September 17, 2019 / 10:23 PM / 2 months ago

East Texas refineries shut key units, cut production after Imelda

HOUSTON (Reuters) - East Texas refineries shut key units and cut production after Tropical Storm Imelda brought days of heavy rain over the region, rivaling the inundation from 2017’s Hurricane Harvey.

Exxon Mobil Corp shut the large crude distillation unit (CDU) at its 369,024 barrel-per-day (bpd) Beaumont, Texas, refinery on Thursday night, said energy industry intelligence service Genscape.

Exxon shut the 240,000 bpd Crude B CDU on Thursday night, Genscape said. Sources familiar with plant operations had told Reuters on Thursday the refinery was limping after shutting some units

Exxon spokesman Jeremy Eikenberry said the refinery continues to operate, but declined to discuss the status of production.

U.S. Gulf Coast gasoline spot prices have risen to two-year highs as refiners cut output. CBOB gasoline gained a penny on Thursday to trade at 3.25 cents per gallon above the gasoline futures contract, highest since Sept. 12, 2017, traders said.

Gasoline prices at the pump in Texas have risen 5% over the last week, to $2.391 a gallon from $2.271 a gallon, according to the American Automobile Association. Prices typically fall this time of year following the peak summer demand season.

“I don’t think the impact will last longer than a week, and I would say the Gulf will see the impact slightly more than other regions - but still just a few cents, nothing like when Harvey shut down a third of refining production in 2017,” said Patrick DeHaan, head of petroleum analysis at GasBuddy.

Valero Energy Corp was preparing to resume production on the small CDU at its 335,000 bpd Port Arthur, Texas, refinery on Friday as the large CDU sustained a malfunction, said sources familiar with plant operations.

Production on the 268,000 bpd AVU 146 CDU was cut to a minimum on Thursday night and the 75,000 bpd AVU 147 CDU was placed on circulation. Production was cut because sulfur cannot be trucked out of the refinery, the sources said.

Production was also cut at Total SA’s 225,500 bpd Port Arthur, Texas, refinery as flooding on roads prevented sulfur removal, Gulf Coast market sources said.

Total may have to begin idling the refinery by early next week if it cannot haul away the sulfur, the sources said.

A major waterway to the refining hubs of Beaumont and Port Arthur was back in operation on Friday as pilots resumed steering vessels along the ship channel to Beaumont, the U.S. Coast Guard said.

Ship movements along the Houston Ship Channel continued with some restrictions along a portion of the 53-mile (85-km) waterway connecting the Port of Houston to the Gulf because of strong currents from the San Jacinto River, the Coast Guard said.

More than 40 inches (102 cm) of rain fell on Thursday across Jefferson County, which includes Beaumont and Port Arthur.

Reporting by Erwin Seba in Houston and Stephanie Kelly in New York; Editing by Jon Boyle and David Gregorio

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