Hurricane Ida wildcard: Effects on U.S. energy supply
Published 3:00 pm Saturday, August 28, 2021
(AP) – Companies evacuated oil and gas platforms south of Louisiana ahead of Hurricane Ida but a far greater worry was potential damage to refineries and petrochemical plants in its projected path from flooding and storm surge.
Nearly 300 offshore platforms — or half the manned platforms in the Gulf of Mexico — were evacuated ahead of the storm, their production temporarily halted, the U.S. Bureau of Safety and Environmental Enforcement said on its website. Floating rigs also cleared out. In all, more than 80% of gulf oil and gas production halted, the agency said.
But a potentially more serious concern was the fate of refineries and petrochemical plants along the Mississippi River between Baton Rouge and New Orleans in or near the projected path of a storm whose maximum sustained winds were expected to reach 130 mph (209 kph) at anticipated landfall late Sunday.
Louisiana’s 17 oil refineries account for nearly one-fifth of the nation’s refining capacity and can process. More than 4 million barrels of refining capacity was in harm’s way, said Richard Joswick, head of S&P Global Platts Analytics.
The Energy Information Administration said Ida could affect local energy supply — especially transportation fuel and electricity. Its maps show more than a dozen plants along the petrochemical corridor vulnerable to flooding.
Less clear is whether the domestic fuel supply might be affected. U.S. daily oil consumption is a little under 20 million barrels a day. Analysts said it was too early to say, though Platts said the storm could halt production of 765,000 barrels a day in gulf output.
Platts’ Joswick said any petroleum price impacts from Ida are likely to be most acute for gasoline but could be expected to return to pre-storm levels in one to three weeks.
It was not immediately clear how many refineries and petrochemical plants might be shut down.
Phillips 66 was halting production at its refinery on the Mississippi just south of New Orleans in Belle Chasse, Louisiana, due in part to “the potential for storm surge,” said company spokesman Bernardo Fallas. It’s daily capacity is 250,000 barrels.
Exxon Mobil said its Baton Rouge refinery, which produces about 520,000 barrels of crude daily, continued to operate while Chevron said it had shut down operations at terminals on the Mississippi river and gulf coast and their related pipeline systems. Shell, Marathon and Valero also have refineries close to the storm’s projected path.
“The industry has been through this maybe too many times over the last few decades,” said Peter McNally, an energy analyst at Third Bridge, said of the hurricane. Several refineries in Lake Charles, west of Ida’s projected path, suffered wind damage in Hurricane Laura almost exactly a year ago.
Meteorologist Jeff Masters, who flew hurricane missions for the government and founded Weather Underground, said Ida is forecast to move through “the just absolute worst place for a hurricane.”
While refineries and petrochemical plants are generally built to withstand high winds, they are not necessarily prepared for high water, an increasing problem as global warming spurs higher rainfall amounts in big storms.
McNally said the industry is most concerned about flooding, which is what cause so much havoc in 2017 with Hurricane Harvey in the Houston area, where petroleum products were spilled at flooded tanker and chemical plants.
“Louisiana is low so you are prone to the flooding. These things are built to withstand winds but it’s flooding you have tougher time dealing with,” he said.
Sixty percent of the gasoline used on the East Coast are shipped from the Gulf Coast, much of it through the Colonial Pipeline, which is in the storm’s path.
In addition to oil production, Louisiana accounts for 9% of U.S. natural gas yields. Last year, the state’s two liquefied natural gas export terminals shipped out about 55% of total U.S. LNG exports, according to the Energy Information Administration.