Saudi Aramco subsidiary Motiva was shutting the largest US refinery complex today as a pair of tropical storms approached the Texas and Louisiana coasts.
Motiva was shutting down its 600,000 b/d refinery in Port Arthur, Texas, ahead of tropical storm Laura, the company said in a filing to state environmental regulators. The company did not respond to multiple inquiries.
Tropical storms Marco and Laura swirled toward the western US Gulf coast, with Marco expected to make landfall tonight and Laura forecast to stengthen into a hurricane and hit on late 26 August or early 27 August. Phillips 66, Valero, ExxonMobil, Total and Citgo, operating roughly 3.3mn b/d of capacity in the likely path of the storms, said they continued to monitor conditions but declined to comment on specific plans. About 4.6mn b/d of refining capacity sits in the storm path.
Nearly half of US refining capacity sits on the Texas and Louisiana coasts, where floodwaters or power outages left by the powerful storms can shut refineries for weeks. Hurricane Harvey sank total US Gulf coast crude processing by nearly 40pc in 2017 beneath record floodwaters that took weeks to clear.
Hurricanes typically disrupt the last weeks of summer holiday travel and menace supplies to the Atlantic coast. Nymex September RBOB prices settled higher by 6.5pc at their highest level since the beginning of March as refiners weighed operations.
But the rare twin storms in the US Gulf this year are merely piling on to nationwide disruptions of supply and demand wrought by the Covid-19 pandemic. US Gulf coast refineries were already processing 17pc less crude ahead of the storms to balance lower demand and swollen stockpiles of diesel and jet fuel. Implied US gasoline demand was 10pc lower than year-ago levels in mid-August, and diesel demand lower by 13pc, according to the latest federal data. Atlantic coast gasoline stockpiles were 8.5pc higher than 2019 levels, at 68mn bl, and ultra-low sulphur diesel inventories almost 50pc higher than the five-year average storage volume for mid-August.
"With (US Gulf coast) utilization at only 82pc and product demand still muted, there is a lot more slack in the system to handle unplanned refinery outages," Tudor, Pickering Holt head of chemicals and refining research Matthew Blair said.
