Sunday, August 27, 2017

Exxon Shuts Second Largest Oil Refinery in US Because of Texas Flooding; It Could Get Worse

ExxonMobil Corp said it took the decision to shut the nation’s second-largest refinery on Sunday because of flooding at the Baytown, Texas, petrochemical complex where it is located, BNN reports.

The 560,500 barrel per day (bpd) Baytown refinery reduced production on Saturday and several units were
out of production by early Sunday, said energy industry intelligence service Genscape as Tropical Storm Harvey flooded the Houston area.

Royal Dutch Shell PLC confirmed it stopped making fuel at its 325,000-barrel-a-day plant in Deer Park, Texas, and Brazil’s state-controlled oil company, PetrĂ³leo Brasileiro SA, shut down its Pasadena plant near Houston that can process up to 110,000 barrels of oil a day, reports The Wall Street Journal.

It appears that approximately 12% of US production is down.

Harvey has also shut down several big offshore oil and gas platforms in the Gulf of Mexico, with roughly 22% of offshore oil production now stopped.

It could get worse.

From The Wall Street Journal:
The worst impact on the U.S. supply of gasoline and other fuels may yet be to come. The Port Arthur region east of Houston is home to four more big fuel-making plants that could go down. Harvey is expected to linger over Texas until Tuesday, dropping another 15 to 30 inches of rain.

Markets were closed Sunday, but volatile trade is expected Monday when they open. The U.S. has significant stockpiles of gasoline and diesel in storage tanks around the country, which should help blunt some of the supply impact.

Long-term refinery outages could cause fuel shortages and drive up the price of gasoline significantly around the U.S.
WSJ on what past storms have done to gasoline prices:
Past storms to hit the Gulf Coast, including hurricanes Rita and Katrina in 2005, caused crude prices to rise between 4% and 6%. During Katrina, gasoline prices soared by as much as 70 cents a gallon in some parts of the country immediately after the storm, while shortages lingered for days.

The last hurricane to hit Texas was Ike in 2008, when oil prices were falling amid the financial crisis. Ike forced more than a dozen refineries to close, largely due to flooding. Exxon Mobil’s Baytown refinery took more than a month to start up again. Ike did less damage to refineries than Katrina but still caused prices to spike by 30 cents a gallon in the Southeast.

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