Karma/Bitch. Harvey’s Toll on the Energy Industry

August 30, 2017


New York Times:

For years, much of the nation’s refinery capacity and chemical production have been concentrated along the swamps and narrow inlets of the Gulf of Mexico, risking devastation in a monster storm.

The pounding being endured by coastal Texas will probably be the biggest test of that risk so far, and energy experts say it raises questions about the area’s role as a hub for such crucial and environmentally sensitive industries.

“The hurricane did what terrorists could only dream of and take a third of U.S. refinery capacity off line for days on end,” said Michael E. Webber, deputy director of the Energy Institute at the University of Texas at Austin. “Over the long term, the energy sector will have to consider the costs of additional hardening of the infrastructure on the Gulf Coast versus moving to a different location like the Eastern Seaboard.”

The Texas and Louisiana coasts took on their vital role because they link vast oil and gas resources, both inland and offshore, with Caribbean and Atlantic shipping channels. But the damage from Harvey, which arrived with hurricane force, has exposed a downside: vulnerability to storms that experts say are becoming more extreme because of climate change.

The damage, detailed in state and federal regulatory filings, is wide ranging: escaping gasoline from a submerged roof at a Phillips 66 storage tank; a sinking tank roof at Exxon Mobil’s vast refinery in Baytown, which resulted in the release of hazardous gases including volatile organic compounds and benzene, above permitted levels; and a lightning strike that disrupted operations and led to toxic-gas releases at a Dow Chemical plant in Freeport.

The full implications are potentially even larger. The environmental fallout could worsen, and if oil and natural gas prices spike because refineries and pipelines are crippled, renewable energy sources like wind and solar power, along with electric cars, could get a major lift. The United States could be forced to import more gasoline and other refined products. And a chemical industry that has been expanding rapidly because of cheap natural gas from shale fields could be slowed, or even stalled.


The hole that Hurricane Harvey ripped across the energy industry along the Gulf Coast will take time to repair, and the Trump administration doesn’t look ready to tap into the government’s crude oil reserves to head off a jump in gasoline prices.

As much as 10 percent of the U.S. oil refining capacity was shut down in advance of the powerful storm that roared ashore and dumped several feet of rain along the coast from Corpus Christi into Louisiana. Those plants are likely to take weeks to return to full operation as crews pore over them looking for damage.

“This is a rainfall of biblical proportions right over the center of the refining industry,” said John Auers, executive vice president of refining consultancy Turner, Mason & Co. “There’s so much water and so much flooding that damage assessments are going to come no earlier than this weekend.”

At least 10 Gulf Coast refineries have been affected, and reports are coming in of operators shutting down wells and taking pipelines offline in South Texas’ prolific Eagle Ford shale region, said Ryan Sitton, commissioner for the Texas Railroad Commission, which oversees energy production in the state.

“Once you shut in a well they don’t immediately come back online,” Sitton said by email. “It could take weeks for production to bounce back and refining capacity to ramp back up.”

Business Insider:

The refinery shutdowns are having a more immediate impact on gasoline futures, which jumped to two-year highs on Monday. It means drivers can soon expect higher prices at the pump.

Many areas along the Gulf Coast will not have access to gasoline for days or even weeks, said Greg McBride, the chief financial analyst at Bankrate.com. “Those areas that do have gasoline will have long lines, high prices and frequently run out quickly,” McBride said in a note.

Hurricane Harvey is the worst storm to hit Texas in half a century, with winds topping 130 mph and as much as 50 inches of rain expected to be dumped around Houston. By Monday morning, the storm, which made landfall as a Category 4 hurricane, had subsided to a tropical storm with winds of up to 40 mph.

While the storm’s impact is still being assessed, history shows that oil demand usually takes months to recover after a big hurricane.

2 Responses to “Karma/Bitch. Harvey’s Toll on the Energy Industry”

  1. wpNSAlito Says:

    One hope they should have is that the mass of freshwater rain pushed out the saltwater storm surge before it could eat their equipment.

    Also, the petrochemical refineries have the resources and the focus to get production up as quickly as possible, far faster than the onesy-twosy local efforts to get residential or downtown business back to basic function. They’ll just bring in any heavy equipment they need to clear the ship channel, fly in any talent they need to survey and repair their infrastructure without any distraction from the complexity of rehousing tens of thousands of people, restoring hospitals, etc.

  2. Lionel Smith Says:

    One hope they should have is that the mass of freshwater rain pushed out the saltwater storm surge before it could eat their equipment.

    I am familiar with that problem having been responsible for looking after aeroplanes operating from carriers. I have listened to the corroding taking place along the grain boundaries of the alloys used, the noise almost deafening, especially aircraft just pulled from the ocean.

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