Recovery of LOOP, pipelines vital

Sam Fletcher
Senior Writer

The Louisiana Offshore Oil Port was operating nearly at capacity Sept. 5, awaiting restoration of power to the Clovelly, La., storage facility. LOOP shut down operations Aug. 27 before Hurricane Katrina made landfall at the mouth of the Mississippi River, but it subsequently made deliveries from storage to ExxonMobil Corp.'s Baton Rouge refinery.

"Resumption of LOOP's operations will be critical as many of the refineries [that it serves] will not be able to receive crude supplies by tanker from the Mississippi River until storm related damage can be repaired," said analysts at Purvin & Gertz Inc., Houston, in a Sept. 2 report. Traffic along the Mississippi, including crude shipments to many refineries is expected to remain at a standstill for "many, many days," said the US Coast Guard.

Sources report that a large number of barges broke loose from their moorings and sank in the Mississippi during the hurricane. Moreover, because of physical changes inflicted by flooding and silting along the lower Mississippi, said Purvin & Gertz, "The ship channel is not recognizable in some stretches. The US Army Corps of Engineers must remap the channel before it can open for tanker traffic."

The company noted, "At present the Corps is resource-constrained and preoccupied in trying to address the New Orleans levee breaches that have catastrophically flooded the city. The timing to reopen the river to ship traffic is a major unknown at this time."

A pipeline controlled by LOOP connects with the Capline pipeline system in St. James, La., which carries crude from the Gulf Coast to Midwest refineries. Capline returned to service Sept. 1 at a reduced rate and by Sept. 5 was operated at about 80% of capacity. Plantation Pipe Line Co. and Colonial Pipeline Co. reopened at reduced capacity two major product pipelines from the Gulf Coast to the East Coast and were back to full service by Sept. 3.

The combined capacity of these pipelines is 2.6 million b/d. "The logistics of transporting multiple grades [of product] to marketing outlets is also being simplified by the elimination of some product specifications that are imposed by the US Environmental Protection Agency," the Purvin & Gertz analysts noted.

Refining capacity
Before Katrina struck, the crude refining capacity along that area of the Gulf Coast totaled 2.4 million b/d, primarily in "large, highly complex facilities" capable of upgrading the lowest quality crudes. That capacity typically is filled 64% by imported crude and 36% domestic. Purvin & Gertz estimated the quality mix of that crude at 36% light sweet, 34% light sour, and 30% heavy sour. "The implication is that restoration of domestic light sweet production will be necessary to prevent continued widening of the light-heavy differential," analysts said.

"Current estimates are that 90% of this [refining] capacity has been seriously impacted or shut down by Katrina, with no definite timetable for restart in most cases," Purvin & Gertz reported. "Without this US Gulf Coast production [of refined products], drawdown of existing inventories and increased foreign imports will be required to maintain adequate finished product supply in the US market, at least until production is restored."

As a result, the US government for the first time in at least a decade asked European governments on Sept. 2 to release some of their emergency gasoline reserves. On that same date, IEA and the European Union Commission unanimously approved a measure to release 2 million b/d of oil from strategic storage for 30 days. Member countries would contribute emergency oil stocks to help offset US loss of 1.5 million b/d of oil production and 2 million b/d of refining capacity damaged by Katrina. About half of the released strategic oil would be crude from the US Strategic Petroleum Reserve and much of the rest product from Europe.

That move "will help a number of refiners . . . who face logistical problems in getting crude after the hurricane and who are sufficiently close to links to the facilities to have easy delivery," said analyst Paul Horsnell of Barclay's Capital, London "For all other refiners, getting the crude is not the problem."

He said, "What Katrina has done is to make an already tight gasoline situation far more serious, to potentially take heating oil out of a situation of ample supply at least back towards normality and maybe further, and to exacerbate the growing division between tight products and ample crude."

(Online Sept. 6, 2005; author's e-mail: samf@ogjonline.com)

Related Articles

US reportedly will begin limited crude oil swaps with Mexico

08/14/2015 The Obama administration will begin to allow limited US crude oil swaps with Mexico, multiple news organizations reported. The US Department of Com...

Unipetrol declares force majeure at Czech ethylene plant

08/14/2015 Unipetrol AS has shuttered production at its Chempark Zaluzi petrochemical complex in Litvinov, Czech Republic, following an explosion and ensuing ...

BHI: US oil rig count continues rise, but overall count unchanged

08/14/2015 The overall US drilling rig count sat unchanged during the week ended Aug. 14, remaining at 884 rigs working, according to data from Baker Hughes I...

Pennsylvania’s DEP issues draft final revisions to well site rules

08/13/2015 Pennsylvania’s Department of Environmental Protection (PDEP) released draft final revisions to its oil and gas well protection standards. The state...

Meritage building oil, gas infrastructure in western Canada

08/13/2015 Meritage Midstream Services III LP, the Canadian affiliate of Denver-based Meritage Midstream Services, has agreed with producer Canadian Internati...

India, Nepal eye border products line

08/13/2015 The governments of India and Nepal have signed a memorandum of understanding for construction of a pipeline to carry oil products from an Indian Oi...

MarkWest, EMG to develop 2-bcfd Utica dry gas gathering system

08/13/2015 MarkWest Energy Partners LP and The Energy & Minerals Group (EMG) are developing a new 2-bcfd dry gas gathering system in the Utica Shale. A fe...

Recompletions double Energy XXI field output

08/13/2015

Energy XXI said a recompletion program has more than doubled production of South Pass 78 oil field offshore Louisiana.

Alliance Pipeline restarts mainline system

08/13/2015 Alliance Pipeline LP has restored full service of its 3,848-km (2,391-mile) integrated Canadian and US natural gas transmission mainline system aft...
White Papers

Solutions to Financial Distress Resulting from a Weak Oil and Gas Price Environment

The oil and gas industry is in the midst of a prolonged worldwide downturn in commodity prices. While ...
Sponsored by

2015 Global Engineering Information Management Solutions Competitive Strategy Innovation and Leadership Award

The Frost & Sullivan Best Practices Awards recognise companies in a variety of regional and global...
Sponsored by

Three Tips to Improve Safety in the Oil Field

Working oil fields will always be tough work with inherent risks. There’s no getting around that. Ther...
Sponsored by

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by

Squeezing the Green: How to Cut Petroleum Downstream Costs and Optimize Processing Efficiencies with Enterprise Project Portfolio Management Solutions

As the downstream petroleum industry grapples with change in every sector and at every level, includin...
Sponsored by
Available Webcasts


The Resilient Oilfield in the Internet of Things World

When Tue, Sep 22, 2015

As we hear about the hype surrounding the Internet of Things, the oil and gas industry is questioning what is different than what is already being done. What is new?  Using sensors and connecting devices is nothing new to our mode of business and in many ways the industry exemplifies many principles of an industrial internet of things. How does the Internet of Things impact the oil and gas industry?

Prolific instrumentation and automation digitized the industry and has changed the approach to business models calling for a systems led approach.  Resilient Systems have the ability to adapt to changing circumstances while maintaining their central purpose.  A resilient system, such as Maximo, allows an asset intensive organization to leverage connected devices by merging real-time asset information with other critical asset information and using that information to create a more agile organization.  

Join this webcast, sponsored by IBM, to learn how about Internet of Things capabilities and resilient systems are impacting the landscape of the oil and gas industry.

register:WEBCAST



On Demand

Taking the Headache out of Fuel License and Exemption Certificates: How to Ensure Compliance

Tue, Aug 25, 2015

This webinar, brought to you by Avalara, will detail the challenges of tax document management, as well as recommend solutions for fuel suppliers. You will learn:

-    Why it’s critical to track business partner licenses and exemption documents
-    The four key business challenges of ensuring tax compliance through document management
-    Best practice business processes to minimize exposure to tax errors

register:WEBCAST


Driving Growth and Efficiency with Deep Insights into Operational Data

Wed, Aug 19, 2015

Capitalizing on today’s momentum in Oil & Gas requires operational excellence based on a clear view of what your business data is telling you. Which is why nearly half* of oil and gas companies have deployed SAP HANA or have it on their roadmap.

Join SAP and Red Hat to learn more about using data to drive process improvements and identify new opportunities with the SAP HANA platform running on Red Hat Enterprise Linux. This webinar will also show how your choice of infrastructure impacts the performance of core business applications and your ability to achieve data-driven insights quickly and reliably.

*48% use SAP, http://go.sap.com/solution/industry/oil-gas.html

register:WEBCAST


OGJ's Midyear Forecast 2015

Fri, Jul 10, 2015

This webcast is to be presented by OGJ Editor Bob Tippee and Senior Economic Editor Conglin Xu.  They will summarize the Midyear Forecast projections in key categories, note important changes from January’s forecasts, and examine reasons for the adjustments.

register:WEBCAST


Emerson Micro Motion Videos

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected