Everyone expects a big oil pick up, but this must materialize in the next months: Analyst
Four of the largest refineries in Texas are discovering widespread damage from the deep freeze that crippled the state and expect to be down for weeks of repairs, raising the potential for prolonged fuel shortages that could spread across the country.
Exxon Mobil Corp.’s Baytown and Beaumont plants, Marathon Petroleum Corp.’s Galveston Bay refinery and Total SE’s Port Arthur facility all face at least several weeks to resume normal operations, people familiar with the situation said. Gasoline prices at the pump could reach US$3 a gallon in May as long outages crimp supply ahead of the driving season, said Patrick DeHaan, head of petroleum analysis for retailer tracker GasBuddy.
The cold snap and power outages that roiled energy markets affected more than 20 oil refineries in Texas, Louisiana and Oklahoma. Crude-processing capacity fell by about 5.5 million barrels a day, according to Amrita Sen, chief oil analyst for consultant Energy Aspects Ltd.
As blackouts that left millions of homes in the dark end and frozen roadways thaw, drivers can take to the road again. But refineries are left with burst pipes, leaks, damaged equipment and, in some cases, petroleum fluids that hardened into a sort of wax because the flow stopped.
“It’s going to be a difficult restart for refiners,” said Andy Lipow, president of energy researcher Lipow Oil Associates in Houston. “They are not going to restart until power is restored and they get the go-ahead from the utilities. My guess is the earliest restarts would even begin is this coming weekend.”
Restarting a refinery isn’t like flipping a light switch when the power comes back on. In addition to fixing any damage, getting back online involves slowly heating up units, testing all the way, then slowly ramping up so they are running fluid again. And then, testing and retesting the output until it meets specifications.
If a refinery didn’t shut major process equipment like gasoline-making units known as catalytic crackers before a power loss, there will be so-called dead legs, pockets of hydrocarbon and steam that freeze and can burst pipes and cause leaks. An abrupt shutdown could cause any fluids in piping to harden and take days or weeks to remove. Even in the case of a controlled shutdowns ahead of a power loss, plunging temperatures can damage equipment.
Below are some details about the four Texas refineries that expect to be down for weeks:
- Marathon’s 585,000-barrel-a-day Galveston Bay refinery in Texas City pushed back an upcoming major turnaround until March expecting to be down at least several weeks to repair equipment damaged by the freeze and awaits the return of power
- Exxon’s 580,500 barrel-a-day Baytown refinery may be down a month or more, with no firm estimate yet as damage assessments continue
- Exxon’s 369,000-barrel-a-day Beaumont refinery will likely be down for at least several weeks
- In Port Arthur, Total’s 225,500-barrel-a-day refinery may also take several weeks to restore full operations as it repairs frozen water lines and instrumentation
Marathon and Exxon declined to comment. Total didn’t immediately respond to a request for comment.
At Motiva Enterprises LLC’s 607,000 barrel-a-day Port Arthur plant, the largest refinery in the U.S, workers remain onsite to check equipment and are repairing pipes damaged in the frigid temperatures, people familiar with operations have said.
LyondellBasell Industries NV’s Houston refinery has working repairing leaks as it waits for nitrogen to be restored from provider Praxair International Inc. and permission from the Electric Reliability Council of Texas to restart its big refinery motors that run off electricity, a person familiar with operations said. LyondellBasell spokeswoman Kimberly Windon said the company’s Gulf Coast sites experienced operational upsets due to a supplier experiencing a temporary power loss.