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Storm-hit Gulf energy industry struggles back

AFX Europe (Focus): Storm-hit Gulf energy industry struggles back – UPDATE 2

The 226,000 bpd Motiva/Shell refinery at Norco, La., was still reported down but suffered limited storm damage and may be able to restart as soon as mid-week, the Energy Department said.”

Wednesday Sept 07, 2005

SAN FRANCISCO (AFX) – A week after Hurricane Katrina pounded the Gulf of Mexico there was growing evidence Tuesday that the industry is regaining its footing, with offshore energy production rising and key pipelines again up and running.

Recovery from the storm by the region’s hard-hit refineries also improved, though industry officials warned that up to 5% of the nation’s refining capacity could be out of commission for weeks – perhaps months in the worst cases.

News of the progress put downward pressure on oil prices, with crude oil futures on the New York Mercantile Exchange closing at $65.95 a barrel, a price not seen since before Katrina ripped through the oil patch.

According to the latest data from the federal Minerals Management Service, the volume of Gulf of Mexico oil shut by the storm has dropped to 870,374 barrels a day, or 58% of the region’s usual output.

That means the region that typically accounts for a fourth of the nation’s oil output is now pumping at 42% of its previous capacity, a marked improvement from the 95% production cut a week ago.

About 41.6% of the Gulf’s natural gas production, or 4.2 billion cubic feet a day, was still out, down from 88% a week ago.

The Louisiana Offshore Oil Port, or LOOP, is now receiving tankers bringing in crude oil imports. But power outages at the deepwater port’s Clovelly, La., onshore storage facility are still hampering operations.

LOOP officials said they expect the port to be fully functional by early next week.

Colonial Pipeline, the 95-million-gallon-a-day fuel line linking Gulf Coast refineries to the huge Northeast market saw power fully restored over the weekend and is now running at full capacity, the Energy Department reported.

Meanwhile, the Capline pipeline to the Midwest was back at 960,000 barrels a day, or just over 80% of capacity, the department said, bringing much-needed crude to refiners farther north.

Refineries restarting

Refineries along the Gulf Coast are also getting back on their feet as the power slowly comes back on. But a serious lack of personnel, scattered to shelters throughout the region, is hampering operations almost as much as actual storm damage.

Seven refineries remain shut by the storm, keeping 1.24 million barrels per day crude processing capacity off the market and driving demand for imports of gasoline and heating oil.

The good news, however, is that three Louisiana refineries restarted operations during the weekend and could be turning out gasoline and other products later this week.

The three restarted refineries are: Marathon Oil Corp.’s 245,000 barrel-per-day facility at Garyville, Motiva/Shell Oil’s 235,000 bpd Convent refinery, and Valero Energy Corp.’s 185,000 bpd plant at St. Charles.

The 226,000 bpd Motiva/Shell refinery at Norco, La., was still reported down but suffered limited storm damage and may be able to restart as soon as mid-week, the Energy Department said.

Chevron Corp’s giant Pascagoula refinery was less fortunate. While the company said it escaped “catastrophic” damage, the site was badly flooded and will likely require major repairs.

With many of its personnel still unaccounted for, Chevron said it was still unable to estimate when its biggest refinery would be back on line.

Meanwhile, several of the refineries that had been forced to cut runs last week due to a shortage of crude oil supplies reported that they were receiving shipments from the Strategic Petroleum Reserve, which the administration ordered opened last week to damp market volatility. This story was supplied by MarketWatch. For further information see

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