Gulf Coast Braces for Worst

Crude futures soar past $70 a barrel as Katrina moves toward Louisiana and Mississippi.
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Updated from 10:48 p.m. EDT

Oil and gas rigs were shut, shipping was halted and a massive evacuation continued as Hurricane Katrina, an ultra-dangerous Category 5 storm, stalked the Gulf Coast south of New Orleans.

Katrina, packing winds of 160 mph, is expected to arrive along the Mississippi and Louisiana coast at dawn. The mayor of New Orleans issued a mandatory evacuation order for the city of 500,000 people.

The storm is bearing down on a region crucial to U.S. oil and gas production and transport. October crude trading electronically in the off-hours session of the New York Mercantile Exchange topped $70 a barrel after 10 p.m. Sunday, up 7% from its Friday close. The September natural gas contract was up more than 20% from Friday, topping $12 per million BTUs.

The National Hurricane Center last put Katrina's eye 105 miles south-southeast of the mouth of the Mississippi River, moving north-northwest at about 10 mph. Forecasters expect the storm to turn north Monday and have posted hurricane warnings from Morgan City, La., to the border of Alabama and Florida.

"Conditions are already beginning to deteriorate along portions of the central and northeastern Gulf Coast and will continue to worsen through the night," the center advised. "Hurricane-force winds extend outward up to 105 miles from the center, and tropical storm force winds extend outward up to 230 miles."

A wind gust of 90 mph was reported late Sunday at Southwest Pass, La.

Three Category 5 storms have come ashore in the U.S. since record-keeping began, the last being Hurricane Andrew, which killed 43 people and did more than $30 billion in damage in 1992. Category 5 storms have sustained winds above 155 mph.

New Orleans mayor Ray Nagin described the storm as potentially a "once-in-a-lifetime event" for the city, most of which sits below sea level. New Orleans is protected by levees from the surrounding waters of Lake Pontchartrain and the Mississippi River, but they could be breached by a possible 28-foot storm surge and up to 15 inches or rain, forecasters warned.

"I do not want to create panic, but I do want the citizens to understand that this is very serious and it's of the highest nature," said Nagin. Added President Bush in a brief address: "We cannot stress enough the danger this storm poses to Gulf Coast communities. I urge all citizens to put their own safety and the safety of their families first by moving to safe ground."

Bush declared Louisiana and Missippi disaster areas, a status that allows more concerted federal cooperation with local aid authorities.

A hurricane watch was issued from the Alabama-Florida border to Destin, Fla., and from Morgan City to Intracoastal City, La.

About 25% of U.S. oil and gas production is located in the Gulf of Mexico. Energy companies began shutting down facilities and removing workers on Saturday when it became evident Katrina would not hew to forecasters' expected northern track into the Florida Panhandle. Instead, the storm has continued to gather energy as it creeps west in the Gulf of Mexico.

As of Sunday,

Chevron

(CVX) - Get Report

reportedly has evacuated all of its Gulf Coast units, while

Exxon

(XOM) - Get Report

,

BP

(BP) - Get Report

and

Royal Dutch

(RD)

are proceeding with evacuations. The Louisiana Offshore Oil Port canceled delivery operations.

Crude futures settled Nymex floor trading lower on Friday, when Katrina appeared destined to miss the main Gulf of Mexico production areas. The October contract lost $1.36 to $66.13 a barrel Friday after closing at a record high of $67.49 on Thursday.

The Mississippi Gaming Commission ordered all Gulf Coast casinos shut down early Sunday morning. Meanwhile,

Delta, United, Northwest, US Air

and

American

canceled flights to New Orleans International Airport.

Katrina caused at least seven deaths in Florida, where it arrived in much weaker condition on Thursday.