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| Early signs from Texas oil patch encouraging after Rita |
| 2005-09-25 |
| Hurricane Rita smacked a key region for oil-refining with less force than feared on Saturday, an encouraging sign to industry officials and analysts who cautioned it was still too early to assess the full extent of the damage. Before Rita hit, 16 of the 26 refineries in Texas shut down and evacuated crews as a precautionary measure. But pump prices for gasoline and diesel fuel still could rise if pipelines and oil refineries — especially those near Lake Charles, La., and Beaumont and Port Arthur, Texas — are slow in resuming production. "There will be some modest disruption of supplies of gasoline and other products," said William Veno, an analyst at Cambridge Energy Research Associates "But I don't think it's going to be as severe a situation as Hurricane Katrina." Power outages were reported across wide swaths of Texas and Louisiana, leaving more than a million customers without electricity and one utility spokeswoman said it could be weeks before service is fully restored. Valero Energy Corp. said it received reports that the lights were on at its refineries in Houston and Texas City, Texas — facilities that refine almost 300,000 barrels of oil per day. And BP PLC spokesman Scott Dean said that was encouraging since "they're right next door to us there." BP's Texas City refinery processes 437,000 barrels per day. Marathon Petroleum Co. said its Texas City refinery, which processes 72,000 barrels of crude oil per day, has power and sustained only minimal damage. Based on computer modeling and initial reports, the Energy Department said it was cautiously optimistic about the nine refineries in the Houston area. "But we really need to look at the Port Arthur region and other areas directly impacted," spokesman Craig Stevens said. "It may still be two or three days before we get a sense of the actual picture." Before Rita hit, 16 refineries in Texas accounting for 2.3 million barrels per day of capacity shut down and evacuated crews. Four refineries in Louisiana and Mississippi whose output had been more than 800,000 barrels per day remain closed almost a month after Hurricane Katrina, and a significant amount of oil and natural gas output has not returned. Late Saturday, a natural gas pipeline near the Louisiana coast was leaking in a flooded area, and workers planned to try to fix it Sunday. Crews also needed to check for leaks in a petroleum storage facility after observing an oil sheen in floodwaters, said Jim Porter, president of the Louisiana Mid-Continent Oil and Gas Association. Crude oil prices fell Friday as traders welcomed news that Rita had weakened. Traders will get their first chance to react to the Rita news when trading resumes on the International Petroleum Exchange in London at 11:15 p.m. GMT. The New York Mercantile Exchange will open electronic trading for crude oil futures and other energy futures at 10 a.m. Eastern Sunday, rather than the usual 7 p.m. Analysts said they were eager to find out about the impact on refinery operations near the Texas-Louisiana border. "Lake Charles looks like it's the closest in terms of any kind of real impact. That's where we've got to focus our attention," said John Felmy, chief economist of the American Petroleum Institute in Washington, D.C. "Remember, the power outages are what bedeviled recovery efforts after Katrina," said oil analyst John Kilduff of Fimat USA in New York. ConocoPhillips, Calcasieu Refining Co. and Citgo Petroleum Corp., a subsidiary of Petroleos de Venezuela S.A., have refineries in Lake Charles. In Port Arthur, refineries are owned by Valero, Total S.A. and Motiva Enterprises Inc., a joint venture between Royal Dutch Shell PLC and Saudi Refining Inc.; ExxonMobil Corp. has a refinery in Beaumont. Shell said in a statement that there was wind damage to power lines and a cooling water-tower at its Port Arthur refinery, but no flooding. The company said it had no restart date yet for the plant. Valero spokeswoman Mary Rose Brown described as "good news" the fact that storm surges in Port Arthur, where Valero has a 255,000-barrel-a-day refinery, were smaller than expected. Motorists are already paying the price for the hurricane-related disruptions. The average retail cost of gasoline nationwide was $2.75 a gallon on Friday, up from $1.87 a year earlier, according to the Oil Price Information Service of Wall, N.J. Several oil and fuel pipelines that carry product from the Gulf Coast to markets in the East and Midwest were also shuttered prior to Rita's arrival, but there was no word yet Saturday about any potential damage. The Louisiana Offshore Oil Port, through which 10% of all U.S. oil imports flow, stopped offloading tankers earlier in the week, but by midday Saturday the LOOP had resumed delivering oil from storage to customers. Scheduling manager Mark Bugg said rough seas will prevent the resumption of oil tanker deliveries until Sunday or Monday. The U.S. Minerals Management Service said Saturday that 634 platforms in the Gulf remained unstaffed, unchanged from Friday. Oil production in the Gulf of Mexico was totally shut down, and more than 74% of natural gas output was off. Since Katrina, more than 31 million barrels of oil and 147 billion cubic feet of natural gas have been lost. More than 675,000 CenterPoint Energy Inc. customers in Texas were without power and company spokeswoman Patricia Frank said it may be weeks before service is fully restored. Entergy Corp. spokesman Chanel Lagarde said there were 504,000 homes and businesses without power in Louisiana. About 212,000 of those were in the New Orleans area, where Hurricane Katrina knocked out electrical service, while the rest were caused by Rita and were concentrated in southwestern and south-central Louisiana. Entergy also reported 251,000 outages in east Texas, all of them caused by Rita. |
| Posted by:lotp |