Oil companies have started gradually restarting some of their refineries in Louisiana and major pipelines fully reopened on Tuesday, offering encouraging signs that the region’s crucial energy industry can soon recover from the onslaught of Hurricane Ida.
Exxon Mobil said crews were starting to resume normal operations on its Hoover platform in the Gulf of Mexico, which successfully avoided damage from the storm. And the company said its fuel terminal in Baton Rouge, Louisiana, resumed operations on Monday.
And in a dose of good news for motorists on the East Coast, Colonial Pipeline said it restored flows Monday night to two pipelines that connect Houston to Greensboro, North Carolina, after crews inspected the facilities. Reopening the lines, a major source of gasoline and other fuels, will help allay fears of sharp price spikes for consumers.
In addition, Philips 66 said its Gulf Coast lubricants plant in Sulfur, Louisiana would reopen on Tuesday, although one of its refineries near Belle Chasse, which took on water, remained closed. Valero said teams were checking its refineries in Saint-Charles and Meraux, which went down on Tuesday.
Ida ravaged the region’s power grid, leaving all of New Orleans and hundreds of thousands of other Louisiana residents in the dark without a specific timeline for power restoration. Refineries starting to restart weren’t at the heart of Ida’s journey and haven’t lost power, making the restart task much more manageable.
Energy and chemical companies across the region have documented the damage since Ida landed on Sunday, causing fierce winds and heavy rains. The companies are focusing their efforts on offshore platforms used to pump oil and natural gas under the Gulf of Mexico and on refineries that turn crude into finished products.
In total, nine Louisiana refineries, which collectively represent about 13% of the nation’s refining capacity, were forced to shut down, at least temporarily, by the storm, the U.S. Department of Energy said on Tuesday. The department noted that refinery operators cannot restart factories until electricity and other utilities on which they depend are restored. Some companies said the flooding made it difficult to access some of their facilities.
Yet even with the disruptions at many refineries, analysts say they don’t expect any major supply shortages. Part of the reason is that Gulf Coast gasoline and other petroleum inventories were above normal for this time of year and oil inventories were in line with the five-year average. .
On Tuesday, oil prices fell more than 1% before reversing part of that decline. Benchmark US crude fell 71 cents, or about 1%, to $ 68.50 in trading on the New York Mercantile Exchange.
Analysts at banking giant Citi estimated that Ida could reduce US economic growth by around a tenth of a percentage point in the third quarter, “which would be barely noticeable in an environment of otherwise strong growth.” They warned, however, that the storm could further increase demand for used cars, building materials and workers, which would worsen inflation.
Citi analysts said Ida’s toll would be large but less than the $ 161 billion cost of Hurricane Katrina, which hit New Orleans in 2005, and the $ 125 billion lost to the Hurricane Harvey, which inundated Houston, including several of its refineries, in 2017. The winds were stronger, but they didn’t cause as much flooding as previous storms.
The impact will be felt beyond the energy industry. Food giant Cargill said a huge grain terminal in Louisiana suffered significant damage. Cargill said safety concerns and power outages were slowing its ability to assess damage to the terminal, which handles crops exported to China and other countries, and the company declined to predict when the facility will operate at new.
Peter Meyer, agricultural commodity analyst for S&P Global Platts, said there is a “logistical bottleneck in Louisiana” that has caused corn and soybean prices to drop – just weeks before harvest – while exporters are trying to understand the damage.
Louisiana communities that were battered by Ida faced growing danger as they began the immense task of cleaning up debris and repairing storm damage: the possibility of weeks without electricity in the sweltering heat of late summer.
Entergy, Louisiana’s leading utility company, said a team of at least 20,000 people would take several days to assess storm damage in New Orleans and southeast Louisiana.
The Environmental Protection Agency has granted emergency fuel waivers for Louisiana and Mississippi until September 16. This decision suspends the requirements for the sale of low volatility gasoline, which is necessary in summer to limit the formation of ozone pollution.
Koenig reported from Dallas, Wiseman from Washington.
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