Exxon Baytown Refinery Impacted as Houston Ship Channel Shutdown Stretches Into Day 3

The chemical tanker Carla Maersk and the bulk carrier Conti Peridot off Morgan's Point, Texas, March 10, 2015, after being involved in a collision March 9, 2015.
The chemical tanker Carla Maersk and the bulk carrier Conti Peridot off Morgan’s Point, Texas, March 10, 2015, after being involved in a collision March 9, 2015.

By Harry R. Weber and Dan Murtaugh

(Bloomberg) — Exxon Mobil Corp. cut processing rates at its Baytown, Texas, refinery because of tanker delays along the Houston Ship Channel as a stretch of the largest U.S. export gateway was shut for a third day following a crash.

The company was working with the Port of Houston and the U.S. Coast Guard to arrange deliveries of crude, Deedra Moe, a spokeswoman for Exxon, said Wednesday. Moe said Exxon expects to meet its contractual commitments at the refinery, which has a capacity of 560,500 barrels a day.

As of Wednesday afternoon, 83 vessels were in the queue at the ship channel, 48 inbound and 35 outbound, according to the Coast Guard. There’s no firm timeline for reopening the section. It may open later Wednesday or stay shut several days, Steven Nerheim, director of the Coast Guard’s Vessel Traffic Service for Houston-Galveston, said by phone Tuesday.

The closed four-mile section of the channel between Light 86 and the Fred Hartman Bridge leads to five refineries with 1.34 million barrels a day of capacity and docks that can export 600,000 barrels a day of propane and other liquid petroleum gases. An extended shutdown may prevent tankers from delivering crude and force the plants to reduce production.

Enterprise Product Partners’ Oiltanking Partners unit suspended ship and barge-docking operations in Houston, according to a notice to customers obtained Wednesday by Bloomberg. The company declared a force majeure that retroactively applies to operations following the collision that closed the section of the channel.

Venezuela Tanker

The Carla Maersk, a 45,000-deadweight-ton tanker, was heading out of the channel for Amuay Bay in Venezuela when it collided March 9 with the MV Conti Peridot, a 57,000-deadweight- ton bulk carrier traveling into the channel, according to vessel tracking data compiled by Bloomberg.

The impact pierced the double-hulled Carla Maersk, which carried 216,000 barrels of gasoline additive MTBE. The vessel suffered a breach in two tanks each holding 15,000 barrels. An unknown amount poured into the water before the leak was stopped. The remaining untainted product has been transferred from the tanks, Coast Guard Capt. Brian Penoyer said at a news conference Tuesday in La Porte, Texas.

The current plan is to insert foam into the two breached tanks to keep vapors from any remaining MTBE from getting into the air, then insert a hose to remove any seawater and residual MTBE, Coast Guard spokesman Andy Kendrick said by phone Wednesday. Once complete and the area is deemed safe, the closed section of the channel will be reopened.

Conti Peridot

Part of the anchor from the Conti Peridot is believed to be at the bottom of the channel and may need to be removed for traffic to proceed, Niels Aalund, a vice president for the West Gulf Maritime Association, a trade group that represents vessel owners and terminal operators, said Wednesday. The channel may open in 24 to 36 hours if weather is favorable and cleanup operations go smoothly, he said.

MTBE, or methyl tertiary butyl ether, is an oxygenate added to gasoline to boost octane levels and to help fuel burn cleaner. While it’s been replaced by ethanol in the U.S. after it contaminated drinking water, other countries still use it. Its offensive odor and taste can render water undrinkable, while its health effects are unclear. U.S. production is shipped abroad, with Venezuela receiving the second-most in December, behind Mexico.

The Coast Guard and National Transportation Safety Board are investigating.

–With assistance from Eliot Caroom and Sheela Tobben in New York.

Copyright 2015 Bloomberg.