* Phillips 66's 238,000-bpd plant has flooding, power out
* Philadelphia's 330,000-bpd refinery restarting
* Hess 70,000-bpd NJ refinery, Imperial plant suffer outages
* Key NY harbor hub at Linden, NJ, powerless
* Gasoline futures pare losses, turn higher on power
By Janet McGurty
NEW YORK, Oct 30 Flooding at the second-largest
refinery on the U.S. East Coast plus power glitches at two other
plants and a key New Jersey terminal hub slowed the recovery in
fuel supplies disrupted by Hurricane Sandy.
While the region's biggest plant, in Philadelphia, and
several others were ramping up operations after escaping damage,
other facilities, pipelines and terminals were struggling to
restore the flow of supplies that had slowed to a trickle.
Several operators cited power outages around the Linden, New
Jersey, hub near the key New York harbor trading area.
Phillips 66 said there was "some flooding in
low-lying areas" of its 238,000 barrel-per-day Bayway, New
Jersey, plant, which was shut on Monday as a precaution. It did
not say when the plant, which had lost external power, might
New Jersey utility PSE&G said late in the day that it had
"re-energized" three of six flooded switchyards, including
equipment that can deliver power to Linden.
News of trouble at Bayway, nicknamed the "gasoline machine"
for its key role in supplying motor fuel to the New York City
area, turned the tide in gasoline futures which had
fallen more than 2 percent as output recovered elsewhere and
traders bet that fuel consumption would be hit.
By late evening, prices had reversed course to rise more
than 2 percent on the New York Mercantile Exchange (NYMEX),
which was due to reopen its trading floor on Wednesday. A fire
at a unit of BP's Texas City refinery aided gains too.
Other power-related glitches also surfaced after the storm,
which left more than 8 million customers without electricity,
shut the region's seven major international airports and all but
halted traffic on the nation's most heavily traveled roads.
As the storm moved north, a power outage shut Imperial Oil's
121,000-bpd Sarnia, Ontario, refinery, but the company
said it expected to restart units later in the day.
Hess Corp's 70,000-bpd Port Reading, New Jersey,
refinery, which had also shut ahead of Sandy, lost power and had
no time frame for restarting.
The northern Line 3 segment of the Colonial Pipeline, a
conduit that supplies as much as 15 percent of the East Coast's
5.2 million bpd of gasoline, diesel and fuel demand, was still
idle, but the company said it had not suffered any operational
damage. Portable generators were being brought in to restore
power to the Linden tank farm and resume shipments.
The company asked customers to divert fuel shipments bound
for the New Jersey area to southern markets.
NuStar Energy said there had been significant water
damage at its Linden terminal, while Buckeye Partners LP
said many of its New York, New Jersey and Connecticut facilities
were also without power.
Factbox on oil operations:
The flooding at Bayway, which had been seen by experts as
the refinery most vulnerable to Sandy's record 13-foot (4-meter)
storm surge and subsequent power outages, is a potential second
nightmare for Phillips 66, which had struggled to restore its
Alliance, Louisiana, refinery after Hurricane Isaac in August.
That storm pushed more than 2 feet of floodwater into the plant.
PHILLY PLANTS SEEN OK
Operations in the Philadelphia area appeared set to resume
quickly. Philadelphia Energy Solutions' 330,000-bpd refinery,
the biggest in the region, escaped damage and was restoring
operations at the Point Breeze half of the plant that was shut,
the company said, confirming a Reuters report.
Industry group Genscape said its infrared cameras detected
the restart of key crude and vacuum distillation units.
Delta Air Lines subsidiary Monroe Energy's
185,000-bpd Trainer, Pennsylvania, plant operated through the
storm, and was expected to reach full rates next week after a
maintenance overhaul, a source with knowledge of operations
PBF Energy was ramping up its Delaware City refinery after
minimal run-cuts, another such source said. A company spokesman
confirmed reports that the plant had flared briefly, but said
the incident had not affected operations.
Delaware City and PBF's 180,000-bpd Paulsboro plant in
southern New Jersey, which had throttled back to reduced rates
ahead of Sandy, "ran well through the storm", spokesman Michael
He said personnel had completed a "thorough assessment" of
the facilities, and that PBF would not provide further updates
on logistics or operations.
The precautionary refinery closures were more widespread
than during Hurricane Irene in August 2011, when only the Bayway
plant shut completely.
John Auers, senior vice president and refining specialist at
Turner, Mason & Co in Dallas, said East Coast plants, even those
near the water, are better protected from potential flood damage
than those that suffered weeks-long outages on the Gulf Coast
following hurricanes Katrina and Rita seven years ago.
Still, even minor flooding can be a concern and plants
without sufficient on-site generators may have to wait for
utilities to restore outside power. The largest risk may simply
lie in restarting vast, intense equipment.
"You're talking about heating up oil to fairly high
temperatures, putting it through processing units at high
pressure," Auers said. "Anytime you interrupt that steady-state
there is always the potential for issues."
While the biggest ports remained shut, stalling delivery of
some 1 million bpd of imported fuel, the Port of Boston opened
without restrictions and was expected to unload a gasoline cargo
later on Tuesday, an official said.
DEMAND IN FOCUS
Barring major damage, most experts expected the region's
fuel supplies could bounce back quickly, while demand was likely
to take a much deeper knock. Some 170,000 bpd of jet fuel demand
alone was shut for a third day as all three major New York area
airports remained shut, with no date for resuming flights.
Benchmark New York gasoline futures prices, which
rallied more than 6 percent before the storm as traders feared a
disruption in supplies, closed 1 percent lower. U.S. crude oil
futures rose slightly, reversing Monday's dip.
One trader offering to sell physical cargoes in the New York
Harbor market found no buyers on Monday.
"For the moment you have a big black hole where there used
to be oil demand," said Credit Suisse oil analyst Jan Stuart. He
said 80 percent of demand in the New York metropolitan area had
been affected somehow.
"In the end, the demand deficit outweighs the supply
Airlines had canceled more than 15,770 flights in the past
four days, flight-tracking service FlightAware said.