Damage from Harvey will result in a loss of well over 1 million barrels a day


In response to the catastrophic flooding over the weekend major oil refineries are being forced to shut down all throughout south eastern Texas.

This includes Shell’s Deer Park Refinery, one of the largest in the United States, which produces roughly 340,000 barrels per day. In a statement, Shell stated “…we made the decision to initiate a controlled shut down of the Deer Park, Texas, refinery and chemical plant as a result of heavy rainfall and associated nearby flooding from Hurricane Harvey. Only essential personnel will stay on site through the end of the week.”

Other refineries shutting down include Petrobras’ Pasadena refinery (110,000 barrels a day), Phillips 66 Sweeny refinery (260,000 barrels a day), and Exxon Mobil’s Baytown plant (560,000 barrels per day). Corpus Christi’s Flint Hills, Citgo, and Valero refineries have also been temporarily shuttered with combined total of 700,000 barrels per day. In addition to refineries, the Houston Ship Channel, the busiest channel in America, remains closed slowing production at Marathon’s Galveston Bay refinery (460,000 barrels per day) and Access Industries Houston refinery (260,000 barrels per day).

This disrupts nearly a quarter of oil and gas production in the Gulf of Mexico, which refines over 45% of the nation’s oil and processes 51% of nation’s natural gas.

The real impact on the market won’t be determined until after the scope of damage is assessed.  Director of the Global Energy Management Institute of the University of Houston Craig Pirrong said “[It’s] too early to tell…with most people and companies hunkered down, it’s hard to get a comprehensive picture.”

However, experts are anticipating gasoline prices to increase everywhere over the next couple of weeks. “Prices will likely rise nearly country wide heading into Labor Day, from rural towns in the Rockies to major cities in the Midwest and West Coast- nearly everyone will feel a bit of a pinch at the pump from Harvey” said Patrick DeHaan, a senior petroleum analyst at GasBuddy.

In the meantime, Houston braces for more inclement weather as Harvey heads back into the gulf expected to bring another 15 to 25 inches of rain in the next couple days.

Article written by HEI contributor Kevin Abbott.

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