Storm recovery begins; limited refinery damage seen

The US oil and gas industry reported early progress as it began to recover from damage caused by Hurricane Ike.

Sep 15th, 2008

Nick Snow
Washington Editor

WASHINGTON, Sept. 15 -- The US oil and gas industry reported early progress as it began to recover from damage caused by Hurricane Ike.

"Clearly, we have experienced damage to a number of our facilities," American Petroleum Institute Pres. Red Cavaney said in an afternoon briefing. "However, it appears to be less than that associated with Hurricanes Katrina and Rita in 2005."

Fourteen refineries in Texas and Louisiana remained shut down in the morning of Sept. 15, the US Department of Energy said. But the installations apparently suffered minimal damage, and companies are preparing to restart operations.

DOE earlier reported 15 refineries as idle but for the most recent report reclassified the 288,000 Flint Hills refinery in Corpus Christi as operating at reduced throughput (OGJ Online, Sept. 14, 2008).

Company reports
Valero Energy Corp. reported no significant damage to its refineries hit by the storm, according to DOE. It said that the independent refiner-marketer's Houston plant has some electricity, but its Texas City and Port Arthur refineries still are without power.

DOE said that Shell Oil Co. is still assessing its refineries at Deer Park, which sustained some damage and is without power, and at Port Arthur. It said that ConocoPhillips Co. has reported that its Sweeny, Tex., refinery has power and its Lake Charles, La., plant is operating at reduced rates.

ExxonMobil Corp. said on Sept. 15 that a preliminary assessment of its Baytown, Tex., complex indicates that damage from the storm was limited. The installation has power and is developing a start-up plan. Assessments are continuing at the Beaumont, Tex., plant, which is without power, it added.

"We continue to move fuel supply from nonimpacted areas to meet any significant shortfall resulting from Hurricane Ike," the company said in a statement posted at its website. "Several of our Houston area products terminals are back in operation and are loading fuel for emergency responders as well as supplying service stations in the impacted areas."

Shell said that as of the evening of Sept. 14, 30-40% of its company-owned retailed outlets in Houston and Beaumont were open and another 20 were expected to reopen by Sept. 15, DOE said. It said that Shell completed a safety review of its Beaumont terminal and resumed operations there the evening of Sept. 14.

Safety emphasized
Cavaney said that refiners will emphasize safety as well as speed in bringing their facilities back into operation. "Typically, a restart can take 3-5 days, depending on the shutdown," he told reporters.

Crude oil and product inventories along the Gulf Coast were below normal before Ike's arrival because the area was recovering from Hurricane Gustav 2 weeks before, Cavaney said. "Already, there are supplies rerouted from other areas that are coming into the region," he said.

He said that API has received preliminary reports of two mobile drilling rigs being set adrift, one jack up missing and presumed sunk, and another jack up which was heavily damaged (OGJ Online, Sept. 14, 2008). "We have seen no evidence of leaks from platforms where the shutoff valves apparently worked, as they did with Katrina and Rita," he said.

Nearly all of the oil production and 93.8% of the gas production in the Gulf of Mexico remains shut in, the US Minerals Management Service said on Sept. 15. It estimated normal production levels at 1.3 million b/d of oil and 7.4 bcfd of gas.

Oil, product pipelines
Crude oil pipelines have not restarted, Cavaney said. "Right now, pipelines are trying to source all available crude and products," he indicated.

The US Pipeline and Hazardous Materials Safety Administration has not received reports of major pipeline problems, a spokeswoman for the US Department of Transportation agency told OGJ on Sept. 15. She said that the emphasis prior to the hurricanes was on working with operators to make sure backup power generation was available.

"For the most part, we've had a lot of encouraging news. The restoration efforts are moving ahead. Some pipelines have already resumed operations at reduced capacity," she said.

DOE reported that as of the evening of Sept. 15 the Colonial Pipeline was maintaining operations at a reduced flow and was ready to receive oil products. It reported earlier that Explorer Pipeline, which moves products north to the Chicago area, had begun to evaluate its operations.

DOE also said that as of early-morning Sept. 15 the Louisiana Offshore Oil Port (LOOP) resumed unloading crude oil from tankers and was making deliveries to customers from its Clovelly storage facility.

Cavaney said that government officials as well as the oil and gas industry apparently applied lessons from Katrina and Rita in responding to Gustav and Ike. "The cooperation from the federal to the local level has been tremendous," he maintained.

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