Hurricane Grace not expected to have impact on Mexico's crude production

Category 1 Hurricane Grace, likely to land Thursday on Mexican shores, is not expected to have significant impact on national crude production or power generation, as it mostly will hit tourism areas, but measures are being taken to prepare for the season.

Grace will hit the state of Quintana Roo, famous for its beach resort Cancun, with winds up to 45 mph late on Thursday, according to local authorities. Medium-sized and small vessels have been banned from sailing in the states of Quintana Roo and neighbor Yucatan.

The Quintana Roo, Yucatan and Campeche states all issued safety recommendations for the population. However, Grace is expected to lose strength as it moves further west, where crude oil is produced.

Crude production, currently at 1.681 million b/d, is almost entirely drilled from the shallow-water complexes in the Gulf of Mexico, particularly off the costs of Campeche, data from the National Hydrocarbons Commission shows.

In that area, Pemex has halted production during hurricanes Category 3 and stronger in recent years, or when two storms hit consecutively, David Rosales, an independent consultant in Mexico City, told Platts.

Pemex has not identified any potential risk from the Grace, but said in an Aug. 18 statement it was closely monitoring its path to ensure the safety of its facilities.

Power generation is not yet affected by Grace, as its path is far from the large generation centers of the country, but the state utility CFE is preparing for the impact.

To help with potential blackouts in the Yucatan peninsula, CFE has readied 69 mobile power plants in the Yucatan Peninsula, and mobilized personnel and equipment, the company said in a statement Aug. 18.

The company also must prepare the rest of its plants for the storm, Rosales said. By now, CFE should have already stored enough fuels to run the back-up plants, which either run on coal or fuel oil, he said. CFE also should have used its hydropower power plants, lowering the water levels at the dams ahead of the rainy season, he said.