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Floods, Outages Stall Energy Firms' Restart Efforts after Ida

Reuters, August 31, 2021
Reuters

Widespread flooding from Hurricane Ida and power outages on Tuesday slowed efforts by energy companies to assess damages at oil production facilities, ports and refineries.

Nearly all of Louisiana lost electrical power on Monday after Ida downed transmission lines and flooded communities, leaving more than 1 million customers without power. Coastal areas were swamped by a storm surge so great it reversed the flow of the Mississippi River.

Analysts said it could take two-to-three weeks to restart producing platforms and fully resume output at Louisiana refineries. Restoring power, critical to refineries, also could take weeks, utilities officials said.

"This restoration is not going to be a likely quick turnaround," said Rod West, head of utility operations at Entergy Corp (ETR.N). "This was a significant catastrophic wind event, whereas Katrina was a water event by comparison."

Disruptions at oil infrastructure are testing U.S. fuel distribution systems. Operators shut offshore oil and gas pipelines that feed processing plants.

On Tuesday, the Colonial Pipeline - the largest fuel line to the East Coast - restarted main gasoline and distillate lines it had shut ahead of the storm.

Phillips 66 (PSX.N) has yet to begin damage assessments at its 255,600-barrel-per-day refinery on the Mississippi River in Belle Chasse, Louisiana, a spokesman said. The plant, which was put up for sale last week, was swamped when a nearby levee failed.

Floods have been reported at other facilities in Louisiana. Nine refineries have reduced production or shut operations, including Exxon's (XOM.N) 520,000-bpd Baton Rouge, taking offline 2.3 million bpd of capacity or 13% of the country's total, the U.S. Department of Energy estimated.

Offshore, 95% of the Gulf's oil production and 94% of its gas output remained shut, the Bureau of Safety and Environmental Enforcement (BSEE) said. A total of 288 production platforms and 11 rigs remained evacuated.

Ports from New Orleans to Pascagoula, Mississippi, were closed on Tuesday, including Louisiana Offshore Oil Port (LOOP), the largest U.S. privately owned crude export and import terminal. LOOP's initial review found no major damage to marine operations, a person familiar with the matter said, and the company was working with oil shippers to minimize disruption.

"With widespread refinery outages and debris on waterways, we expect no imports into the impacted ports in the coming days," analysis firm ClipperData said in a note to clients.

Oil prices fell on Tuesday, as the shuttering of refineries will temporarily sap demand for crude. U.S. gasoline futures were also lower.

On Monday, oil prices rose due to uncertainty on infrastructure restart timelines.

Trying to avoid over-costs of getting imported gasoline or domestic fuel shipped in tankers, some consumers are relying on the country's pipelines to fully restart soon, traders said, especially since many ports have not reopened.

Late Monday, the U.S. Environmental Protection Agency waived an environmental rule to allow winter-grade gasoline to be sold in Louisiana and Mississippi. read more

Regional gasoline prices are expected to rise temporarily, the American Automotive Association said, though flooding could sap demand.

Pipeline operator Enbridge (ENB.TO) temporarily suspended some contracts under force majeure, while Energy Transfer (ET.N) informed shippers that its Stingray Pipeline, which brings gas from the U.S. Gulf to Louisiana, would not accept deliveries.

(Reporting by Erwin Seba, Stephanie Kelly and Liz Hampton; Writing by Marianna Parraga; Editing by Stephen Coates, Bill Berkrot and David Gregorio)

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