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US Gulf coast refineries start slow recovery: Update

05 Sep 2017 21:54 (+01:00 GMT)
US Gulf coast refineries start slow recovery: Update

Updates throughout with refining, pipeline restarts.

Houston, 5 September (Argus) — US Gulf coast refining rates rose today as more facilities began restarting equipment shut or swamped by Hurricane Harvey.

Roughly 3.3mn b/d of Texas refining capacity remained at reduced rates or shut today as companies hunted flooded sites for storm damage and waited for ports and pipelines to restore full service. Harvey at its peak disrupted roughly 5mn b/d of US refining capacity in Texas and Louisiana, with lashing winds and record rainfall over a period of five days disrupting about 27.5pc of US refining capacity.

About 1.5mn b/d of refining capacity in the Beaumont and Port Arthur areas of east Texas remained the hardest hit. All three Port Arthur refineries — Total's 240,000 b/d, Valero's 325,000 b/d and Motiva's 600,000 b/d facility, the nation's largest — remained shut for flooding and repair. Motiva, the US refining subsidiary of Saudi Aramco, said today it would reach 40pc of its production capacity by 10 September if equipment proved suitable. ExxonMobil's 348,000 b/d refinery in Beaumont was also shut as of 3 September. The chemical plant at that complex had partially restarted. Phillips 66's 247,000 b/d Sweeny refinery, south of Houston, also remained down and under evaluation by workers today, the company said.

The shut and reduced refiners all operated significant coking and distillate-producing units, Marathon Petroleum chief executive Gary Heminger noted today in a conference call with analysts. All 1.1mn b/d of the Marathon Petroleum's Texas and Louisiana capacity was operating today.

"Those refineries that are down, they are the big diesel engines," Heminger said on a conference call with analysts. "I think it is still going to be a good while before everything gets back to normal."

US Gulf coast distillates inventories were 7.7pc higher than the ten-year average and 9.9pc higher than the same week last year for the week ended 25 August.

Marathon Petroleum's 585,000 b/d Galveston Bay complex in Texas City, Texas, was operating at full rates after idling a crude unit and reducing throughputs as the 25 August storm caused logistical constraints throughout the region, Heminger said. With ports and pipelines shut, the complex ran out of places to store fuel.

Colonial Pipeline today restored service at Houston and Pasadena on its 1.4mn b/d gasoline-bearing Line one from the area to Greensboro, North Carolina. The pipeline operator yesterday resumed similar service on its distillates-bearing 1.1mn b/d Line 2 pipeline. The Texas segments of the 5,500-mile (8,851km) refined products system connecting the region to the New York Harbor market shut last week because of flooding at sites and a lack of supply.

Explorer Pipeline today finished resuming service on its 660,000 b/d products system from the Port Arthur area to Tulsa, Oklahoma, and Hammond, Indiana, fully restarted by today. A company representative could not be immediately reached for comment.

Magellan Midstream Partners continued to restore incoming connections from products pipelines and truck racks at its East Houston products terminal, the company said in a notice to customers.

Valero's 275,000 b/d Corpus Christi and 220,000 b/d Texas City refineries had returned to pre-hurricane rates, but the US independent refiner's 95,000 b/d Three Rivers refinery, one of the first to report restart work, continued to work toward normal operations. Citgo's 165,000 b/d Corpus Christi refinery restarted yesterday, the company said.

ExxonMobil's 557,000 b/d Baytown refinery "was spared significant damage from Harvey" and would reach normal operations as Port of Houston and other logistics infrastructure recovered, the company said. Pasadena Refining's 100,000 b/d refinery in Pasadena, Texas, also began restart today.

Refinery restarts can pose some of the greatest risks to workers and equipment. Citgo notified a community alert system of emergency workers responding to the east plant of its 165,000 b/d Corpus Christi refinery for an unidentified operational issue. An all-clear was given less than 30 minutes later.