US refiners ready post-Laura restarts: Update 2

Adds detail throughout.

Refineries began restart work today after Hurricane Laura largely spared the 16pc of US crude processing capacity that cut or idled facilities as the powerful storm approached the Texas-Louisiana border.

Total began restart work today at its 240,000 b/d refinery in Port Arthur, Texas, while ExxonMobil, Motiva and Valero assessed for restart the 1.5mn b/d of capacity they operate nearby. Chevron issued an all-clear at its 100,000 b/d Pasadena, Texas, refinery after the Houston area passed the storm untouched.

Another 5pc of US refining capacity faces slower restart prospects because of severe wind damage to the electrical grid across western Louisiana. Citgo's 425,000 b/d refinery and Phillips 66's 249,000 b/d refinery in harder-hit Lake Charles, Louisiana, did not comment on restart plans. Early assessments suggested power outages would be the primary concern for the Lake Charles refineries.

Hurricane Laura churned ashore with pummeling winds but without the anticipated flood waters that can add weeks to recovery efforts. The storm made landfall at 2am ET after reaching sustained winds of 150mph (241 km/h), which were forecast to drive a fast-moving surge of water as much as 40 miles inland in an area between Beaumont, Texas, and Lake Charles, Louisiana.

Citgo, ExxonMobil, Motiva, Total and Valero all idled capacity in the region as the hurricane approached. The 136,000 b/d Calcasieu Refining refinery in Lake Charles had already idled indefinitely at the beginning of the month. Phillips 66's 289,000 b/d Alliance refinery in Belle Chasse, Louisiana, had reduced rates for maintenance.

More wind, less water Emergency workers reported severe wind damage but less flooding than feared. Extensive power outages darkened Calcasieu Parish, where the Lake Charles refineries are located.

Entergy reported about 2,700 customers without power in East Baton Rouge Parish, where ExxonMobil operates the 502,500 b/d Baton Rouge refinery, and about 1,500 outages in West Baton Rouge Parish, where Placid Refinery operates a 75,000 b/d refinery. Utilities showed no outages in the New Orleans area, where another 1.8mn b/d of refining capacity operates.

Crews were making initial damage assessments this morning and waiting out some flooding and continued gusting winds, the utility said. More than 13,000 power line workers were activated to respond to the storm, with a primary focus on hospitals, emergency services and nursing homes followed by large clusters of customers.

Kinder Morgan's Plantation fuel pipeline, which begins near Baton Rouge and moves fuel into Virginia, continues to operate. Colonial Pipeline said its massive gasoline and diesel trunk lines moving fuel from near Houston through the Atlantic coast and up into the New York Harbor market continues to operate "downstream of the impacted areas" as it assesses the pipeline in the hurricane's path.

A path like Rita's Emergency management officials repeatedly invoked Hurricane Rita's similar path in 2005 as Laura strengthened and approached. That storm required weeks of repair at Valero and Motiva refineries and delivered heavy flooding in the Lake Charles area.

Power outages caused by high winds gusting across more than 100 miles of Texas and Louisiana coast threaten shorter-term interruptions to 5mn b/d of refining capacity across the wider area. Total US refinery crude processing fell by about 24pc in Rita's wake and took about two months to restore to seasonally average levels.

Refiners shut down this year against a backdrop of higher fuel stockpiles and softer demand. Travel and business activity restrictions to slow the spread of the Covid-19 pandemic have kept domestic gasoline demand lower through the summer. Implied national gasoline demand last week was 7.5pc lower than year-ago levels. Atlantic coast gasoline inventories fell by 6.5pc last week to 63.7mn bl, the region's largest draw since after Hurricane Harvey in 2017. Most of that draw was in the southeastern US. Gulf coast fuel stockpiles remained well above normal, at 90mn bl of gasoline and a record 56.1mn bl of ultra-low sulfur diesel (ULSD).

By Elliott Blackburn

Hurricane Laura disrupts US refineries &#39;000 b/d Refiner Capacity Shut in storm path Citgo Lake Charles 425.0 Phillips 66 Lake Charles 249.0 Shut or reduced for non-storm work Calcasieu Refining 136.0 Delek Krotz Springs 80.0 Phillips 66 Alliance 255.0 Shut outside damage zone Motiva Port Arthur 600.0 Total Port Arthur 240.0 Valero Port Arthur 325.0 ExxonMobil Beaumont 362.0 Chevron Pasadena 100.0 Capacity involved Total 2,772.0 Company information

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