Producers shut in close to 90% of volumes; refiners close plants ahead of Cat 4 Hurricane Ida
30th August 2021 05:18 GMT

Close to 90% of total US oil and gas production came offline in the Gulf of Mexico ahead of Category 4 strength Hurricane Ida, and Louisiana's refining and petrochemical operators began closing some plants ahead of the heavy winds and storm surge of a major hurricane. Ida is expected to make landfall Aug. 29 as one of the most powerful storms to ever hit the US Gulf Coast.

Ida was upgraded to a strong Category 4 hurricane with maximum sustained winds of 150 mph on Aug. 29, according to the US National Hurricane Center, with the potential to strengthen even more before landfall later in the afternoon.

The US Bureau of Safety and Environmental Enforcement said Aug. 28 that 90.84% of the US Gulf's crude oil, or 1.653 million b/d, already was shut in, as well as 84.87% of the region's approximately 2.2 Bcf/d of natural gas production, or about 1.893 Bcf/d. An estimated 279 offshore platforms were evacuated -- 50% of the US Gulf's total.

Close to 4.4 million b/d of operating refinery capacity is in the path of Ida as well, primarily in Louisiana, and at least half of that at-risk capacity came offline ahead of Ida as Phillips 66, Shell, ExxonMobil, Valero and others closed refining units. Ida's wind speed will play a major role in how hard it strikes at the heart of USGC refining centers, according to S&P Global Platts Analytics.

If the hurricane comes in with 120 mph winds or stronger, it could be "a major factor" in disrupting refining and petrochemical operations, Platts Analytics said. Ida would become a Category 5 hurricane if its winds hit 157 mph.

"Hurricane Ida is expected to come ashore along the same path as other storms, which did extensive damage to USGC refining and petrochemical facilities. Many plants have been hardened against hurricanes, but disruptions in operations are still very likely due to flooding, power outages and personnel dislocations," Platts Analytics said.

Louisiana and other Gulf Coast utility crews also were adding extra personnel in preparation for widespread power outages across the region.

As of about 9:30 am CT Aug. 29, Louisiana had about 40,000 electricity customers without power, led by Entergy with 27,500 and Cleco with about 5,500 customers, almost all of them in Louisiana.

A hurricane typically causes power demand destruction, as it severs transmission and distribution lines to loads. With weaker demand, lower prices would be expected, but much of the nation's natural gas flows through Louisiana, and Ida could disrupt that infrastructure and increase pressure on gas prices.

Prices

 

Oil

  • Oil markets likely to open higher on the evening of Aug. 29 ahead of weekly trading, analysts said.
  • NYMEX September RBOB settled up 1.88 cents at $2.2742/gal Aug. 27.
  • NYMEX September ULSD climbed 2.60 cents to settle at $2.1092/gal.
  • ULSD assessed at a 4.55 cent/gal discount to front-month NYMEX ULSD, the highest level since March 26.
  • NYMEX October WTI settled $1.32 higher at $68.74/b.

 

Natural gas

 

  • Henry Hub prices gained 14 cents to settle at $4.34/MMBtu for the weekend, the strongest spot price since the severe winter storm in mid-February.
  • Henry Hub forwards saw strong support during Aug. 27 trading, with the prompt contract gaining 15 cents to $4.33/MMBtu.
  • Winter strip pricing increased by 10-13 cents as the January 2022 contract broke above $4.50/MMBtu.

 

Power

 

  • Day-ahead on-peak power for delivery Aug. 30 was bid at $50/MWh and offered at $85/MWh on the Intercontinental Exchange, up from the $41.50/MWh that power for delivery Aug. 27 settled at Aug. 26.

 

 

Trade flows

 

Oil

 

  • Louisiana Offshore Oil Port (LOOP) said it was executing its storm plan.
  • Port of New Orleans and Port of Mobile -- covering Alabama and Mississippi coasts -- were closed to inbound and outbound traffic as of Aug. 28.
  • Some other Gulf Coast ports were restricted as well, according to the US Coast Guard.
  • Gasoline inventories in PADD III heading into the weekend were adequate at 2.5 million barrels higher relative to the five-year average, Platts Analytics said, but could be rapidly depleted in a week to the lowest levels since February.

 

Natural gas

 

  • As of late Aug. 27, there were two tankers at Sabine Pass, one at Cameron LNG and one at Freeport LNG, according to Platts cFlow.
  • Sabine Pilots advised late Aug. 27 that any facilities in the area that want to empty their berths should do so sooner rather than later as Ida approaches Louisiana.
  • If Louisiana LNG facilities remain open, exports likely will be restricted until Ida passes. Pilots serving the channels were meeting to assess the situation, according to shipper notices.

 

 

Infrastructure

 

Oil

 

  • Crews were evacuated from 279 production platforms, or 49.82% of the 560 manned US Gulf platforms, BSEE said.
  • BP said Aug. 28 it had shut in production and evacuated crews from its four US Gulf platforms.
  • Shell shut in production and evacuated Ursa, Mars, Olympus and Appomattox assets, and shut in Auger and Enchilada/Salsa facilities.
  • Shell was planning to restart its Stones field -- just west of Ida's projected path -- after shutting it down earlier in the week when the storm was tracking farther west.
  • Shell shut down its 230,600 b/d Norco Refinery in Louisiana, as well as its Geismar petrochemical plant.
  • Phillips 66 closed its 255,600 Alliance Refinery in Belle Chasse, Louisiana.
  • Chevron shut in production from its operated Gulf of Mexico platforms, and closed its Fourchon and Empire terminals and pipelines in Louisiana.
  • Murphy Oil, BHP, ExxonMobil and Equinor shut in and evacuated all of their offshore platforms.
  • Louisiana's 17 refineries have aggregate capacity of 3.4 million b/d, representing about 20% of the nation's total capacity, according to US EIA data.
  • Mississippi has a total refinery capacity of 394,000 b/d, according to EIA.
  • These refineries accounted for 1.4-1.6 million b/d of gasoline output, 1.1-1.3 million b/d of distillate production, and 300,000-400,000 b/d of kerojet supply, Platts Analytics said.
  • ExxonMobil said late Aug. 28 it was shutting some refinery units and equipment at its 520,000 b/d Baton Rouge, Louisiana, facility ahead of Hurricane Ida.
  • Valero Energy shut down its 215,000 b/d St. Charles refinery in Norco and its 125,000 b/d refinery in Meraux, Louisiana.
  • Market analysts said two regional renewable diesel facilities – Valero's Diamond Green Diesel 290 million gal/yr facility in Norco and Renewable Energy Group's 90 million gal/yr Geismar, Louisiana, plant were closed ahead of the storm.
  • Colonial Pipeline said it was prepared and executing its storm plan.

 

Natural gas

 

  • Cheniere Energy, Cameron LNG and Freeport LNG -- all west of Ida's path -- remained confident they could remain open.
  • For petrochemicals facilities, more shutdowns are expected for both steam crackers and their downstream units, Platts Analytics said.
  • Potential impacts include roughly 6.5 million t/year of ethylene capacity, 3.8 million tons of polyethylene, and 1.1 million tons for polypropylene, according to Platts Analytics.
  • Other facilities include 3.6 million tons of PVC and 300,000 tons of MEG.

 

Power

 

  • The Midcontinent Independent System Operator, which encompasses the target area, said Aug. 29 that it is "taking measures to ensure grid and market operating systems remain secure and protected during the storm." MISO has a severe weather alert and conservative operations – forbidding maintenance work in generation and transmission facilities – in effect through 11:50 pm Aug . 31.
  • As of about 9:30 am CT Aug. 29, MISO had load about 81.7 GW, compared with a load forecast of about 82 GW. Louisiana Hub real-time locational marginal prices at that time was $26.30/MWh, compared with an average real-time LMP of about $34.60/MWh for the previous four Sundays this August.
  • Cleco, a large utility serving Louisiana, said it had secured the help of an additional 2,000 workers to assist in restoring service that the storm may disrupt.
  • Entergy on Aug. 28 said it should be able to deploy roughly 16,000 workers, including from outside the region, to help restore power knocked out by the storm.
  • Customers in the direct path of Ida could lose power for more than three weeks, said Entergy.

 


Bunkerworld .,
30th August 2021 05:18 GMT