10 Refineries Close As Harvey Drenches Texas Power Hub
Tropical Storm Harvey is tearing by means of one of many nation’s most necessary power hubs. All through the Gulf Coast, key refineries and manufacturing facilities have been compelled to close.
Rain and flooding are continuing to wreak havoc on Houston and the surrounding area, and the rain is forecast to continue through the week. The devastating storm’s full influence on the region’s oil and gas infrastructure will not be identified until coming days.
Ten oil refinery plants in oil and gas production line the Houston space and Corpus Christi are shutting down because of the storm, based on a report launched Sunday by S&P International Platts. They normally have the capacity to refine about 2 million barrels of oil a day.
That included Exxon Mobil (XOM)’s Baytown refinery, the second largest in the country. The campus, about 25 miles east of Houston, can process up to 584,000 barrels of crude oil per day. It employs about 7,000 people.
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S&P estimated Sunday that roughly 2.2 million barrels per day of refining capability had been forced offline due to the storm.
Total, the Gulf area is dwelling to refineries and other operations that account for practically one-third of the nation’s capability to turn oil into gasoline, diesel and different merchandise.
Harvey’s market impact became clear Sunday night when U.S. gasoline futures spiked 7% after power markets reopened.
One factor that might lessen the influence of Harvey’s damage: The world has a glut of oil.
“As more refineries go offline, there’s less stress to the system because it is well equipped,” stated Rob Smith, a director at IHS Markit.
Live updates from CNN on Harvey and its toll
Harvey made landfall as a Class 4 hurricane late Friday, however was downgraded to a tropical storm by mid-Saturday. It continued to dump large amounts of rain on Houston and cause dangerous flooding that might get worse.
Federal officials mentioned Sunday that workers from 105 oil and gasoline manufacturing platforms had been evacuated. All instructed, 737 platforms within the Gulf are staffed with employees.
About 22% of the oil produced in the Gulf was shut down as of Sunday, in response to the Interior Division’s Bureau of Security and Environmental Enforcement. That quantities to almost 379,000 barrels of oil per day.
The numbers had been a slight enchancment over Saturday, when a few quarter of oil manufacturing within the Gulf was closed.
The bureau additionally estimated Sunday that about 26% of pure gasoline production within the Gulf has been shut.
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Harvey is the primary major storm to significantly threaten the Gulf Coast energy sector in a while.
Hurricanes Gustav and Ike in 2008, as well as Hurricane Isaac in 2012, all knocked greater than 1 million barrels of Gulf oil manufacturing offline, in response to the EIA. These hurricanes also briefly disrupted refining capability.
Hurricanes that land in Texas tend to have little impact on oil production, but extra important consequences for refining, in line with Tom Kloza, chief oil analyst on the Oil Worth Data Service.
While refineries in Corpus Christi were already closed ahead of the storm, flooding within the Houston area compelled extra closures Sunday.
By late afternoon, plants run by Exxon, Citgo, Petrobras, Flint Hills, Magellan, Buckeye, Shell, Phillips 66 and Valero Vitality (VLO) had all closed because of the storm, according to S&P International Platts and the businesses.
Valero reported Sunday that oil and gas production line there were no “substantial refinery impacts” due to the storm. The corporate mentioned it’s working with government officials to determine what it needs to do to resume operations.
The corporate’s Corpus Christi plant produces 293,000 barrels per day, whereas its Three Rivers plant produces 89,000 barrels.
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Houston additionally marks the beginning of the Colonial Pipeline, which transports greater than 100 million gallons of gasoline, heating oil and aviation gas each day to so far as the brand new York harbor. Energy outages throughout Hurricanes Katrina and Rita in 2005 pressured the shutdown of elements of the Colonial Pipeline for a number of days.
Kloza said that normally refining is knocked offline for just a brief time, making the affect on costs fleeting. However that is dependent upon the severity of the storm.
“Katrina was the exception,” Kloza mentioned, referring to the 2005 storm that badly damaged Gulf Coast operations.
He predicted on Thursday that Harvey is prone to cause solely a short-time period leap in fuel costs of 5 to 10 cents per gallon, though he stated a 25-cent spike in a worst-case state of affairs was also possible.
The average value of a gallon of normal gasoline nationwide has ticked up just a few cents in current days, in response to AAA.
“You are talking about a scenario where a month from now gasoline prices will most likely be lower. However every week from now they’ll be larger,” mentioned Kloza.