Texas refineries begin restart after hit from Hurricane Harvey

A note is left on a petrol pump in the aftermath of Hurricane Harvey in Cedar Park, Texas. (Reuters)
Updated 03 September 2017

Texas refineries begin restart after hit from Hurricane Harvey

HOUSTON: A number of key Texas refineries worked to reopen or resume normal operations on Saturday, a week after Hurricane Harvey knocked out nearly one quarter of the US refining capacity and sent gasoline prices to two-year highs.
While much of the region’s refining infrastructure still remained offline from Harvey, which made landfall as a Category 4 hurricane last week and drenched Texas as a tropical storm, the restarts were a first step in alleviating concerns about US fuel supplies.
Exxon Mobil said it was restarting its 560,500 barrel per day (bpd) facility in Baytown, Texas, the second-biggest US oil refinery, after it was inundated by flooding.
Phillips 66 said it was working to resume operations at its 247,000 bpd Sweeny refinery as well as its Beaumont terminal.
The announcements come after Valero Energy said late on Friday it was ramping up production at its Corpus Christi, Texas-area refineries, as well as evaluating its 335,000 bpd Port Arthur, Texas, refinery for damage from Harvey. The refinery was shut on Wednesday.
Retail gasoline prices have risen more than 17.5 cents since August 23, before Harvey hit, amid worries the storm would trigger supply shortages.
Pump prices were at $2.59 a gallon on Saturday, according to motorists advocacy group AAA, up 3 percent from Friday and 16.7 percent higher on average than a year ago.
In another positive sign for the industry, Occidental Petroleum said it had loaded and shipped the first crude cargo from its Ingleside terminal in Corpus Christi after Hurricane Harvey first made landfall.
The Port of Corpus Christi, a major energy industry shipping hub, was partially open and hoped to resume normal operations next week, officials said.
But much energy infrastructure remained offline, including the largest US refinery, the 603,000 bpd facility in Port Arthur, Texas, owned by Motiva Enterprises. Motiva has told customers to prepare for fuel shortages, said a source at convenience store and gas station chain Circle K.
In some Texas cities, including Dallas, there were long lines at gas stations on Friday.
At a QMart filling station west of Houston on Saturday, cars were clogging the pumps soon after a tanker arrived to replenish its pumps.
“We had a half a tank, but decided to get more, just in case,” said Maria Linares, a school teacher whose husband was topping their car’s tank.
The Phillips 66 brand station has not raised its fuel prices since before Harvey, said Assistant Manager Jalal Sadruddin, by policy of the station owner, Q-Mart.
“Right now, we have about 4,000 gallons, maybe two or three days’ worth,” he said. The station received a tanker load of gasoline on Saturday but was out of diesel, he said. An Exxon brand station across the street was out of fuel.
“In all this area, no one has it but us,” Sadruddin said.
Nearly half of US refining capacity is in the Gulf Coast region, an area with proximity to plentiful supplies from Texas oil fields to Mexican and Venezuelan oil imports. The majority of Texas ports remained closed to large vessels, limiting discharge of imported crude.

Demand issues ‘to overshadow OPEC+ supply next year’

Updated 29 October 2020

Demand issues ‘to overshadow OPEC+ supply next year’

  • Libya's rising production adding to pressure on oil markets

DUBAI: The Organization of the Petroleum Exporting Countries (OPEC) and its allies will have to contend with a “lot of demand issues” before raising supply in January 2021, given throughput cuts by oil refiners, the head of Saudi Aramco’s trading arm said.
OPEC and its allies plan to raise production by 2 million barrels per day (bpd) from January after record output cuts this year as the coronavirus pandemic hammered demand, taking overall reductions to about 5.7 million bpd. 

“We see stress in refining margins and see a lot of refineries either cutting their refining capacity to 50-60% or a lot of refineries closing,” Ibrahim Al-Buainain said an interview with Gulf Intelligence released on Wednesday.

“I don’t think the (refining) business is sustainable at these rates (refining margins).”

However, Chinese oil demand is likely to remain solid through the fourth quarter and into 2021 as its economy grows while the rest of the world is in negative territory, he added.

Among the uncertainties facing the oil market are rising Libyan output on the supply side and a second wave of global COVID-19 infections, especially in Europe, on the demand side, Al-Buainain said.

Complicating efforts by other OPEC members and allies to curb output, Libyan production is expected to rebound to 1 million bpd in the coming weeks.

Oil prices, meanwhile, fell over 4 percent on Wednesday as surging coronavirus infections in the US and Europe are leading to renewed lockdowns, fanning fears that the unsteady economic recovery will deteriorate.

“Crude oil is under pressure from the increase in COVID-19 cases, especially in Europe,” said Robert Yawger, director of energy futures at Mizuho in New York.

Brent futures fell $1.91, or 4.6 percent, to $39.29 a barrel, while US West Texas Intermediate crude fell $2.05, or 5.2 percent, to $37.52.

Earlier in the day Brent traded to its lowest since Oct. 2 and WTI its lowest since Oct. 5.

Futures pared losses somewhat after the US Energy Information Administration (EIA) said a bigger-than-expected 4.3 million barrels of crude oil was put into storage last week, but slightly less than industry data late Tuesday which showed a 4.6 million-barrel build.

However, crude production surged to its highest since July at 11.1 million barrels per day in a record weekly build of 1.2 million bpd, the data showed.

Gasoline demand has also been weak overall, down 10 percent from the four-week average a year ago. US consumption is recovering slowly, especially as millions of people restrict leisure travel with cases surging nationwide.