Matt Zborowski
Assistant Editor
As OGJ went to press last week, US Gulf Coast refiners and shippers were continuing to restore operations amid possible damages and logistical constraints caused by Hurricane and Tropical Storm Harvey, which barreled through Houston and surrounding areas in southeast Texas and Louisiana (OGJ, Sept. 4, 2017, Newsletter). Meanwhile, upstream oil and gas firms were still monitoring the midstream and downstream recovery to determine how much they could could return to production.
Colonial Pipeline Co. said on Sept. 4 that it restarted its distillate Line 2 between Houston and Lake Charles, La., and remained on track to restart its gasoline Line 2 between Houston and Lake Charles on Sept. 5.
Colonial had continued to ship available gasoline and other refined products from Louisiana-based refineries and other refineries on the Colonial system east of Lake Charles.
As of 1:30 p.m. CDT on Sept. 5, five Gulf Coast refineries had started the process of restarting after being shut down, the US Department of Energy reported. This process, operators said, would take several days or weeks to start producing product depending on whether any damage was found.
The restarting refineries have a combined capacity of 1.55 million b/d, or 16% of total Gulf Coast (PADD 3) refining capacity and 8.4% of total US refining capacity.
At least seven refineries in the region were operating at reduced rates as of midday Sept. 5, according to public reports. These refineries have a combined total capacity of 1.67 million b/d, or 17.2% of total Gulf Coast (PADD 3) refining capacity and 9% of total US refining capacity.
Motiva Enterprises LLC, a wholly owned subsidiary of Saudi Aramco's Saudi Refining Inc. (SRI), said on Sept. 5 its 600,000-b/d refinery in Port Arthur, Tex., was in the final phases of equipment assessments and initial phases of startup. It expected the refinery to initially return to 40% production "by the end of this weekend provided that the final assessments meet our operational standards."
ExxonMobil Corp. said facility assessments and restart activities continued at its 584,000-b/d Baytown, Tex., refinery. The firm added that it had made progress in restarting chemical production, pipelines, and other logistical infrastructure in the Houston area.
Valero Energy Corp. said on Sept. 4 that its 293,000-b/d Corpus Christi and 225,000-b/d Texas City refineries are at pre-hurricane rates. Its 89,000-b/d Three Rivers refinery continued to ramp up and 191,000-b/d Houston refinery would increase rates as transportation and logistics infrastructure became more available. Its 335,000-b/d Port Arthur refinery was in the final stages of assessment and preparing to resume operations.
DOE okayed release of more crude from the Strategic Petroleum Reserve-this time up to 4.5 million bbl-after saying it would send 500,000 bbl to Phillips 66's 249,000-b/d Lake Charles refinery (OGJ Online, Sept. 1 , 2017).
Marathon Petroleum Corp. was taking 3 million bbl while Valero was to receive 500,000 bbl.
Ports reopening
The Port of Corpus Christi in Texas fully reopened on Sept. 4 after the Paragon DPDS 1 drillship was removed from blocking a section of the port, Corpus Christi Business News reported. It had run aground during the storm after breaking free of its moorings. Corpus Christi accounted for 245,000 b/d of crude imports from January through May.
DOE reported on Sept. 4 that the Houston Ship Channel was open to just past ExxonMobil's Baytown refinery to vessels with up to a 40-ft draft. Ships were exiting and entering the channel at the time.
Platts noted that a sunken dry dock in the waterway had impeded passage of crude carriers in the Houston Ship Channel. Houston accounted for 646,000 b/d of crude imports during this year's first 5 months.
Magellan Midstream Partners LP had restarted two long-haul Texas crude pipelines-the 400,000-b/d BridgeTex and 275,000-b/d Long Horn line-that extend from southeast Texas to Magellan's East Houston terminal along the Houston Ship Channel, the commodity and energy information services firm said. Magellan had started up a 180,000-b/d refined products pipeline that begins at its East Houston terminal in Texas.
Enterprise Product Partners LP said it had restarted commercial service of its two marine terminals, where loadings of ethane, LPG, and polymer-grade propylene ships have now resumed (OGJ Online, Sept. 5, 2017).
The ports of Beaumont, Galveston, Port Arthur, and Texas City in Texas and Lake Charles in Louisiana were all open with restrictions on Sept. 4. Platts said the three Lake Charles refineries were no longer cut off from tanker deliveries now that the Calcasieu Ship Channel and Lake Charles port have reopened.
As of 9:00 p.m. CDT on Sept. 4, 55 oil vessels were waiting in anchorage off Corpus Christi, Houston, Galveston, Freeport, Texas City, Beaumont, Nederland, Port Arthur, Port Neches, Sabine, and Lake Charles. The vessels were carrying an estimated total of 38 million bbl of crude.
Crude imports at ports impacted by Harvey along the Gulf Coast collectively averaged 2.1 million b/d from January through May.
Oil output nears normal
Onshore and offshore producers last week continued to ramp up activity toward pre-storm levels as logistical and market bottlenecks are relieved. Minimal damage to upstream and midstream facilities had been reported by operators.
ConocoPhillips said on Sept. 5 its Eagle Ford output was expected to rise to 80% of its pre-storm level of 130,000 boe/d. The Houston independent noted that the increase remained dependent on access to third-party offtake and downstream infrastructure. Its NGL production, meanwhile, was expected to be the slowest to recover due to offtake constraints, which were thought could persist for at least another week.
EOG Resources Inc. on Sept. 5 reduced the midpoint of its third-quarter US crude and condensate volume guidance range by 15,000 b/d due to the impact of Harvey on its Eagle Ford operations. The Houston firm's full-year US crude and condensate volume guidance remained unchanged.
EOG, which suspended drilling and completion operations and shut in production in certain areas of South Texas ahead of Harvey making landfall, had begun to resume production as conditions permitted.
Carrizo Oil & Gas Inc. reported on Sept. 5 that its assets and facilities in the Eagle Ford had sustained no damage due to the storm. The Houston firm had suspended its drilling and completions operations in the play prior to the storm's arrival.
Crews were able to return to the field, and all of the firm's operated Eagle Ford rigs and frac crews had resumed operations. Many of its third-party facilities had restarted and resumed taking oil and gas, and Carrizo expected to be able to ramp back to nearly full sales capacity in the play.
Offshore activity was expected to return to near pre-storm levels by the 2-week mark from when personnel were first evacuated from US Gulf of Mexico platforms ahead of the storm's passage. As of Sept. 4, personnel had been evacuated from just 14 offshore production platforms, or 1.97% of the 737 manned platforms, according to estimates from the US Bureau of Safety and Environmental Enforcement.
BSEE estimated that 6.94% of pre-storm oil production, or 121.484 b/d, remained shut on Sept. 4. Pre-storm output was about 1.75 million b/d. The agency also estimated that natural gas production was down by 8.05%, or 259.19 MMcfd of pre-storm output of 3.22 bcfd.
ExxonMobil also said startup operations were under way from its Galveston 209 offshore platform systems. Its Hadrian South subsea production system had been deemed safe and operational, and production had resumed. Crews from subsidiary XTO Energy Inc. had begun assessments and were bringing onshore wells on line when it was safe to do so.