Reuters: U.S.: Oil companies recover from Isaac, one refinery flooded

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Oil companies recover from Isaac, one refinery flooded Aug 30th 2012, 17:04 By Kristen Hays and Erwin Seba HOUSTON | Thu Aug 30, 2012 1:04pm EDT HOUSTON (Reuters) - Most oil and gas companies prepared their U.S. Gulf region installations on Thursday for a gradual restart in the wake of Hurricane Isaac, while one Louisiana refinery reported flooding and workers scrambled to prevent damage. Isaac now poses little threat to most Gulf region energy infrastructure after weakening to a tropical storm and moving inland. But Phillips 66 said its 247,000 barrel per day (bpd) refinery in Belle Chasse, Louisiana had been at least partially flooded. It offered no estimate on when the plant could restart, and said personnel were trying to prevent damage by pumping water out. Belle Chasse is located in Louisiana's southernmost Plaquemines Parish, where storm waters had earlier flowed over a levee and prompted flooding. There were few other reports of damages to energy infrastructure. Isaac, now a tropical storm, moved north on Thursday, after hitting Louisiana at Category 1 hurricane strength earlier this week. Companies including Royal Dutch Shell and Anadarko, said they could begin restaffing and restarting shut-in offshore production as early as Friday. Isaac prompted oil companies to shut down nearly all of U.S. Gulf of Mexico oil production and almost three-fourths of its natural gas output this week, while idling about 5.5 percent of U.S. refining capacity, according to government figures. It will likely take several days or a week to gradually restore around 1.3 million barrels per day (bpd) of offshore oil output and 3.2 billion cubic feet per day of natural gas production idled due to Isaac, experts said. Refineries, which have scaled back around 936,500 bpd of throughput in the coastal region, are also expected to restart gradually. "This was not a storm that bent metal, like Hurricanes Katrina or Ike," said Tim Evans, energy analyst at Citi in New York. "I expect refineries that shut down completely to take time to come back after thorough inspections. Offshore production will be restored gradually over several days." Refiners that scaled back processing rates instead of fully shutting down during the storm can probably restore normal throughput more quickly, Evans said. U.S. oil futures fell 1.3 percent to $94.28 a barrel as of 12:28 p.m. EDT (1628 GMT). Natural gas futures rose 2.3 percent. Henry Hub terminal, the Louisiana delivery point for benchmark NYMEX gas contracts, was operating normally, a spokesman from NYMEX owner CME said. "Most of the concern has passed," said Matt Smith, analyst at Summit Energy in Louisville, Kentucky. "Now it's just a case of the actual production coming back online. We'll probably see a temporary drop in crude imports due to Isaac and a drop in crude demand from refineries that have been closed." IN ISAAC'S WAKE Phillips 66's Alliance refinery in Belle Chasse, one of the Louisiana areas hardest hit by Isaac, suffered some flooding. Phillips staff is assessing the plant and pumping out water to prevent further flooding, the company said Thursday. There was no estimate on when it could restart. Other Gulf Coast regional refineries appeared unscathed by Isaac. Independent refiner Valero said it detected no structural damage at two Louisiana refineries it operates, during a preliminary inspection on Thursday. It was still unclear when the plants would restart. A crude distribution terminal at St. James, Louisiana was not damaged by Isaac and will restore full operations by Saturday, operator NuStar said. That could help restore normal crude flows to regional refineries as they ramp up output. St. James is also home to rail terminals that receive crude from other U.S. regions. Rail shipments should resume on Thursday after they were cut on Wednesday, said a terminal operator, U.S. Development. The Louisiana Offshore Oil Port (LOOP), a crude terminal that typically handles 13 percent of U.S. imports, has adequate backup power generation to restart deliveries and meet anticipated demand from refineries after Isaac passes, spokeswoman Barb Hesterman said. LOOP facilities, including its onshore terminal at Clovelly, Louisiana, suffered power outages after a transmission line was damaged. The line could be difficult to repair since it crosses a marsh, utility Entergy Corp. said. Hesterman said LOOP personnel were inspecting for damages on Thursday. LOOP operations have been suspended this week and it wasn't immediately clear when it would restart. (Additional reporting by Selam Gebrekidan, Janet McGurty, Eileen Houlihan, Ed McAllister, David Sheppard and Robert Gibbons in New York; Writing by Joshua Schneyer; Editing by Bernadette Baum and David Gregorio) Link this Share this Digg this Email Reprints

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