UPDATE 3-US floods hit fuel transport, threaten refineries
* Flood waters headed to crest in Memphis
* Flooding expected in Louisiana within two weeks
NEW YORK/HOUSTON, May 9 (Reuters) - Heavy flooding in the U.S. Midwest will disrupt crude supplies to one U.S. refiner in days and could threaten a swathe of Louisiana plants within weeks as the rising waters move south down the Mississippi.
The U.S. Army Corps of Engineers plans to open a spillway that will send Mississippi flood waters down the Atchafalaya River in Louisiana. This will make the Atchafalaya unnavigable to barges and cut off 25 percent to 30 percent of crude supplies to Alon USA Energy's (ALJ.N) 80,000 barrel per day (bpd) Krotz Springs, Louisiana refinery, a source said. [ID:nN09248481] [ID:nN09233555]
U.S. gasoline futures jumped 6 percent on Monday, in part due to the threat to fuel supplies after weeks of heavy rains and swelling rivers. [ID:nL3E7G90DS]
In Memphis, flood waters were moving to a crest, expected on Tuesday, at or above 48 feet (14.6 meters).
Valero Energy Corp's (VLO.N) 180,000 barrel per day Memphis, Tennessee refinery remained in operation on Monday morning as the nearby Mississippi River was approaching record flood levels and forcing area residents from their homes.
In addition to the Memphis refinery, nine Louisiana refineries were at risk from the flooding, although it was not expected to reach those plants for two weeks. The 10 plants have a combined refining capacity of 2.4 million barrels per day (bpd), equal to 13.7 percent of national capacity.
U.S. officials were preparing to open the Morganza spillway to divert waters down the Atchafalaya, forcing it to close in two days, the source said. Already some barge operators have already declined to navigate it.
The Krotz Spring plant has been testing out new crudes, including Bakken, Eagle Ford and West Texas Intermediate -- some of which come through on barge -- as local Louisiana grades become more expensive, the source added.
For a complete list of oil infrastructure under threat from floods, click [ID:N09239373]
Scores of U.S. heartland rivers from the Dakotas to Ohio have flooded following a snowy winter and heavy spring rains, feeding the near-record crests on the Mississippi River.
On the Ohio River, the U.S. Coast Guard said 20 percent of barge terminals it regulates were unable to operate because of high water levels and flooding, curbing transfer of petroleum products to trucks. [ID:nWEN2940]
El Paso Corp EP.N was monitoring possible flooding from the bulging Mississippi River around its Southern Natural Gas pipeline. [ID:nN09254294]
Further down river in Louisiana, officials opened portions of the Bonnet Carre spillway near the refining hub of Norco, Louisiana, to send Mississippi River water to Lake Pontchartrain.
The Colonial Pipeline, which transports refined products from refineries in Texas, Louisiana, Mississippi and Alabama to terminals across the U.S. South and East Coast, is ready for high water coming into Louisiana, and does not expect operations to be affected, spokesman Steve Baker said.
While the system's pipelines are underground -- and under the swollen riverbed -- there is a spot in Louisiana where a double levee on the west bank provides extra protection, Baker said. Colonial officials plan to do regular flyovers and monitor water movement closely. (Reporting by Erwin Seba, Kristen Hays, Janet McGurty, Selam Gebrekidan, Jeanine Prezioso; Writing by Erwin Seba and Matthew Robinson; Editing by David Gregorio)
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