Texas refineries begin restart after hit from Harvey

HOUSTON 3 August 2017: 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 U.S. 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 U.S. fuel supplies.

Exxon Mobil Corp (XOM.N) said it was restarting its 560,500 barrel per day (bpd) facility in Baytown, Texas, the second-biggest U.S. oil refinery, after it was inundated by flooding.

Phillips 66 (PSX.N) 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 Corp (VLO.N) 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 Aug. 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.

POWER CUTS

In another positive sign for the industry, Occidental Petroleum Corp (OXY.N) 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 U.S. refinery, the 603,000 bpd facility in Port Arthur, Texas, owned by Motiva Enterprises LLC[MOTIV.UL]. 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 U.S. 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.

The reduced availability of fuel forced the Colonial Pipeline, which provides fuel from refineries near the Gulf of Mexico to the U.S. Northeast, to reduce supplies.

But some oil pipelines had restarted, easing the constraint. Magellan Midstream Partners (MMP.N) announced late on Friday that it resumed operations on its BridgeTex and Longhorn crude oil pipelines. The two pipelines transport around 675,000 bpd of West Texas crude to East Houston.

The company said its refined products pipeline system originating at East Houston has resumed service and will deliver gasoline and diesel to the Dallas and West Texas area.

Phillips 66 also said its Pasadena refined products terminal would resume truck loading for gasoline and diesel this weekend.