Twin Storms Hit U.S. Gulf Energy Production

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August 24, 2020

Tropical Storms Marco and Laura pictured at 1130 ET on Monday, August 24, 2020. Image courtesy NOAA/GOES-East

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By Erwin Seba HOUSTON, Aug 24 (Reuters) – Energy companies are moving to cut production at U.S. Gulf Coast oil refineries after shutting half the area’s offshore crude oil output ahead of back-to-back storms aiming for the coast this week.

Tropical Storms Marco and Laura, a rare double-team approach to the U.S. Gulf Coast, threaten days of heavy rains and strong winds this week. Producers by Sunday had shut more than 1 million barrels per day of Gulf Coast offshore oil production, 9% of the nation’s total output, as one storm is forecast to become a damaging Category 2 hurricane.

Motiva Enterprises on Monday began preparations to shut its large Port Arthur, Texas, crude oil refinery, said people familiar with plant operations. A Motiva spokesperson did not immediately reply to a request for comment.

Benchmark gasoline prices rose nearly 7% to the highest since March and Gulf Coast crude oil grades strengthened in thin trading on Monday, according to traders. Gulf Coast refiners account for 45% of U.S. oil processing capacity.

The Louisiana Offshore Oil Port, the largest Gulf Coast oil-export facility, halted operations at its marine terminal on Sunday. Storm Laura is forecast to strike the Texas/Louisiana coast by Thursday as a Category 2 hurricane with 105 mile per hour (169 km/h) winds and heavy rain. Some meteorologists say the storm could strengthen to a major hurricane before it makes landfall.

Other refiners including Exxon Mobil, Valero and Royal Dutch Shell are planning to maintain operations at Louisiana plants as the first cyclone arrives Monday, people familiar with those refineries said. Storm Marco is expected to drop up to 5 inches (12.7 cm) of rain along the Louisiana coast.

Refineries in east Texas including those operated by Exxon, Valero and Total are weighing plans for Storm Laura when it hits the Texas-Louisiana border.

During 2017’s Hurricane Harvey, which occurred three years ago this week, five feet (1.52 meters) of rain fell on east Texas, forcing Motiva to halt Port Arthur plant operations for nearly two weeks and others to take shorter shut-downs.

That storm led Motiva, which is owned by the world’s top oil producer Saudi Aramco, to cancel plans to expand the refinery. (Reporting by Erwin Seba; Writing by Gary McWilliams; Editing by Andrea Ricci)

(c) Copyright Thomson Reuters 2020.


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