By Robin Emmott
MONTERREY, Mexico (Reuters) - Hurricane Alex weakened to a tropical storm on Thursday as it moved across north-eastern Mexico, dumping heavy rain that flooded a major city as U.S. companies began to restart halted oil production.
The first named storm of the 2010 Atlantic season was powerful enough to drench the industrial city of Monterrey well inland from the coast, killing three people, washing away chunks of surrounding highways and turning dry desert beds into turbulent rivers. Zoo animals including buffalo were dragged from their pens as floods swept through the city.
"The damage is enormous. A river burst its banks and we have people trapped on the roofs of their houses," said Mayor Martin Zamarripa of the town of Hualahuises outside Monterrey.
South Texas escaped much of the storm, but Alex flooded about 80 percent of the port city of Matamoros across from Brownsville, sent uprooted trees crashing down on parked cars and forced thousands to flee low-lying fishing villages.
Alex made landfall as a Category 2 Hurricane on the Tamaulipas coast around 9 p.m. on Wednesday (0200 GMT Thursday). U.S. oil installations were not been hit by the storm, which formed near the Yucatan peninsula on Saturday, and oil companies began to ramp up production again after shutting down about a quarter of the Gulf's output as a precaution.
Companies had reported 342,224 barrels per day in oil production and 877 million cubic feet in gas output shut.
The shut-in totals were down from the Wednesday peak of 26.3 percent, or 421,350 bpd of oil, and 14.4 percent of gas, or 919 Mmcf of gas.
BP Plc said on Thursday its Gulf oil and gas output was back to normal, although the passage of Alex slowed oil clean-up and containment efforts at its leaking deep-sea well off the Louisiana coast.
As the oil industry came back to life in the Gulf, ship traffic resumed at Houston and Corpus Christi, Texas, the U.S. Coast Guard said. [nWNA4813] Alex, which is expected to dissipate over Mexico's central mountains overnight, had maximum sustained winds of 50 mph (80 kph) and was located about 150 miles (245 kms) east of Zacatecas in central Mexico.
At least three tornadoes swept through the Brownsville area on Wednesday, tossing over tractor-trailers but causing no major damage. "Isolated tornadoes are possible over portions of extreme southern Texas today," the U.S. National Hurricane Centre said. Alex was the first and strongest Category 2 hurricane to occur in the month of June since 1966.
Mexican marines evacuated thousands of people from fishing communities along the Gulf coast and into shelters, but some refused to leave their homes even as water ran in under doors.
Local authorities are on high alert in case of rainfall as high as 20 inches (50 cm). Alex killed a dozen people in Central America over the weekend.
(Additional reporting by Cyntia Barrera Diaz in Mexico City and Tomas Bravo in Matamoros; editing by Todd Eastham)
