Oil and gas companies on the Texas Gulf Coast were dealing Monday with the impact of Tropical Storm Harvey, which was unleashing torrential rains and flooding in the Houston area after making landfall Friday night as a Category 4 hurricane near Corpus Christi.
Roughly 2.2 MMbpd of Texas refining capacity remained down, as were major ports in Corpus Christi and Houston, according to a report by S&P Global Platts.
A state of emergency has been declared in Louisiana, although so far refiners in the area are operating normally. Meanwhile, pipeline operations were suspended in a significant way:
- Magellan Midstream has suspended operations on two long-haul pipelines BridgeTex and Longhorn. The two pipelines carry a combined 675,000 bpd of crude from the Permian Basin in Texas to the US Gulf Coast.
- Kinder Morgan shut down “select systems” of its 300,000 bpd crude and condensate pipeline in Texas. The shut-in is being implemented on the 250-mile Kinder Morgan Crude and Condensate line.
- Refined product futures were up sharply Monday. At 1815 GMT, the October NYMEX RBOB crack spread was trading at about $19.70/b, up from $16.84/b Friday. The October ULSD crack was trading at about $21.85/b, up from $20.33/b.
- Asia’s gasoline crack strengthened Monday, as the fallout from lost gasoline production on the US Gulf Coast reverberates around the globe.
- Asia’s 92 RON gasoline crack against ICE Brent was assessed Monday by S&P Global Platts at $13.19/b, up 22 cents, and within reach of a 17-month high of $13.54/b. With European gasoline supply likely diverted toward the US, or to buyers of US barrels, the Asian market was seen tightening.
- Jet fuel differentials on the US Gulf Coast climbed to their highest levels in nearly four and a half years, with benchmark 54 grade jet fuel on Colonial Pipeline trading as high as NYMEX ULSD plus 5 cents/gal.
- The Brent/WTI spread was trading around $5.32/b midday Monday, out from $4.54/b Friday, partly reflecting the closure of oil infrastructure that is limiting crude exports.
- Permian Basin sweet grade WTI Midland was heard bid at WTI cash minus 50 cents/b, which is 30 cents/b lower than where Platts assessed the grade Friday. The move lower came as 675,000 bpd of Permian takeaway capacity came offline after Magellan closed of its BridgeTex and Longhorn pipelines, both of which carry Permian Basin crude to the US Gulf Coast.
- With roughly 2.2 MMbpd of refining capacity down, refined products supplies should tighten, with major Texas Gulf Coast ports of Corpus Christi and Houston closed to vessel traffic, imports and exports of crude and refined products will be delayed.
- Texas imported roughly 1.9 MMbpd of waterborne crude in May, out of a total 3 MMbpd into the Gulf Coast, according to US Energy Information Administration data. Another 418,000 bpd of various refined products and unfinished oils were imported into Texas in May.
- Texas is also a major source of refined products to the Northeast via Colonial Pipeline, and waterborne refined products and crude exports. U.S. Gulf Coast refiners exported 2.7 MMbpd of refined products in May, primarily to buyers in Latin America and Europe. USGC refiners regularly export gasoline to Mexico, for instance, and diesel to Europe.
- The USGC exported 750,000 bpd of crude in May, according to the EIA. PIRA Energy Group, a unit of S&P Global Platts, estimates Texas’ total crude export capacity to be 2.5 MMbpd, of which 930,000 bpd is in Corpus Christi/Brownsville and 910,000 bpd is in Greater Houston.
- Roughly 2.2 MMbpd of refining capacity has been shut. Houston-area refineries began shutting down Sunday because of flooding. Refiners have not reported any damage so far.
- The following plants have been or are in the process of being shut: ExxonMobil, Baytown, TX, 560,500 bpd; Valero, Corpus Christi, TX, 293,000 bpd; Citgo, Corpus Christi, TX, 157,500 bpd; Flint Hills, Corpus Christi, TX, 296,470 bpd; Magellan, Corpus Christi, TX, 50,000; Buckeye, Corpus Christi, TX, 50,000 bpd (not confirmed); Shell, Deer Park, TX, 340,000 bpd; Petrobras, Pasadena, TX,112,229 bpd; Phillips 66, Sweeny, TX, 247,000 bpd; Valero, Three Rivers, TX, 89,000 bpd.
- ExxonMobil’s Beaumont, TX refinery has reduced totals to 362,300 bpd, bringing the total to 2,195,699 bpd. The Texas Gulf Coast is home to 4.944 MMbpd of refining capacity, while the Louisiana Gulf Coast refines 3.696 MMbpd of capacity, according to the U.S. Energy Information Administration.
- The Environmental Protection Agency issued temporary waivers for parts of Texas required to use reformulated fuels under the Clear Air Act to ensure ample supplies of gasoline and diesel. The Texas Commission on Environmental Quality asked the EPA for waivers for gasoline and diesel in 30 of Texas’ 254 counties. The waivers are in effect until Sept. 15, but could be extended.
- The U.S. government’s largest crude storage site – Bryan Mound – is unavailable for drawdowns, a Department of Energy official said Monday. Bryan Mound, located near Freeport, TX, is “drawdown impaired and unavailable,” the official said. The Bryan Mound site holds 240.7 MMbbls of crude in 20 caverns and makes up 35% of the US government’s total stockpile of crude.
- The Port of Lake Charles, Louisiana, and neighboring Port Arthur, TX, were at condition Yankee Monday, closing the ports to inbound traffic, according to the US Coast Guard.
- Corpus Christi area ports remained closed, and so far there are no reported oil spills or damages to storage tanks.
- The four major ports in the Houston-Galveston area complex remained closed: Houston, Texas City, Galveston and Freeport.
- NuStar is hoping to get power supplies later Monday for its shut-down crude and refined products terminal at Corpus Christi. NuStar’s North Beach Terminal at Corpus Christi includes a 1.6 MMbbl crude facility, and 10 storage tanks with a combined capacity of 327,000 bbls for gasoline, distillates, xylene and toluene, and a 72-mile, 15,000 bpd pipeline that carries refined products and chemicals.
- Oil operators in the onshore Eagle Ford Shale in South Texas began to restart wells and related midstream facilities. BHP said it was ramping up production in the Eagle Ford. Before the storm hit, the Eagle Ford was producing about 1.341 MMbpd of oil, and 5.1 Bcf/d of natural gas, according to data from Platts Analytics’ Bentek Energy unit.
- ConocoPhillips, Murphy Oil and XTO Energy had also shut in operations in the area.
- U.S. Gulf of Mexico offshore production was returning Monday. The U.S. Bureau of Safety and Environmental Enforcement showed 331,370 bpd of oil output shut in Monday, or 18.94% of total GOM output, down from 428,568 bpd Saturday. BSEE reported 0.583 Bcf/d of natural gas output shut in, 18.12% of production.
- Anadarko Petroleum resumed production at its Constitution, Heidelberg, Holstein and Marco Polo platforms, all located in the central Gulf of Mexico. The company also said it is eying a restart of its Lucius production facility, located further southwest in the lower Keathley Canyon area near Mexican waters.