Louisiana refiners face lengthy recovery from Ida

The stage is set for many slow, grinding weeks of refinery repairs and restarts in Louisiana following Hurricane Ida's stampede across the Gulf coast this week.

At least three refineries have confirmed damage from the storm so far, which knocked off line 2.3mn b/d of refinery capacity — approximately 13pc of total US capacity (see table). With major power transmission lines throughout Louisiana downed and many roads in the low-lying region flooded, assessing damage to key infrastructure may take days more, and repairs many weeks.

Shell's 250,000 b/d Norco refinery and Phillips 66's 250,000 b/d Alliance refinery both flooded and suffered other damage when the Category 4 storm brought driving rain, 150mph (241kph) winds and storm surge over the banks of the Mississippi River.

Marathon Petroleum's 565,000 b/d Garyville site, Louisiana's largest refinery by nameplate capacity, also sustained damage and was reduced to running off backup power.

Even with full power restored, refinery restarts are typically lengthy and dangerous processes that can take several weeks to complete. Getting the workers, equipment and other supporting material to the sites will remain challenging given road and power conditions.

Local utility Entergy said eight major power transmission lines serving much of the refinery-heavy New Orleans area were knocked out over the weekend, as well as some generating plants serving greater New Orleans. Power was restored to about 10pc of affected customers in the state by this afternoon, but larger assets figure to take longer to bring back online.

With nearly 800,000 homes and businesses in Louisiana still without power this evening, images circulated on social media of the Shell Norco refinery, located 28 miles upstream from New Orleans on the Mississippi, burning four of its gas flares as parking lots and storage tanks stood in a few feet of water.

With Louisiana's refinery complex crippled, refineries in Texas are likely to pick up the slack, but Marathon, ExxonMobil, Valero and PBF Energy declined comment on operating plans for their refineries in Texas at this time.

Fuel from Texas refineries should be able to continue to move to eastern US markets with the restoration of service last night to Colonial pipeline system, which carries gasoline and distillates from the Houston area to the Northeast and Southeastern US.

Kinder Morgan said a section of its 700,000 b/d Products (SE) Pipe Line, carrying refined products between Collins, Mississippi, and Greensboro, North Carolina, was shut while crews worked to restore power at a Baton Rouge terminal. Kinder Morgan expected service along the segment of resume tomorrow.

In anticipation of possible US Gulf coast fuel shortages, the US Environmental Protection Agency cleared fuel distributors in Louisiana and Mississippi to begin selling gasoline blends typically restricted for winter season sales. The move appears to have had little impact so far, however, as little fuel or blending components are able to move in or out of the states at the moment.

The refinery outages and offshore oil production shut-ins are not anticipated to cause any serious supply issues, according to the US Department of Energy. Gulf coast gasoline stocks were recorded at 3pc above the seasonal five-year average for the week ending 20 August.

By Dylan Chase