Hurricane Laura idles 13pc of US refining capacity
Refiners have taken about 13pc of US refining capacity off-line as Texas and Louisiana operators accelerate shutdowns ahead of a strengthening Hurricane Laura.
Refiners confirmed idling or reducing throughput rates by another 1.9mn b/d in Texas and Louisiana today as Laura intensified to a hurricane and landfall forecasts drifted closer to refineries near Houston, Texas. About 2.5mn b/d of capacity has confirmed plans to reduce rates or fully idle ahead of an expected landfall tomorrow evening.
Total today confirmed shutting down its 240,000 b/d refinery in Port Arthur, Texas, adding to Motiva's 600,000 b/d refinery there, confirmed yesterday. ExxonMobil is shutting down its 362,000 b/d refinery at Beaumont but continues to operate its 560,500 b/d refinery in Baytown, Texas. Marathon Petroleum declined to comment on a notification that it began shutdown procedures at its 585,000 b/d Galveston Bay refinery in Texas City, Texas. Both Citgo and Phillips 66 are cutting rates at their refineries in Lake Charles, Louisiana.
Laura is gathering strength and is forecast to make landfall somewhere between Houston, Texas, and the Morgan City community west of New Orleans, Louisiana. About 4.5mn b/d of refining capacity sits in that path.
Hurricanes can cut off supply to the eastern US Gulf coast and Atlantic coast markets as power outages, floodwaters or direct wind damage force refineries offline for a week or more, depending on severity. But Laura is churning toward a US refining complex already running at reduced rates to offset demand depressed by efforts to contain the Covid-19 pandemic. Mid-August implied US demand, the most recent figure available, reported gasoline demand 10pc lower than year-ago levels. US Gulf coast refineries were running 17pc lower than year-earlier levels, an environment that had already led some facilities to idle. Gasoline stockpiles in the New York Harbor region are 8.1pc higher than year-ago levels in mid-August, at 33.9mn bl, and lower Atlantic coast gasoline stockpiles are 4.8pc higher than the same period, at 29.3mn bl. A break that disrupted flows on the main fuel pipeline connecting the region to the Atlantic coast earlier this month passed with barely a ripple in product markets. But the outages have still spurred RBOB futures higher this week and inspired higher shipping rates for tankers moving fuel from Europe to the US.
Refineries that have confirmed to reduce rates or idle through the storm imported about 540,000 b/d of crude in September last year, with Saudi medium sour, Canadian heavy and Mexican heavy sour grades accounting for most of the volume. All refineries in the hurricane's projected path imported about 750,000 b/d in September 2019.
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