Factbox: US Gulf Coast oil production, refining operations curtailed following Ida

Roughly 75% of Louisiana refining capacity and 94% of offshore US Gulf of Mexico oil production remained offline Aug. 31 as a result of Hurricane Ida. Now a tropical depression, Ida caused widespread power outages after making landfall Aug. 29 as a Category 4 storm.

According to estimates from S&P Global Platts Analytics, about 2.2 million b/d of Louisiana refining capacity remained offline, with the majority of plants without power from outside supplier Entergy.

The bulk of US Gulf of Mexico oil and gas output also remained down Aug. 31 as E&P operators were still in the beginning stages of inspecting platforms.

Factbox: Louisiana petrochemical restarts beginning post-Ida

According to the US Bureau of Safety and Environmental Enforcement, 1.70 million b/d of crude output and 2.107 Bcf/d of natural gas output was down, 94% and 95% of total US GOM production, respectively.

The oil production outages have had little impact on NYMEX oil futures, but have given spot Mars crude prices a lift. October Mars was heard at an 85 cents/b discount to NYMEX WTI late Aug. 31, up from a $1.25/b discount Aug. 31, S&P Global Platts data showed.

"Given that offshore operators have already managed to kick off damage assessments, US Gulf output recovery could begin within a few days and return to more normal levels by the weekend or early next week," Platts Analytics said.

But the return of offshore production could face delays as Port Fourchon, Louisiana, took a near-direct hit from Ida. The port is a key hub of supplies and equipment, and a transportation point of entry and exit to and from the Gulf.

The Greater Lafourche Port Commission said Aug. 31 it has started its recovery phase, which involves clearing debris.

"Giving a timeframe on power restoration and a timeframe on how long certain tenants and users will need to repair facilities is challenging," spokesperson Thad Angelloz said. "Right now the main thing is clearing the roadways to provide for safe travel down to the port. While damaged, we are hopeful in the fact that a lot of key infrastructure remains and looks to have stood up well to the onslaught of this historic hurricane."

Colonial Pipeline -- the primary fuel artery from Houston to the South and East Coast - which was closed ahead of Ida, restarted late Aug. 30 following a damage assessment.

The return of Colonial supply helped push the New York-delivered NYMEX RBOB gasoline futures contract lower Aug. 31.

But supply concerns boosted spot USGC gasoline prices, and Europe-US clean tanker rates on a flurry of fixture activity.

In order to address fuel shortages in Louisiana and Mississippi, the US Environmental Protection Agency issued a temporary waiver to federal RVP requirements for gasoline in both states.

PRICES

Oil

**New York-delivered NYMEX RBOB futures led the futures complex lower, reversing the Aug. 30 rally as Colonial Pipeline confirmed it had restarted operations, restoring the primary fuel artery for much of the US Southeast and the East Coast.

**September RBOB settled 3.01 cents lower at $2.2826/gal.

**NYMEX September ULSD settled 93 points lower at $2.131/gal.

**NYMEX October crude settled 71 cents lower at $68.50/b, while ICE October Brent settled 42 cents lower at $72.99/b.

**October Mars was heard at an 85 cents/b discount to NYMEX WTI late Aug. 31, up from a $1.25/b discount Aug. 31, S&P Global Platts data showed.

**Platts assessed ULSD on the Gulf Coast at the NYMEX October ULSD futures contract minus 3.80 cents/gal, up 37 points/gal from Aug. 30, and the highest Gulf Coast diesel has been since March 24.

**US Gulf Coast CBOB was assessed by S&P Global Platts at NYMEX RBOB plus 21 cents/gal, up 6.1 cents on the day.

Shipping

**The UKC-to-USAC, 37,000 mt clean tanker route was assessed by Platts up 20 points at Worldscale 135 Aug. 31 as several fixtures were reported because of continued fuel supply concerns in the US.

**USGC-loading Medium Range clean tanker freight rates weakened 6% to Worldscale 70 on the US Gulf Coast-Transatlantic route Aug. 31 as charterers held back fresh cargoes in September laycans or waited for the diesel arbitrage to open, while spot tanker supply grew due to storm-related delays.

Natural gas

**Cash Henry Hub gained 4.50 cents on Aug. 31 to reach $4.25/MMBtu, preliminary settlement data from Platts showed.

**Henry Hub prompt-month futures rose around 7 cents to settle at $4.38/MMBtu; the winter contracts saw similar gains with the December, January and February calendar months ending the session around $4.52, $4.56 and $4.46/MMBtu, respectively, data from CME Group showed.

Power

**At the Louisiana Hub, real-time locational marginal prices averaged $40.81/MWh as of about 2 pm CT, compared with an average of $43.42/MWh for the previous four Tuesdays in August.

TRADE FLOWS

Oil

**Around 200,000 mt of US Gulf Coast ULSD has already set sail and is due to arrive in Europe in September, according to data from Platts trade-flow software cFlow, but the widespread refinery and pipeline shutdowns following Hurricane Ida could tighten the US market and disrupt arbitrage flows for the rest of the month.

**Small flows of jet fuel continue to make their way from Europe to the US Atlantic Coast, with several cargoes of ULSD expected to make the voyage in coming days.

**At least eight LR2s have been recently contracted to load jet fuel on the North Asia-Europe routes in the first half of September, with some of them having options for delivery in Singapore and the US Atlantic Coast as well.

**Market participants point out that though not all of these shipments will end up in the US, but any delay in resumption of normal refinery operations in the US Gulf Coast will translate to a higher trans-Pacific and Atlantic shipping demand.

**The ports of New Orleans and Houma, Louisiana, and Pascagoula, Mississippi, remained closed to inbound and outbound traffic as of Aug. 31.

Natural gas

**Louisiana's total demand sample, still subject to revision, sat at 590 MMcf/d Aug. 31, up from a low of around 295 MMcf Aug. 29, amid power outages and disruptions to industrial demand at Gulf Coast refineries, petrochemical and other facilities.

Power

**Power demand in the Midcontinent Independent System Operator, which covers most of the hardest-hit areas, has begun to recover, hitting a peak of 92.8 GW as of 2 pm CT Aug. 31, compared with a forecast peak of 92.5 GW.

**Still, those numbers are well below the average of the previous four Tuesdays in August of 110.8 GW.

INFRASTRUCTURE

Oil

**Colonial Pipeline -- the primary fuel artery from Houston to the South and East Coast - restarted late Aug. 30.

**Colonial had temporarily shut lines 1 and 2 from Houston to Greensboro, North Carolina, ahead of Ida's landfall. Colonial's lines 3 and 4 from North Carolina to New Jersey never ceased operations.

**The Greater Lafourche Port Commission said Aug. 31 it has started its recovery phase at Port Fourchon, which involves clearing debris.

**The port is a key hub of supplies and equipment, and a transportation point of entry and exit to and from the Gulf.

**Port Fourchon is also home of the Louisiana Offshore Oil Port's onshore facilities, which includes a booster station and Clovelly Dome Storage Terminal.

**LOOP, the only deepwater port in the US capable of loading VLCCs with crude, had suspended deliveries ahead of Ida, and said it was assessing the area for damage.

**LOOP could not be reached for comment Aug. 31.

**The Dome Terminal has a capacity of 40 million barrels of crude, according to LOOP.

**ExxonMobil's Baton Rouge Fuels Terminal resumed operations Aug. 30.

**Chevron's Fourchon terminal and Empire terminal and related pipeline systems remain shut-in Aug. 30.

**As of Aug. 31, 1.70 million b/d of the Gulf's crude oil production, or just under 94% of the region's roughly 1.8 million b/d, remained shut-in, compared with 94.6% Aug. 30, the US Bureau of Safety and Environmental Enforcement said.

**2.1 Bcf/d of natural gas output, or about 94.5% was shut-in Aug. 31, a bit more than the 93.6% the previous day. The Gulf's pre-storm gas output was about 2.2 Bcf/d.

**In all, 278 platforms remained evacuated in the US Gulf Aug. 31, or just under 50% of the region's total, BSEE said, compared with 288 platforms the day before.

Refining

**According to estimates from S&P Global Platts Analytics, about 2.2 million b/d of refining capacity remained offline as of Aug. 30, reflecting roughly 75% of the state's capacity.

**Shell reported some damage from the storm at its 230,611 b/d Norco, Louisiana, refinery.

**Phillips 66 also reported some water had breached its 255,600 b/d Alliance refinery located outside New Orleans.

**Refiners to the west of New Orleans were also impacted by power problems.

**"We're still assessing a timeline for safely resuming operations," said Jamal Kheiry, spokesperson for Marathon Petroleum, which operates the state's largest refinery - the 578,000 b/d Garyville plant.

Natural gas

**Total offshore Gulf of Mexico gas production was estimated at 317 MMcf/d Aug. 31, up slightly from the prior two days, Platts Analytics data showed.

**Louisiana and Mississippi offshore gas production remained largely offline, with Mississippi production at zero and Louisiana at just 10 MMcf/d Aug. 31, down from around 2.2 Bcf Aug. 25, Platts Analytics data shows.

**Louisiana's onshore gas production has also been affected by the storm, sitting at 213 MMcf/d Aug. 31, down from around 420 MMcf/d prior to Ida.

Power

**As of about 2 pm CT Aug. 31, about 1.1 million electricity customers, mostly in Louisiana, were without power.

**Entergy was the hardest hit utility, at 808,171 customers offline in Louisiana and Mississippi, followed by Cleco at 95,077 in Louisiana, Dixie Electric Membership Corporation at 84,707 in Louisiana and Washington St. Tammany Electric Cooperative in Louisiana.

**Damage to eight high-voltage lines took out power for New Orleans, Jefferson, Plaquemines and St. Bernard parishes, plus parts of St. Charles and Terrebonne parishes.

**Entergy's need to minimize risk from the resurging coronavirus pandemic may slow the recovery.

**Entergy said Aug. 31 that it has deployed more than 15,000 people of an anticipated storm team of more than 20,000 to assess the damage across New Orleans, Southeast Louisiana and Mississippi.