Royal Dutch Shell Plc  .com Rotating Header Image

Houston Chronicle: Humberto nudges oil above $80

Sept. 14, 2007, 12:33AM

With traders already jittery, supply worries lead to record

Copyright 2007 Houston Chronicle

The price of oil closed above $80 a barrel for the first time Thursday after Hurricane Humberto knocked out power to three Texas oil refineries and rattled traders who were already anxious about tight oil supplies.

Light, sweet crude finished at a $80.09, 18 cents above the record set the day before. Adjusted for inflation, however, the new high falls short of the $38 oil price in early 1980, equivalent to nearly $100 a barrel in today’s dollars, according to the U.S. Energy Information Administration.

Humberto’s surprise attack on the heart of the nation’s oil refining network also raised fears that already-low gasoline supplies could fall still lower. Gasoline futures rose about 3 cents, an increase that could soon find its way to the pump.

But traders and analysts were more focused on crude supplies, which have taken center stage since a government report Wednesday showed a surprisingly big draw in the nation’s oil reserves, as well as declines in gasoline supplies and refinery activity.

Bill Herbert, analyst with Simmons & Company International in Houston, said that while the storm had some effect, the “grim reality” is that $80 is mostly a product of continuing supply and demand forces.

Humberto could have upset that delicate balance far more than it did. But the quickly forming storm spared oil production platforms and drilling rigs in the Gulf of Mexico that are key to domestic crude supplies.

“We didn’t even evacuate,” said Bill Provine, spokesman for Rowan Cos., a Houston-based operator of shallow-water jack-up rigs in the Gulf. One of those rigs, known as the Bob Keller, was in the direct path of Humberto, but the 70-mph winds it took did no damage, he said.

The Gulf of Mexico, with about 830 manned platforms, accounts for about 30 percent of America’s domestic oil production and 20 percent of its natural gas production, according to the U.S. Minerals Management Service in New Orleans, which regulates offshore oil producers in the Gulf.

But there were no reports of suspended production or evacuations because of the storm, said Caryl Fagot, a Minerals Management spokeswoman.

Humberto saved a bigger punch for refiners and petrochemical plants along the Texas-Louisiana border, many of which were battered when Hurricane Rita cut a similar path in 2005.

In Port Arthur, three major refineries were taken out of commission by power failures Thursday morning. Total shut down its 240,000-barrel-per-day refinery, Motiva stopped production at its 285,000-barrel-a-day refinery and Valero Energy Corp. ceased operations at its 325,000-barrel-a-day refinery, according to the companies and the Texas Commission on Environmental Quality.

Refiners and chemical plant operators are required to file reports with the state when they have unplanned shutdowns. That’s because shutting down facilities typically leads to increased emissions of hazardous compounds. The emissions are produced when operators burn off materials stranded in midproduction — a process called flaring, said Georgie Volz, regional director for the environmental quality commission in Beaumont.

By Thursday evening, Valero had restored power throughout its Port Arthur refinery but hadn’t restarted units, company spokesman Bill Day said. Total also said it had restored partial power and expected to be back up within five days.

But Shell, which owns Motiva jointly with Saudi Arabia’s state-owned oil company, said it was still assessing damage and did not give a timeline for when the facility would return to normal operations.

The storm also interrupted or shut down operations at a number of petrochemical plants in and around Port Arthur. Among them were a Chevron Phillips facility in Port Arthur and a Firestone polymer plant in Orange, Volz said.

[email protected] and its also non-profit sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

0 Comments on “Houston Chronicle: Humberto nudges oil above $80”

Leave a Comment

%d bloggers like this: