Louisiana refineries brace for Tropical Storm Francine; Texas plants on guard

Refineries along the US Gulf Coast were preparing Sept. 9 for the arrival of Tropical Storm Francine, which could impact as much as 5.8 million b/d of capacity.

Francine is also expected to pass through key offshore oil and gas production platforms. The US offshore is currently producing roughly 1.8 million b/d of crude and 1.9 Bcf/d of natural gas, according to S&P Global Commodity Insights data.

As of late Sept. 9, the National Weather Service expected Francine to make landfall late Sept. 11 as a Category 1 hurricane near Erath, Louisiana in Vermillion Parish, just east of the three Lake Charles refineries and west of New Orleans-area plants.

A hurricane warning has been issued for Cameron Parish, with Calcasieu Parish under a tropical storm watch.

"We are likely to see wind gusts in the 50 to 60 miles in our area which may cause downed trees, power outages and roof damage," the Calcasieu Parish Executive Policy Group said in a statement Sept. 9, adding flooding could also be a problem in many areas.

Currently, the refineries with most probable risk from the storm are the three plants in Calcasieu Parish with total refining capacity of about 854,500 b/d, which is about one-third of Louisiana's coastal refining capacity.

"Personnel at Phillips 66 Gulf Coast assets continue to closely monitor the progress of Tropical Storm Francine and are making the appropriate preparations. At this time, there is no impact to operations," a company spokesperson said Sept. 9. Phillips 66 owns and operates the 264,000 b/d Westlake refinery in Calcasieu Parish.

Other Louisiana refiners were also watching the storm.

"We are monitoring the situation and will continue to do so over the next three to four days," said Joseph Israel, head of refining for Delek US on Sept. 9.

Delek US owns and operates the 80,000 b/d Krotz Springs, Louisiana, refinery, located inland in St. Landry Parish, just west of Baton Rouge, and is located on the currently forecast storm path.

More easterly or westerly track not ruled out

Other more eastern Louisiana refineries and some western Texas refineries were also closely monitoring the storm.

"We continue to monitor the potential for heavy rainfall in our coastal and far eastern zones Tuesday evening through Wednesday due to the expected hurricane in the northwestern Gulf of Mexico. The storm is expected to track into Louisiana. However, a track closer to the Texas Coast cannot be ruled out," according to the NWS.

At the western edge of the Francine's projected path, the NWS has issued storm watch surge and tropical storm watch for Jefferson County, Texas, which would impact 1.83 million b/d of refining capacity located there.

This includes ExxonMobil's massive 609,204 b/d Beaumont, Texas, refinery.

"We're closely monitoring and preparing for severe weather that may impact our Gulf of Mexico operations. Our primary focus is the safety of our workforce and communities in the affected areas. Operations are normal," said Lauren Kight, spokesperson for ExxonMobil.

The NWS said rainfall could be a factor for some further inland Louisiana refineries, including Marathon's 596,000 b/d Garyville, Louisiana, plant, located in St. John the Baptist Parish, where a storm surge watch and tropical storm watch are in effect.

"We have comprehensive plans and procedures in place to protect our people, assets, neighbors and the environment during severe weather," said Marathon Petroleum spokesperson Jamal Kheiry in a Sept. 9 email.

Moving along the eastern Louisiana coast, storm surge and tropical storm watches are in effect for St. Bernard and St. Charles Parishes, which could impact another 315,000 b/d and 449,000 b/d of refinery capacity, respectively.

Storm jitters boost USGC gasoline prices

The US Gulf Coast gasoline complex strengthened Sept. 9 in part on the storm threat.

The USGC unleaded 87 outright price rose 3.94 cents to $1.9404/gal, while the regular CBOB price rose 3.69 cents $1.8754/gal, according to Platts assessments. Platts is part of S&P Global Commodity Insights.

And in the futures market, after plunging 35.17 cents since Aug. 29, the NYMEX October RBOB futures contract rose 2.44 cents to $1.9204/gal.

"I think the basis is moving up because of the storm," a USGC trader said. "It is all nervous storm-related."

Offshore producers preparing

Offshore oil and gas producers were monitoring the storm.

Chevron began evacuating non-essential personnel from its Anchor, Big Foot, Jack-St. Malo and Tahiti facilities, a spokesperson said Sept. 9. Shell also began evacuating non-essential personnel from its Enchilada, Salsa and Auger offshore facilities, while partial drilling operations were paused at its Perdido and Whale platforms, the company said.

BP was not expecting "major impact" to its facilities with no evacuations yet reported, a spokesperson said Sept. 9.

Likewise, Murphy Oil said it was monitoring the storm.

"At this time, we do not anticipate any impact to our operated Gulf of Mexico assets," a company spokesperson said.