Harvey: Several refiners, upstream operators ramping up activity as recovery commences

Sept. 1, 2017
With the remnants of Hurricane Harvey finally clear of the region, many US Gulf Coast refiners and upstream operators are gradually increasing output in areas not overly beset by flooding or logistical constraints.

With the remnants of Hurricane Harvey finally clear of the region, many US Gulf Coast refiners and upstream operators are gradually increasing output in areas not overly beset by flooding or logistical constraints.

As of 6:30 a.m. CDT on Sept. 1, six refineries in the Gulf Coast region had begun the process of restarting, which may take several days or weeks to start producing product depending whether they have been damaged, the US Department of Energy reported.

Those refineries have a combined capacity of 1.27 b/d million, or 13.1% of total Gulf Coast (PADD 3) refining capacity and 4.2% of total US refining capacity.

Sources told Reuters on Sept. 1 that Marathon Petroleum Corp.’s 459,000-b/d Galveston Bay refinery in Texas City was running at 45% capacity, and Citgo Petroleum Corp. was moving to restart its 157,500-b/d refinery in Corpus Christi, Tex.

Four refineries were operating at reduced rates. The refineries have a combined capacity of 1.1 million b/d, or 11.4% of total Gulf Coast (PADD 3) refining capacity and 6% of total US refining capacity.

As of 7 a.m. CDT on Sept. 1, 10 refineries in the Gulf Coast region remained shut down, according to public reports. The refineries have a combined refining capacity of 3.1 million b/d, or 31.7% of total Gulf Coast (PADD 3) refining capacity and 16.6% of total US refining capacity.

DOE is releasing 500,000 bbl of crude from the Strategic Petroleum Reserve’s West Hackberry site in Louisiana to Phillips 66’s 249,000-b/d Lake Charles refinery, which is partially supplied by pipelines that deliver light crude oil from Texas (OGJ Online, Aug. 31, 2017).

IHS Markit said the Bayou Bridge and Zydeco pipelines, which connect Texas crude with Louisiana refineries, are reportedly down.

Ports, pipelines begin recovery

A week after Hurricane Harvey made landfall in southeast Texas, the Port of Corpus Christi is reopening on a limited basis. Vessels with as much as a 43-ft draft are allowed to transit during daytime hours only, and larger vessels are allowed one-way transits during daylight hours.

Corpus Christi has accounted for 250,000 b/d of crude exports year-to-date, IHS Markit notes.

The Port of Houston remains open with restrictions as heavy currents threaten incoming vessels. The upper Houston Ship Channel from Morgan’s Point inbound to the Turning Basin remains closed for vessel traffic until weather conditions improve.

Operations at Enterprise Product Partners LP’s 200,000-b/d Morgan’s Point ethane terminal at the Houston Ship Channel has been out of service, IHS Markit said. Targa Resources’ Galena Park Marine Terminal also is out of service due to constraints at the Houston Ship Channel.

The ports of Freeport, Galveston, and Texas City in Texas remain open with restrictions. The ports of Beaumont and Port Arthur in Texas, and Lake Charles, La., remain closed, though the US Coast Guard is allowing vessel transit on protected inland waterways.

Colonial Pipeline’s gasoline Line 1 and distillate Line 2 continue to operate intermittently from Lake Charles east to Greensboro, NC, and remain dependent on terminal and refinery supply. The lines remain down from Houston to the Hebert injection station near the Texas-Louisiana border due to impacts from Harvey.

Aerial overflights were conducted Aug. 31 from Hebert to Houston, and no indications of integrity issues were reported. Colonial Pipeline Co. employees are attempting to map out accessible routes in impacted areas to reach additional facilities.

The pipeline operator said it will be able to return to service from Houston on Sept. 3, following an evaluation of its infrastructure and successful execution of its startup plan.

Chemical logistical, feedstock issues

More than 50% of US ethylene production capacity remained offline as of the evening of Aug. 31, S&P Global Platts reported.

“Producers with full or partial operations were focused on how they would get feedstock and whether stalled logistics or spotty access to power might squeeze their ability to move output to markets,” the commodity and energy information services firm said.

A BASF SE spokesman said its Total SA joint-venture complex in Port Arthur, which includes a 1 million-tonne/year steam cracker, “is still operating at reduced capacities but in position to shut down if raw material supplies and access to utilities become more constrained.”

Dow Chemical Co. reiterated to S&P Global Platts that it could cut rates at its Texas and Louisiana complexes because of infrastructure and logistics limits. The company has restarted its 1 million-tpy cracker in Freeport that was shut after a lightning strike interrupted steam supply, a spokesman said.

Huntsman Corp.’s complex in Port Neches, Tex., remained shut, a company spokeswoman told S&P Global Platts. Operations there include a steam cracker with an ethylene production capacity estimated at just under 200,000 tpy as well as MTBE production capacity of 766,000 tpy.

ExxonMobil Corp. shut its chemical complex and refinery in Baytown, Tex., as Harvey approached Houston, but its olefins plant was partially operating. The company also shut its 1 million-tpy polyethylene plant in Mont Belvieu, Tex., and was working to assess damage there.

Based on company reports, IHS Markit estimates about 45% of the total NGL fractionation capacity was potentially impacted by the storm.

Offshore, onshore output recovery

US Gulf of Mexico upstream operations continue to ramp back up. IHS Markit noted that operators have not reported damage to platforms and shut-ins appear to be mostly related to takeaway constraints given the large volume of refining capacity that remains offline.

As of 11:30 a.m. CDT on Sept. 1, just 8.74% of US gulf oil production, or 152,989 b/d, was shut, down from an event peak of around 25% the US Bureau of Safety and Environmental Enforcement reported. BSEE also estimates that 12.61% of US gulf natural gas production, or 405.99 MMcfd, remained shut, also down from a high of 25% late last week.

Personnel were still evacuated from 75 production platforms, or 10.18% of the 737 manned platforms prior to the storm in the US gulf, and personnel have returned to all five of the previously evacuated nondynamically positioned rigs.

Australia’s BHP Billiton Ltd., which operates fields in the US gulf, reported that it’s restarting operations at its Hawkville asset in the Eagle Ford. Its Blackhawk operations, however, remain suspended.

EP Energy Corp., Houston, reported that its Eagle Ford assets were not damaged by weather relating to Hurricane Harvey. The local area only experienced a few inches of rain, which did not impair drilling or production operations, the company said.

“Production volume impacts were minimal during the storm,” said Brent Smolik, EP Energy chairman, president, and chief executive officer. “Looking ahead, we will continue to monitor the recovery of the Gulf Coast downstream infrastructure for potential impacts on market demand.”

Sanchez Energy Corp., Houston, confirmed earlier this week that its western Eagle Ford operations and production were largely unaffected by Harvey. “Our drilling operations are ongoing and were only temporarily impacted by the storm,” said Tony Sanchez, III, chief executive officer of the company.

Other major Eagle Ford operators, including EOG Resources Inc. and ConocoPhillips, also have been restoring production this week.

The Texas Railroad Commission reported earlier in the week that, at peak, up to 500,000 b/d of Eagle Ford production was halted in response to the storm. Resumption of operations at the Port of Corpus Christi should aid production ramp up in the region by relieving supply bottlenecks, IHS Markit said.

Contact Matt Zborowski at [email protected].