New York — Texas refiners and pipelines Wednesday were still in the process of returning operations from the impact of Hurricane Harvey and the US oil industry further east was preparing for Hurricane Irma.
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Most of the Texas refineries brought down ahead of Harvey were on their way back Wednesday, with Phillips 66 the latest to announce it had begun a restart Tuesday of its 247,000 b/d Sweeny plant.
Roughly 977,800 b/d of refining capacity remains down, while another 2.75 million b/d of capacity is in the process of returning. Assuming the returning refineries are operating at 50% of capacity, the total downed capacity comes to roughly 2.35 million b/d, or 12.7% of US capacity.
The market is now watching Irma, which is moving across the Caribbean and heading to Florida by the weekend.
Fuel retailers across Florida reported sporadic shortages Wednesday but expect more outages as residents from across the state, especially those in the southern parts, evacuate ahead of the Category 5 hurricane.
The state depends on barge shipments rather than pipelines for 97% of its refined products. Refined products are shipped regularly into Port Everglades, on the southeast coast. Petroleum throughput at Port Everglades was 121.07 million barrels in 2016, according to the port's website. South Florida ports were open Wednesday.
At least one offshore oil producer, BP, is already evacuating nonessential personnel in the US Gulf of Mexico ahead of Irma.
* Roughly 977,800 b/d of Texas refinery capacity remained down. Assuming the plants that are returning are at 50% of capacity, that would put the figure closer to 2.35 million b/d, or 12.7% of US capacity.
Full shutdown: (Company: Location -- Capacity (b/d))
Total capacity closed: 977,800
Share of US capacity: 5%
(Company: Location -- Capacity (b/d); 50% of Capacity (b/d))
- ExxonMobil***: Baytown, TX -- 560,500; 280,250
- Magellan***: Corpus Christi, TX -- 50,000; 25,000
- Flint Hills***: Corpus Christi, TX-West -- 230,000; 115,000
- Flint Hills***: Corpus Christi, TX-East -- 70,000; 35,000
- Motiva***: Port Arthur, TX -- 603,000; 301,500
- Valero***: Three Rivers, TX -- 89,000; 44,500
- Lyondell***: Houston, TX -- 263,776; 131,888
- Marathon***: Galveston Bay, TX -- 459,000; 229,500
- Marathon***: Texas City, TX -- 86,000; 43,000
- Valero***: Houston, TX -- 191,000; 95,500
- Valero***: Port Arthur, TX -- 335,000; 167,500
- Petrobras***: Pasadena, TX -- 112,229; 56,115
- Phillips 66***: Sweeny, TX -- 247,000; 123,500
Total capacity reduced: 1,375,753
Closed + reduced capacity: 2,353,553
Share of US capacity: 12.7%
* The Galveston Bay Entrance Channel, Outer Bar Channel, Inner Bar Channel and Bolivar Roads Channel are open, as are the ports of Galveston and Texas City. Freeport is open, albeit with a maximum draft restriction of 38 feet. As draft restrictions remain in place, there has been significant lightering activity. Texas waterborne imports of crude remain sluggish nearly two weeks after Hurricane Harvey made landfall, according to Platts Analytics Bentek Energy and US Customs data. The state's ports imported just 3 million barrels of crude in the past 10 days, roughly one-fifth their typical intake, as port authorities along the coast work to resume normal traffic flows.
Instead, it appears the majority of crude tankers are being diverted east to Louisiana. Louisiana imported 10.6 million barrels of crude over the same period of time, while Mississippi and Alabama collectively imported 2.4 million barrels. Compare those figures with the 10 days prior to Harvey's landfall, when Texas imported 16.7 million barrels of crude by water, Louisiana 5.1 million barrels and Mississippi-Alabama 4 million barrels.
* The Port Everglades website lists 12 companies operating facilities at the port, including Buckeye, Chevron, Citgo and ExxonMobil. Tankers "deliver about 12.5 million gallons of petroleum products to Port Everglades" every day, according to the port website, more than 50% of which is gasoline. Offshore Florida's east coast, Buckeye operates its Freeport, Bahamas crude and refined products terminal, which has a capacity of roughly 26.2 million barrels. The terminal is currently in Irma's potential path.
PIPELINES AND RAIL
* TransCanada has started up the southern leg of its 600,000 b/d Keystone crude oil pipeline system. The pipeline that ships crude from Cushing, Oklahoma, to refineries in the Gulf Coast, is part of the overall 487-mile southern leg of Keystone, also called the Gulf Coast pipeline. Marketlink delivers crude to points along Texas in the USGC and include Sour Lake, Houston and Port Arthur. Western Canadian Select ex-Hardisty values rebounded Wednesday as a result of the news. The benchmark heavy sour grade was heard to have traded for October at an $11.25/b discount to the underlying West Texas Intermediate calendar-month average, up 65 cents/b from late Tuesday.
OFFSHORE AND ONSHORE OIL PRODUCTION
* As Hurricane Irma approaches the coast of Florida and the US Gulf of Mexico, BP is evacuating nonessential personnel from its Thunder Horse platform and West Vela drilling rig. There has been no impact on production, however. The Thunder Horse platform, located 150 miles south of New Orleans, can process up to 250,000 b/d of oil. Operator BP has a 75% stake, with ExxonMobil having a 25% interest in the platform.
* Big Eagle Ford Shale producers Chesapeake Energy and ConocoPhillips each say they still have a fifth of their Eagle Ford Shale production in South Texas offline in the wake of Hurricane Harvey. Chesapeake, which produced about 100,000 b/d of oil equivalent in the play during the second quarter, 88% of it oil, has been affected by Harvey "to a pretty significant extent," Doug Lawler said in webcast remarks at the Barclays annual CEO Energy-Power Conference in New York late Tuesday. ConocoPhillips said its Eagle Ford production was running at close to 80% of its pre-storm production rate of 130,000 boe/d. "We expect to return to pre-storm levels in the next week or two, subject to third-party offtake access," the company said in a website storm update. "We continue to bring Eagle Ford wells into production."
* Harvey's operational impacts to EOG Resources in the Eagle Ford Shale are "significant," mostly from logistical issues and the company's ability to get supplies for drilling and completing wells, EOG said Wednesday. While the company had no significant damage to its installations, the main problem for EOG appeared to be what CEO Bill Thomas called "road issues." Not only was diesel in "very short supply," and remains so to a lesser extent, but getting sand to well sites for hydraulic fracturing operations through rail and trucking was problematic, Thomas said. "It's slowed down the whole process of drilling and completing the wells," he said. "We're getting that back going again."
* The US Federal Energy Regulatory Commission has approved Colonial Pipeline's request to accept gasoline with higher volatility than shippers had nominated because of supply disruptions. The US Environmental Protection Agency last week waived summer-grade gasoline requirements in 38 states and the District of Columbia two weeks early. Yet Colonial told Valero Energy that it could not accept its higher RVP gasoline without permission from FERC, as that would deviate from September shipper nominations made before the storm. FERC agreed that granting a temporary waiver to the tariff provisions "should help avoid any disruption to the supply of gasoline in the wake of the widespread damage inflicted by Hurricane Harvey." Valero, the largest independent US refiner, told FERC in an emergency petition over the weekend that the ramp-up of its Houston-area refineries after Harvey would be stalled if Colonial could not accept its winter-grade gasoline shipments. Colonial filed its own emergency request to FERC asking for the same action.
--Staff reports, firstname.lastname@example.org
--Edited by Richard Rubin, email@example.com