Texas Refineries Mark Steady Recovery from Hurricane Harvey
Exxon Mobil Corporation's (ExxonMobil) (NYSE:XOM) (Irving, Texas) announcement last week that its Baytown and Beaumont operations have begun producing fuels again were a welcome sign that refineries along the Texas Gulf Coast were recovering in the wake of Hurricane Harvey.
ExxonMobil said its 560,000-barrel-per-day (BBL/d) Baytown refinery and 362,000-BBL/d Beaumont refinery were producing fuels at reduced rates and crude oil and refined product pipelines in the Gulf and other regions of Texas have restarted.
"We are making good progress safely restoring our operations to pre-storm levels," said Jerry Wascom, president of ExxonMobil Refining and Supply Company. "We have brought in gasoline, diesel and jet fuel from other regions to supplement our own production to ensure a quick return of reliable supply to our customers."
Crude oil and refined product pipelines to and from the Baytown refinery are in service and pipelines from Baytown to San Antonio and Irving, Texas, have returned to full service, and terminals in those locations have reopened, the company said.
Other refineries in the region were also hitting recovery milestones. Pasadena Refining completed repairs on the 56,000-BBL/d fluid catalytic cracking unit (FCCU) last week at its 100,000-BBL/d Pasadena refinery after the hurricane shut down operations on August 27. The FCCU was expected to return to normal operations early this week, followed by the restart of other units.
In the aftermath of Harvey, Industrial Info unveiled its Disaster Impact Tracker, which includes both weather-related and earthquake events for all industrial plants monitored by Industrial Info globally. For more information, see September 12, 2017, article - Industrial Info Introduces Disaster Impact Tracker.
Hurricane Harvey had caused substantial disruptions to crude oil and petroleum product supply chains, subsequently increasing petroleum product prices. According to some estimates, 20% or more of the nation's refining capacity was idled as a result of the storm, which made landfall on August 25 near Rockport, Texas.
The Energy Information Administration (EIA) reported that for the week ended September 1, gross inputs to refineries on the U.S. Gulf Coast fell by 3.2 million BBL/d, or 34%, from the previous week--the largest drop since hurricanes Gustav and Ike in 2008. Weekly refinery utilization in the region plummeted from 96% to 63%, while other areas of the country remained virtually unchanged.
More than half of U.S. refining capacity is located on the U.S. Gulf Coast, according to the EIA, and Texas alone represents 31% of the nation's refining capacity, supplying products to domestic markets on the Gulf Coast, East Coast, and Midwest, as well as to international markets.
The International Energy Agency (IEA) (Paris, France) noted on September 13 that the significance of the U.S. Gulf Coast on the global energy market stage has grown.
"While the industry responded much better than a decade ago when severe storms hit the Gulf Coast, the region nowadays is more important to the global oil market," according to the IEA's monthly Oil Market Report (OMR). "For a long time, it has been a production and refining hub; today, it is an important global trading center with more than [4 million BBL/d] of products and 0.8 [million BBL/d] of crude oil being exported. For products, U.S. exports are important for many countries e.g. Mexico, Venezuela and several Central American states."
Also, the IEA noted, crude oil from the U.S. "finds its way to an increasing number of countries including China, Korea, Italy, the Netherlands, Singapore and the United Kingdom. With U.S. export volumes expected to increase, the strategic importance of the Gulf Coast will only grow. The rise of the Gulf Coast as a major energy hub means that, in some respects, it can be compared to the Strait of Hormuz in that normal operations are too important to fail."
The massive flooding that was caused by Harvey in Houston and other parts of East Texas have prompted some renewed calls for more infrastructure improvements, including the so-called "Ike Dike" (named after Hurricane Ike, which blasted through the region in 2008), which would protect Houston area refineries and petrochemical plants from storm surges.
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