Several unexpected setbacks:
HOUSTON -(Dow Jones)- The recovery of U.S. refining capacity took another step back Thursday, as further indications emerged that outages around the Texas-Louisiana border could last for weeks, and a healthy refinery outside the hurricane impact zone shut down for almost two months for work. Royal Dutch Shell PLC said the 275,000 barrel a day refinery it co-owns in Port Arthur, Texas, is still "weeks away" from restart. BP will also take weeks to restart its giant, 437,000 barrel a day Texas City refinery. Marathon Oil Corp., meanwhile, said it would shut its 74,000 barrel a day Detroit refinery Thursday for 50 days to complete an expansion project that has entered its final phase.
The comments indicate the U.S. could have to endure outages of significant refining capacity through the fall, which U.S. energy analysts say will tighten the country's fuel inventories ahead of winter. "There still is a substantial gap that's going to have to be fed," said Doug MacIntyre, analyst at the EIA. "The further it goes on, the bigger issue is becomes." Facing limited solutions on the supply side, Energy Secretary Samuel Bodman called a news conference for Monday to announce a national campaign for energy conservation. Yet while high prices are already pressing drivers to cut back where possible, analyst say lower consumption alone won't balance the market. Prices will have to stay high to encourage extra production and draw imports, they say. BP is looking to produce gasoline from its Texas City refinery, the country's third largest, as soon as possible, but production is likely still several weeks away, a person familiar with the refinery said Thursday. "The plan is to work toward gasoline production first, but the timing is weeks away as opposed to next week," the person said. John Hofmeister, president of Shell Oil Co., made similar comments about the Motiva Enterprises refinery it co-owns in Port Arthur, Texas, with Petroleos Mexicanos. "We're still evaluating the Motiva refinery," Hofmeister said. "We've got crews working around the clock...we're still weeks away." The refinery is one of seven still shut down by Hurricane Rita in the Texas- Louisiana border area.
Together with BP's still shuttered near Houston and four still off line in the wake of Hurricane Katrina, about 18% of U.S. refining capacity is out of service. Entergy suffered severe damage to its high-voltage system and has told the refineries it will be "several weeks" before power is restored. One exception is Exxon Mobil Corp.'s 348,500 barrel a day Beaumont, Texas, refinery. Entergy said it will start delivering power to the town of Beaumont Thursday via a large power line from Arkansas, and that will allow ExxonMobil to restart its refinery by this weekend. "Today they'll get this key link going to Beaumont, and that in turn will allow ExxonMobil to come on line by this weekend," Entergy spokesman David Caplan said. Just because power is available doesn't mean the refinery will start up, and ExxonMobil itself still hasn't set a restart schedule. In a recorded message to Beaumont refinery employees Thursday morning, ExxonMobil pointed to some progress on the restoration of key local infrastructure, but said it was still assessing damage at the facility. "We are still completing damage assessment and finalizing our startup plans," the message said. Seven refineries have begun to restart in the Houston area. Another, the Texas City refinery owned by Valero Energy Corp., was attempting to restart Tuesday but hasn't since updated its progress. Meanwhile, Marathon said it will shut down its Detroit refinery Thursday to complete an expansion and clean fuels project. The $300 million project, now in its final phase, will boost the refinery's capacity to 100,000 barrels a day, but will take yet another refinery off line for 50 days. |
