I guess it is not possible to remove/disable the "Format" option from the Context Menu for drives. The only way is to just disable the user's Context Menu.
To do that, you have to create the registry data listed below and then Sign out and Sign in.
Registry Location: HKEY_CURRENT_USER\Software\Microsoft\Windows\CurrentVersion \Policies\Explorer
Value: NoTrayContextMenu
Type: REG_DWORD
Options: 1=Enable 0=Disable