Harvey: Offshore, onshore output remains shut; downstream outages grow

Crude oil and natural gas production outages persist in the US Gulf of Mexico as well as onshore Texas as Tropical Storm Harvey moves over East Texas and southwestern Louisiana, another major US downstream region.

Crude oil and natural gas production outages persist in the US Gulf of Mexico as well as onshore Texas as Tropical Storm Harvey moves over East Texas and southwestern Louisiana, another major US downstream region.

The US Bureau of Safety and Environmental Enforcement (BSEE) reports that, as of midday Aug. 30, 18.5% of US gulf oil production, or 323,760 b/d, remains shut, slightly more than the 18.26% reported 24 hr earlier but down from an event peak of around 25%.

BSEE also estimates that 18.98% of US gulf natural gas production, or 611.09 MMcfd, has been halted, slightly down from the 19.1% reported a day prior.

Personnel remain evacuated from 102 production platforms, 13.84% of the 737 manned platforms in the US gulf, virtually unchanged since Aug. 28. Personnel remain evacuated from five nondynamically positioned rigs, or 50% of the rigs of this type previously operating in the gulf.

Anadarko Petroleum Corp. said it has resumed production from its Lucius spar platform as well as from its Constitution, Heidelberg, Holstein, and Marco Polo facilities.

Onshore East Texas, Pantheon Resources PLC suspended all operations ahead of the storm at its conventional projects in Tyler and Polk counties. The London-based producer said it doesn’t expect to be able to assess any possible damage from high water levels to its wellheads or associated facilities until early September.

Operations on its VOBM No. 2H well, where Pantheon has recovered all frac load fluid and is awaiting completion and production equipment, will be delayed. The arrival of a drilling rig for the VOBM No. 4 sidetrack is also expected to be delayed beyond the second week of September given weather conditions and a delay at the rig’s current third-party location.

Denbury Resources Inc., effective Aug. 27, suspended operations and temporarily shut-in all production at its Houston area fields, representing net production of 16,000 boe/d.

The impacted fields include Hastings, Oyster Bayou, Conroe, Thompson, Webster, and Manvel. The Plano, Tex., firm reports “no significant damage outside of localized flooding” at the fields. However, it noted that the full impact may not be determined for several days as the firm’s employees and contractors remain evacuated.

In South Texas, drilling, completion, and production activities are expected to begin slowly ramping up through this week as operators assess damage to their assets and remobilize personnel (OGJ Online, Aug. 29, 2017). ConocoPhillips, EOG Resources Inc., and Baytex Energy Corp. are among firms reported to be resuming activity in the region.

Among the fortunate firms in the region, WildHorse Resource Development Corp. (WRD), Houston, said its Eagle Ford operations and production have been minimally affected by Harvey.

WRD is currently operating all five of its rigs and experienced insignificant drilling down time. Completions were temporarily suspended due to weather conditions but are again operational with two of three crews back online. Full completion operations are expected by the end of Aug. 30.

While the availability of third-party oil-hauling trucks has been limited by the storm, considerable capacity has returned to the region with most capacity expected to return over the next few days, WRD said. The temporary trucking constraints affected WRD's oil sales but not production volumes.

In West Texas, Permian production could be impacted as Magellan Midstream Partners LP’s pipelines connecting the basin with Houston are shut along with the firm's pipeline distribution system within the Houston area.

Downstream outages, restarts

As of 7:00 a.m. CDT on Aug. 30, all six refineries in the Corpus Christi area, seven refineries in the Houston-Galveston area, and two refineries in the Beaumont-Port Arthur area were shut down or in the process of shutting down, according to public reports. These refineries have a combined refining capacity of 3.87 million b/d, equal to 39.9% of total Gulf Coast (PADD 3) refining capacity and 20.9% of total US refining capacity.

Five more refineries in the Gulf Coast region were operating at reduced rates. The refineries operating at reduced rates have a total capacity of 1.51 million b/d, equal to 15.6% of total Gulf Coast (PADD 3) refining capacity and 8.2% of total US refining capacity.

In Houston, which is forecast to receive even more rain over the next several days, Marathon Petroleum Corp. is idling production at its two refineries, according to IHS Markit sources. The reports, however, have not been confirmed by Marathon Petroleum. No Houston refineries have reported significant damage yet, but it’s too early to truly assess the sites given the ongoing floods.

IHS Markit notes that Flint Hills Resources LLC’s 296,470-b/d Corpus Christi refinery, meanwhile, is expected to begin a staged restart process as early as Aug. 30, with the other three plants in the area likely to follow suit later this week.

The Port Arthur-Lake Charles refining hub along the Texas-Louisiana border has already received large amounts of rainfall and is expected to receive another several inches through Sept. 1. It’s home to seven refineries with a collective distillation capacity of 2.3 million b/d, about 12.3% of the national total.

Total distillation capacity confirmed offline remains at 2 million b/d. However, the amount of refining capacity operating at reduced rates has doubled to 2.2 million b/d. Another 1.3 million b/d is under imminent threat to reduce operations. The affected facilities combined represent more than 30% of US refining capacity.

As of Aug. 28, 22 oil tankers carrying 15.3 million bbl of imported crude near Texas ports were unable to offload due to port closures.

All major ports along the Texas Gulf Coast except Brownsville remain closed. The Port of Corpus Christi is assessing damage and expects to return to normal operations by Sept. 4. The Port of Lake Charles in Louisiana also is closed.

Louisiana Offshore Oil Port (LOOP) facilities near Port Fourchon, meanwhile, are currently reporting normal operations. LOOP is executing its inclement weather plan and will update shippers accordingly.

Major chemical outages

IHS Markit reports that, as of late Aug. 29, 41% of total US ethylene production was out as well as 33% of total US ethylene consumption capacity. Texas is home to 70% of total US ethylene production and 65% of total ethylene equivalent consumption capacity.

As for chemical grade propylene (CGP) and polymer grade propylene (PGP), 30% of supply is confirmed offline, with 22% of refinery grade propylene supply confirmed offline.

The affected Texas-Louisiana coastline impacted by the storm is home to 92% of total US CGP and PGP production. Some 88% of total propylene equivalent consumption capacity based on CGP-PGP feed also lies within the potentially affected zone.

The information services firm notes that polyethylene producers Ineos AG, ChevronPhillips Chemical Co. LLC, and LyondellBasell Industries NV are among the companies that have issued force majeure declarations, with even more expected.

Up to 65% of North American polypropylene capacity could be offline, IHS Markit estimates. That includes Ineos and LyondellBasell remaining under force majeure.

Contact Matt Zborowski at matthewz@ogjonline.com.

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