and Aaron Sheldrick

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