(Reuters) - A hurricane in the heart of the U.S. energy industry is
set to curtail near-record U.S. oil production for several weeks,
with the impact expected to reverberate throughout the country and
across international energy markets.
hit the Texas shore as a fierce Category 4 hurricane, causing massive
flooding that has knocked out 11 percent of U.S. refining capacity, a
quarter of oil production from the U.S. Gulf of Mexico, and closed
ports all along the Texas coast.
futures jumped as much as 7 percent to their highest level in more
than two years in early Monday trading in Asia as traders took stock
of the storm’s impact.
outages will limit the availability of U.S. crude, gasoline and other
refined products for global consumers and further push up prices,
assessments could take days to weeks to complete, and the storm
continues to drop unprecedented levels of rain as it lingers west of
Houston, home to oil, gas, pipeline and chemical plants. And restarts
are dangerous periods, as fires and explosions can occur.
far, the federal government has not announced if it will release
barrels of oil or refined products from the nation’s Strategic
Petroleum Reserve (SPR), which holds nearly 680 million barrels of
SPR was established in the 1970s to prevent supply shocks in the wake
of an embargo imposed by several members of the Organization of the
Petroleum Exporting Countries (OPEC).
is not like anything we have ever seen before,” said Bruce
Jefferis, chief executive of Aon Energy, a risk consulting practice.
It is too soon to gauge the full extent of Harvey’s damage to the
region’s energy infrastructure, he said.
than 30 inches (76 cm) fell in the Houston area in 48 hours and a lot
more rain is forecast, according to the National Weather Service.
storm was felt from coastal ports to inland oil and gas wells. Oil
producers in the Eagle Ford shale region of south Texas have halted
least four marine terminals in the Corpus Christi area, an export hub
for energy deliveries to Latin America and Asia, remained closed due
to the storm.
vessel is spotted listing in a channel from a U.S. Coast Guard
helicopter during an overflight after Hurricane Harvey passed the
area from Port Aransas to Port O'Connor, Texas, August 26, 2017. U.S.
Coast Guard/Petty Officer 3rd Class Johanna Strickland ia REUTERS
just simply don’t know yet the damage all this rain will have on
Houston’s energy infrastructure,” said Andrew Lipow, president of
energy consultancy Lipow Oil Associates LLC.
refineries could be offline for up to a month if their storm-drainage
pumps become submerged, he said.
gasoline prices jump as Hurricane Harvey knocks out Texas refineries
the storm churned towards Texas on Friday, U.S. gasoline futures RBc1
rose to their highest level in three years for this time of year.
Those gains came even before several large Houston area refiners,
including Exxon Mobil Corp (XOM.N), halted some operations.
closed the second largest U.S. refinery, its 560,500 barrel-per-day
(bpd) refinery in Baytown, Texas, complex because of flooding. Royal
Dutch Shell Plc (RDSa.L) also halted operations at its 325,700-bpd
Deer Park, Texas, refinery. The refinery may be shut for the week, it
on highways between Houston and Texas City nearer to the coast led
Marathon Petroleum Corp (MPC.N) to cut back gasoline production at
the company’s 459,000-bpd Galveston Bay Refinery in Texas City,
said sources familiar with plant operations.
Petroleum (MPC.N) employees were unable to drive to work and
conditions at the plant forced the company to reduce gasoline output,
said industry sources. Marathon spokesman Jamal Kheiry declined to
discuss plant operations.
every plant in the region was hit. Operations were stable at the
largest U.S. crude refinery, Motiva Enterprises’ [MOTIV.UL]
603,000-bpd Port Arthur plant, the company said.
double-staffed the refinery's crew ahead of the storm, as did Total
SA (TOTF.PA) at the company's 225,500-bpd Port Arthur refinery, said
sources familiar with plant operations.
refineries in Texas account for one-quarter of the U.S. crude oil
refining capacity. All of those refineries have been impacted by
Harvey since Thursday when refineries in Corpus Christi, Texas, shut
in production ahead of the storm's landfall on Friday.
Pipeline, the largest mover of gasoline, diesel and other refined
products in the United States, said its operations had not been
affected by Harvey. Any disruptions to the conduit would send prices
across the U.S. Southeast and Northeast soaring. Traders have been
keeping a close eye on whether there will be an outage at the
Petroleum Corp [PDVSAC.UL] and Flint Hills Resources [FHR.UL], two of
the refiners that closed last week as the storm approached, did not
provide updates about the status of their Corpus Christi refineries