More than 800,000 barrels per day (bpd) of refining capacity is being taken offline as refineries across Texas are preparing for the first anticipated hurricane landfall in the state since 2008. Current forecasts have Harvey making landfall later today, August 25, as a Category 3 hurricane.
Production shut-ins began as early as August 23 as the Tropical Storm passed over crude production regions in the Gulf of Mexico, and at least 39 platforms were evacuated. Approximately 145,000 bpd of oil production was shut-in as of this morning, according a Hurricane Analysis report included in Genscape's Springrock Production Forecast.
Heavy rain, storm surge, and strong winds will lead to an increased chance of flooding and power outages. According to National Weather Service models, the potential exists for more than 20 inches of rain and 6-12 feet of storm surge in areas prone to it. Currently, the area between Brownsville, TX, and High Island, TX, is forecast to be most affected. Flooding traditionally poses the highest risk of damage to refineries, although cooling towers have been susceptible to damage from hurricane-force winds during past storms.
Total motor gasoline rack demand in Texas on August 24 was up 13 percent over the previous day and 10 percent over the same day last week, as residents commenced hurricane preparations, according to Genscape Supply Side Analyst data. Areas like Corpus Christi, Harlingen, and Brownsville, which are nearest to the forecasted eye of the storm, saw gasoline rack liftings spike more than 37 percent on August 24 versus August 23. Harlingen liftings rose the most at 64 percent. Even Houston metropolitan area gasoline rack liftings increased 19 percent.
The rush to the fuel pump in Texas contributed to overall U.S. gasoline rack demand increases. On August 24, U.S. total motor gasoline rack demand was 5 percent higher than on August 23, with PADD 3 aggregate rack liftings 10 percent higher. On the week, PADD 3 gasoline demand for the week ending August 25 is expected to be about 1 percent higher than the week prior, contributing to a 1 percent increase in total U.S. gasoline demand for the same period.
Corpus Christi Area
All monitored units at all Corpus Christi refineries, apart from a couple sulfur recovery units, have been shut ahead of Hurricane Harvey. The vast majority of units were shut yesterday evening, while a few units were shut earlier in the day. Valero is also closing their Three Rivers refinery due to the hurricane.
Lyondell is reducing rates at their Houston refinery and is considering shutting the plant, according to Reuters. Most refineries in the Houston region are elevated 15 to 35 feet above ground.
Texas City Area
The Texas City refineries are only elevated 5 to 10 feet above ground but are protected by a 15 foot high flood wall. Currently no changes have been reported at Texas City area refineries.
Port Arthur/Beaumont Area
Similar to the Texas City refineries, the Port Arthur refineries are protected in a leveed area. Motiva has initiated preparatory plans, while no other changes have been reported at Port Arthur area refineries.
Source: Genscape U.S. Gulf Coast Crude Storage Report
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