Ike Shutters 20% of U.S. Refining Capacity; Reserves Released

[uppityperson]

Source: Bloomberg

http://www.bloomberg.com/apps/news?pid=20601087&sid=a.rPLbKihqn0&refer=home

Sept. 14 (Bloomberg) -- Almost 20 percent of the U.S.'s oil refining capacity was shut after Hurricane Ike slammed into the Gulf Coast, limiting fuel deliveries and prompting the Department of Energy to release 309,000 barrels from its strategic reserves.

At least 13 refineries in Texas including plants operated by Exxon Mobil Corp., Valero Energy Corp. and Royal Dutch Shell Plc shut 3.64 million barrels a day of refining capacity as Ike approached Texas. Exxon and Shell said yesterday they would begin assessing damage of Gulf facilities as soon as weather permitted. Gulf refineries and ports are the source of about 50 percent of the fuel and crude used in the eastern half of the U.S. Analysts predict gasoline prices may again reach $4 a gallon.

``If these refinery outages go three weeks or more, most of the nation could see $4 gasoline again,'' Bruce Bullock, director of the Maguire Energy Institute at Southern Methodist University in Dallas, said in an telephone interview. ``If they are back up in a week, it may be a 15- or 20-cent-a-gallon increase.''

The U.S. Department of Energy said today it released a total of 309,000 barrels in crude from its Strategic Petroleum Reserve because of shortage in refineries owned by ConocoPhillips and Placid Oil along the Gulf Coast.

``The oil was requested because of disruptions in supply caused by Hurricanes Gustav and Ike,'' the Department said in an e-mailed statement. Deliveries will begin today, it said. The deliveries are for the ConocoPhillips refinery at Wood River along the Capline pipeline system and Placid Oil's Port Allen refinery, the statement added.

Read more: http://www.bloomberg.com/apps/news?pid=20601087&sid=a.rPLbKihqn0&refer=home

[glowing]

1. How's that drill-baby-drill thing working for ya now?

[ElboRuum]

2. 20% of refining capacity temporarily out of commission.

40% price increase. Likely permanent.

Anyone else see a pattern forming here?

[Endangered Specie]

3. You would think that high gas prices would get more people

to vote Democrat?

[klyon]

4. Do we have a strategic reserve of gasoline? I don't think so????

How does releasing barrels of oil help if there is no where to refine it into gasoline? This makes no senses to me unless they put gasoline on the market. We had an over supply of gasoline this summer since people cut back drive with gas over $4.00 a gallon, exports where up 30%. Now they get to gouge us again. When do these companies ever have to take a hit for bad things happening? Never that I have seen.

[NCDem60]

5. Another stupid reaction.

It was only done to be able to say the government did something. Sad thing is it works, over and over again, it works.

[BadgerKid]

6. No, we just had record exports of gasoline.

I'll try to find the link.

Edit: http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x3612752

[klyon]

12. thanks for the clarification

That is the thread I remember up 33% from a year ago.

[leftrightwingnut]

7. From Wikipedia:

http://en.wikipedia.org/wiki/Strategic_Petroleum_Reserve

The Strategic Petroleum Reserve is exclusively a crude petroleum reserve, not a stockpile of refined petroleum fuels, such as gasoline, diesel and kerosene, nor vegoil or biofuels. Although there are small-scale (2 million barrels) heating oil reserves in Connecticut, Rhode Island and New Jersey under the aegis of the Department of Energy (DOE), the Federal government maintains no gasoline reserves on anything like the scale of the SPR. Consequently, while the US enjoys some protection from disruptions in oil supplies, it would have to depend on other stockpiling members of the International Energy Agency for relief from any major disruption to refinery operations. Since no new refineries have been constructed in the US for thirty years, there is little reserve capacity. This was illustrated during Hurricane Katrina, when many of the Gulf coast oil refining complexes were disrupted for some time.

[Psephos]

10. It was intended to soften overreaction in the oil futures markets

Futures are based on perceptions. Speculation has a considerable psychological component. This wasn't about gasoline per se, but rather, about broader petroleum concerns.

The release may not have been necessary, but any palliatives are welcome in my opinion.

[uppityperson]

8. Twelve Texas refineries showing little damage

http://www.reuters.com/article/marketsNews/idUSN1444970020080914
PORT ARTHUR, Texas (Reuters) - Twelve of the 15 Texas oil refineries shuttered ahead of Hurricane Ike showed no visible signs of flooding or damage in the storm's wake, although fewer than half of them appeared to have power, a Reuters eyewitness said on Sunday.

The assessment was in line with reports from emergency management officials that the state's refineries appeared to have escaped serious flooding -- a sign fuel production could resume more quickly than initially thought.

Five refineries in the Houston area -- owned by Valero Energy Corp (VLO.N: Quote, Profile, Research, Stock Buzz), Lyondell LYO.N, Pasadena, Exxon Mobil (XOM.N: Quote, Profile, Research, Stock Buzz) and Shell Deer Park (RDSa.L: Quote, Profile, Research, Stock Buzz) -- had some power with only Lyondell's plant showing superficial damage to two on site storage tanks.

In Texas City, Beaumont and Port Arthur -- areas struck by widespread power outages -- none of the refineries had visible lights, the Reuters witness said. "Even though there is little indication of serious damage, I think it will be difficult to restart these oil refineries because of the power issue," said Chris Jarvis, senior analyst at Caprock Risk Management in Hampton Falls, New Hampshire. "Parts of the power system took a devastating hit."

[uppityperson]

9. Ike destroys a number of Gulf platforms

http://www.onelocalnews.com/howelltimesandtranscript/stories1/index.php?action=fullnews&id=33139

HOUSTON - Hurricane Ike appears to have destroyed a number of production platforms and damaged some of the pipelines in the Gulf of Mexico, federal officials said Sunday.

"It‘s too early to if it‘s close to Katrina- and Rita-type damage," Herbst said. The MMS says Hurricane Katrina destroyed 44 platforms three years ago, and soon after Hurricane Rita destroyed 64.

Specifics about the size and production capacity of the destroyed platforms were not immediately available. Herbst said the aerial inspections showed Ike damaged several large pipelines, but the extent of the damage was not known.

[Lithos]

13. For perspective...

There are 3800 rigs. I read somewhere else that they are thinking it is on the order of 10-20 rigs for Ike.

L-

[Imagevision]

11. CNN reported earlier today that oil platforms only had electrical supply problems?

[suston96]

14. Today's Washington Post.....

http://www.washingtonpost.com/wp-dyn/content/article/2008/09/15/AR2008091500415.html

Oil plummets as Ike largely spares energy output

By STEVENSON JACOBS
The Associated Press

Monday, September 15, 2008; 10:11 AM
NEW YORK -- Oil prices plunged to a seven-month low Monday as the Gulf Coast energy infrastructure appeared relatively unharmed after Hurricane Ike and traders bet that Lehman Brothers' bankruptcy could ignite a massive liquidation of commodities.

Light, sweet crude for November delivery fell $4.87, or 4.82 percent, to $96.38 a barrel on the New York Mercantile Exchange, after earlier dropping to $94.41, the lowest level since Feb. 14. A close at that level would be oil's first settlement under $100 since March 4.

Crude has fallen more than $50 _ or 35 percent _ from its all-time trading record of $147.27 reached July 11 as a global economic slowdown continues to weigh on demand for energy.

U.S. officials said Sunday that Ike destroyed at least 10 oil and gas platforms and damaged pipelines in the Gulf of Mexico. But that represents only a small portion of the 3,800 production platforms in the Gulf and pales in comparison to the catastrophic damage to energy infrastructure doled out by Hurricanes Katrina and Rita three years ago.

********

[kickysnana]

15. UKGuardian: 14 U.S. oil refineries shut due to Ike-DOE

http://www.guardian.co.uk/business/feedarticle/7799416

WASHINGTON, Sept 15 (Reuters) - Hurricane Ike caused minimal damage to oil refineries in the Gulf of Mexico, the U.S. Energy Department said on Monday.
Companies were preparing to restart operations at the 14 oil refineries in Texas and Louisiana that remained shut due to Ike. The closed refineries have a total capacity of 3.573 million barrels per day, the department said.

In addition, 27 major natural gas processing plants with a total capacity of 13.85 billion cubic feet per day were closed in the Gulf of Mexico, including plants still affected by Hurricane Gustav.

Eight major natural gas plants with a total capacity of 2.9 billion cubic feet per day were operating at reduced or normal levels.