July 12, 2019 / 2:05 PM / 3 days ago

U.S. refiners in path of Storm Barry to keep running

HOUSTON/NEW YORK (Reuters) - Most U.S. refiners with plants in the path of Tropical Storm Barry scrambled on Friday to keep them running, as the storm continued to strengthen and was projected to become the season’s first hurricane.

FILE PHOTO: Storage tanks are seen inside the Exxonmobil Baton Rouge Refinery in Baton Rouge, Louisiana, November 6, 2015. REUTERS/Lee Celano

Exxon Mobil Corp (XOM.N) plans to run its 502,500 barrel-per-day (bpd) Baton Rouge, Louisiana, refinery through Barry’s expected slow move across the state this weekend, said sources familiar with plant operations.

Royal Dutch Shell Plc’s (RDSa.L) refineries in Norco and Convent, Louisiana, also plan to remain in operation as forecasts call for the state to be drenched with as much as 2 feet (61 cm) of rain, sources familiar with operations at those plants said.

Barry is expected to strengthen further, bringing a dangerous storm surge, heavy rains and winds of at least 74 mph (119 km per hour) before making landfall on Saturday, according to the National Hurricane Center.

Exxon is taking steps to minimize the risk of heavy rain to its workers and equipment, said spokesman Jeremy Eikenberry, who added that its Baton Rouge plant and others were operating normally. Shell operations were continuing at the two Louisiana refineries, spokesman Ray Fisher said.

“The slow movement of Barry will result in a long duration heavy rainfall and flood threat along the central Gulf Coast,” NHC hurricane specialist Jack Beven said in an advisory. Flooding “which may be life-threatening” is expected across southeast Louisiana into Mississippi,” he added.

Barry has shut 1.11 million barrels per day (bpd) of U.S. Gulf of Mexico oil production, nearly 59% of the region’s daily crude and 49% of its natural gas output, according to estimates released on Friday by the U.S. Bureau of Safety and Environmental Enforcement.

Oil producers have evacuated staff from 267 facilities in the Gulf of Mexico and moved 11 drill ships out of the path of the storm, BSEE said.

U.S. crude futures CLc1 settled up a penny at $60.21 a barrel and natural gas futures NGc1 rose 1.7% despite an International Energy Agency report on Friday that projected a growing global surplus of oil. For the week, West Texas Intermediate crude has climbed about 5.5%.

Natural gas output in the Lower 48 U.S. states could drop to a seven-week low of 87.2 billion cubic feet per day (bcfd) on Friday from a record 91.1 bcfd on July 5.

Most of the loss was in the offshore Gulf of Mexico region where producers were expected to cut output to just 1.3 bcfd on Friday, from more than 3.1 bcfd a week ago, according to data provider Refinitiv.

The amount of gas flowing to liquefied natural gas supplier Cheniere Energy Inc’s (LNG.A) Sabine Pass plant on the Texas-Louisiana border dropped to a 13-week low of 2.9 bcfd on Thursday and Friday from an average of 3.6 bcfd over the prior seven days, according to Refinitiv.

Cheniere declined to comment on the decrease, but said it did not expect a major impact on operations. There were three LNG tankers in the northern Gulf of Mexico on Friday, most of them waiting to enter the Sabine Pass waterway, according to vessel tracking data.

A storm surge of up to 6 feet (1.83 m) is expected to cause coastal and interior flooding. Barry was moving slowly and centered about 70 miles (115 km) southeast of Morgan City, Louisiana, with winds of 65 mph (100 km/h) late on Friday afternoon.

Refiner Phillips 66 (PSX.N) earlier shut its 253,600-bpd Alliance, Louisiana, refinery, which has regularly been inundated by tropical storms over the past 14 years.

PBF Energy Inc’s (PBF.N) Chalmette and Valero Energy Corp’s (VLO.N) Meraux refineries, both in Louisiana, were expected to remain open through the storm, according to people familiar with their operations. The Meraux refinery is about 17 miles north of the Alliance refinery.

Valero is following its hurricane preparedness plan and coordinating with local agencies, spokeswoman Lillian Riojas said. PBF did not reply to a request for comment.

Reporting by Erwin Seba in Houston and Scott DiSavino in New York; Writing by Gary McWilliams; Editing by Jonathan Oatis and Matthew Lewis

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