Refineries potentially face weekslong outages after Hurricane Ida3 min read . Updated: 01 Sep 2021, 06:48 PM IST
- Storm leaves fuel makers in Louisiana struggling to restart after damage to power grid
Refineries that were caught in the path of Hurricane Ida could take weeks to resume operations because of widespread power outages.
Valero Energy Corp., Marathon Petroleum Corp., Royal Dutch Shell PLC and other oil refiners along the banks of the Mississippi River near New Orleans are still assessing damages and trying to figure out when they can come back online.
Restarting those facilities, which account for almost a quarter of the Gulf Coast’s oil refining capacity, will largely depend on a sluggish, weekslong effort to restore the region’s power. The utility Entergy Corp. has warned that it will likely take days to assess widespread damage across 2,000 miles of electric-transmission lines knocked offline by the storm and weeks to fully repair problems.
“Power supplies remain the biggest impediment to restoring operations," said Andy Lipow, president of Lipow Oil Associates LLC in Houston. “The recovery process is going to be slow."
Mr. Lipow said he estimated that it could take two to three weeks for some refineries west of New Orleans to recover as power is restored, while others southeast of the city could take about a month because of a higher potential for flooding.
The impact on oil and fuel markets will likely remain muted, though. Gasoline inventories are ample ahead of Labor Day weekend, the start of a seasonal drop in fuel demand. Many motorists are still working from home because of the pandemic. The East Coast was expected by U.S. traders to draw higher imports from Europe in coming weeks.
Average U.S. gasoline prices edged up less than 1 cent Tuesday to about $3.16 a gallon, while gasoline futures were essentially flat.
Still, prolonged outages could contribute to a shortage of fuel supply in the region. On Tuesday, roughly 35% of gas stations in Baton Rouge, La., and almost 30% of stations in New Orleans had run out of fuel, according to the fuel and price tracker GasBuddy.
All told, nine Louisiana refineries with about 2.3 million barrels a day of refining capacity—13% of the U.S. total—were offline Tuesday, the Energy Department said. Several of those located near New Orleans took the brunt of the heavy wind and rain.
As of Tuesday afternoon, Entergy’s website showed virtually all power lines were still out along areas of the Mississippi River, where several refineries are located, though it didn’t specify which customers lacked power. About one million Louisiana customers lacked power Tuesday, according to poweroutage.us.
In Garyville, La., about 40 miles west of New Orleans, Marathon’s initial assessments at its 565,000 barrel-a-day refinery showed minor damage. An electrical outage there has forced the company to use generators to power parts of its operations to progress with repairs. It is still working on a timeline for restarting the facility, a spokesman said.
Valero, which has refineries in St. Charles Parish, La., to the west of the city, and Meraux, La., to the east, is assessing the condition of refinery equipment and is “working with third-party suppliers and utility providers on restoration of services and infrastructure," company spokeswoman Lillian Riojas said. The two refineries have a combined capacity of 475,000 barrels a day.
Shell said its refinery in Norco, La., which produces 250,000 barrels a day, is still offline because of power outages and expects to have elevated flaring, or burning of excess gas, until power is restored. Spokesman Curtis Smith said the power required to restart the Norco refinery comes from the electrical grid and is supplied by Entergy, though it can also import natural gas.
Post-storm assessments were under way at Phillips 66’s 255,000-barrel-a-day refinery in Belle Chasse, La., which had taken on water during the storm. “Timelines for operational restarts are largely dependent on assessment impacts and access to electricity and other utilities in the region," spokesman Bernardo Fallas said in an email.
In Baton Rouge, Exxon Mobil Corp.’s chemical and refining complex, which can process about 500,000 barrels a day, didn’t take heavy damage from Ida and is making progress on its restart procedures. The company had shut some operations over the weekend.
This story has been published from a wire agency feed without modifications to the text
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