• Post-Hurricane Laura impacts on the Gulf Coast oil industry and ports

    28 August 2020

    With the passage of Category 4 Hurricane Laura on August 27, Texas and Louisiana crude oil refineries and ports are currently assessing potential damages caused by the storm system and deciding when to begin reopening.

    More than 2.3 million b/d of refining capacity was taken offline ahead of Laura’s arrival. The storm path went directly over two large oil refineries operated by Citgo Petroleum and Phillips 66 near Lake Charles, Louisiana. The two refineries closed in preparation for the storm along with five other major oil refineries on the Texas side of the state line. Reports indicate that all five of the refineries are likely to restart operations following safety inspections and once power has been restored in the state. According to Citgo officials at the Lake Charles location, the company assembled a team to assess the refinery, service providers, and port facilities.

    Additionally, the four major refineries in Port Arthur and Beaumont operated by Motiva, ExxonMobil, Total, and Valero Energy, as well as Chevron’s Pasadena Refinery near Houston, closed in preparation for the storm.  Safety inspections are ongoing at these facilities and operations are likely to restart once inspections are passed and power is restored. The nation’s largest refinery, Motiva’s Port Arthur facility, which processes approximately 630,000 b/d, and its terminals sustained minor damages. The company said it will conduct all necessary assessments and preparations to ready its Port Arthur refinery and chemical plant to continue operations as soon as it is safe to do so. Chevron’s Pasadena Refinery has reportedly completed the post-Laura assessment of its facilities, which did not sustain any damage during the storm and has not experienced disruptions to customer’s supply needs.

    Fire at BioLab chemical plant

    Although most refineries reported minor damages to their facilities, the storm caused a fire and chemical leak at the BioLab chemical manufacturing facility in Westlake, Louisiana. BioLab manufactures trichloroisocyanuric acid, chlorinating granules, and other home cleaning chemicals including bleach scrub and pool chlorine powder. The company is a subsidiary of KIK Custom Products Inc., a major manufacturer of consumer pool, automotive, and household products.

    The fire caused Interstate-10 to close between the cities of Sulphur and Westlake and residents were instructed to close doors and windows. Residual disruptions to other manufacturing operations in the area are likely. A hazmat unit had been called to the plant for a reportedly massive chlorine leak. The incident reportedly broke out only hours after the passage of Hurricane Laura.

    Although refineries are undergoing swift safety inspections, storm damages and power outages were widespread throughout the Lake Charles region, so refinery closures may prolong for several days.

    Pipeline operations mostly unaffected

    U.S. Secretary of Energy Dan Brouillette announced that the critical Colonial Pipeline system was undamaged and continues to move refined fuel products from Texas and Louisiana up through the U.S. Atlantic Coast. Nearly 840,000 utility customers were without power around 2:00 pm CDT on August 27 in Arkansas, Louisiana, Mississippi and Texas as Hurricane Laura passed through the states.

    Magellan Midstream Partners company officials, which owns ammonia and petroleum pipelines in the Mid-Continent, said its East Houston terminal hub is operating normally after briefly suspending truck-loading operations on August 26. Magellan also shut down its Galena Park oil and refined products terminal in preparation for both Hurricane Laura and Tropical Cyclone Marco. The company is conducting a final safety inspection at its facility and reported to local media outlets that they did not encounter any wind damage or flooding issues and expects to resume normal operations shortly.

    Port and waterway impacts

    Ports along the Texas and Louisiana coasts closed early on August 27 prior to the powerful Category 4 hurricane making landfall in Cameron, Louisiana. The storm brought hurricane winds and storm surges to the region. Although some ports remain closed along the Texas-Louisiana border, port operations throughout the region are swiftly recovering.

    The LOOP oil-shipping facility in Louisiana, which provides tanker offloading and temporary storage services for crude oil transported on some of the largest tankers in the world, remained closed and could reopen as early as August 28 if no serious damage is discovered. The Gulf Intracoastal Waterway and Port of New Orleans remained open with restrictions. According to the U.S. Coast Guard, the Port of Houston and the Houston Ship Channel began reopening to commercial shipping on August 27 after a day-long closure due to Hurricane Laura. About 50 vessels were anchored offshore, waiting the re-enter the Houston Shipping Channel. The majority of vessels left the port earlier in the week.

    According to reports from the U.S. Coast Guard, the ports of Beaumont, Orange, Port Arthur and Sabine, Texas, remained closed on Thursday, August 27 as did ports in Lake Charles and Cameron, Louisiana. The Port of Galveston, Texas, reopened to tug and barge traffic, and the Ports of Freeport, and Texas City, Texas, reopened with additional draft restrictions on Thursday.

    As hurricane season in the Atlantic basin is currently at its peak, companies with operations along the country’s Atlantic coast are advised to map and visualize the key locations in their supply chain network to gain a comprehensive overview of where they operate, source from, and which transportation hubs are frequently used. A better understanding of key supply chain chokepoints will help to assess the potential impact upcoming storms may have on business operations, including their risks to individual shipments, products, facilities, and revenue.

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