By August 29, 2017 Read More →

Some US Gulf refineries under water, some threatened by Hurricane Harvey

Gulf refineries

The effects of Hurricane Harvey on US Gulf refineries and the Houston shipping channel could be felt for weeks. Dallas Morning News photo.

US Gulf refineries account for nearly half of domestic refining capacity

UPDATE: Reuters is reporting that Motiva Enterprises is shuttering its 603,000 b/d refinery in Port Arthur, the largest in the United States. 

Hurricane Harvey’s heavy rains and flooding have closed more US Gulf refineries in Texas, and officials are concerned more facilities could be impacted as the deadly storm makes its way into Louisiana.

As of Tuesday morning, over 16 per cent of overall US refining capacity is offline due to Harvey.  As the storm moves east, south-central Louisiana is expected to get between 5-15 inches of rain, according to the National Hurricane Center.

enmaxTexas and Louisiana account for nearly half of the domestic refining capacity, with Texas producing 5.6 million barrels per day (b/d) and 3.3 million b/d in Louisiana.

So far, Harvey has shut down about 3 million b/d of refining capacity and restarting the closed refineries could take at least a week, maybe longer.

As a result, on Tuesday US gasoline futures were up 0.9 per cent to $1.73/gallon, up about 6 per cent since last Wednesday when refiners in Harvey’s path began shutting down ahead of the storm.

Retail gasoline prices have also begun rising.  The average price for gasoline went up 1 cent overnight to $2.38 nationally.

“These closures are already impacting markets, with crude prices lower on a perceived drop in demand and gasoline prices spiking in response to lower supply,” Sandy Fielden, director of oil and products research at Morningstar told Reuters.

US crude futures dropped by 1.6 per cent on Tuesday after falling over 2 per cent on Monday.

Analysts are unsure of the full impact of the refining shutdowns.

“The current disruptions are affecting both demand and supply, making it difficult to assess the impact on balances at this point,” wrote analysts at JBC Energy, according to Reuters.

As Harvey moves out of Houston, Marathon Petroleum announced it will shut down two refineries in the Houston area due to flooding, according to Reuters’ sources familiar with plant operations.

The two refineries affected are the 459,000 b/d Galveston Bay Refinery in Texas City, Texas, located 45 miles south of Houston and the 86,000 b/d Texas City refinery located just across the street from the Galveston Bay plant.

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Sources report there is some flooding at the Galveston Bay tank farm and on nearby streets.

As well, Exxon shut all units of its 362,300 b/d Beaumont refinery in east Texas due to high water in the plant, according to Reuters’ sources.  Exxon had already cut production at its Baytown, Texas, refinery.  Baytown is the second largest refinery in the United States.

Motiva Enterprises’ Port Arthur, Texas, plant is still open, but sources say the company says it will make a final decision on Tuesday as to whether or not to close the plant, which is the largest in the US.

As of Monday, the company was reporting its Port Arthur operations were “stable”.

Citgo’s 435,000 b/d Lake Charles, Louisiana refinery has cut back on production due to crude oil shipping disruptions, according to Energy News Today.  A spokeswoman with the company said Citgo is closely monitoring the situation.

Shell announced on Sunday it was closing its 340,000 b/d Deer Park refinery.  Also on Sunday, Petrobras began shutting down operations at its Pasadena Refinery.

“Our focus is on the safety of our workforce and the community,” Petrobras said.

Along with refinery shut downs, Hurricane Harvey may result in a lengthy shut down of the Houston Ship Channel, a major artery for crude supplies.

As well as high water levels, swift currents in the channel caused by Harvey could damage pipelines buried in the river bed, according to Harris County officials.

The AP reports the pipelines could be subject to “scouring” as fast-moving water moves away a cover that is buried over the pipelines.  Jeff Linder of the Harris County Flood District told the AP that the pipelines could then be exposed and more likely to a break.

In 1994, a flood caused by about 20 inches of rain in the Houston area resulted in eight pipelines breaking across the San Jacinto basin.  Almost 1.5 million gallons of oil and petroleum products were spilled.

According to the National Transportation Safety Board, over 500 people suffered injuries, mostly minor burns, when the fuel from the pipeline was ignited.

The AP reports hundreds of petrochemical industry pipelines carrying oil, gasoline and natural gas crisscross Houston and southeast Texas.







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