Oil & Gas Industry Battens Down the Hatches as Harvey Barrels In

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Hurricane Harvey continues on its collision course with the Gulf Coast of Texas at speed of about 10 mph with hurricane force winds near 110 mph, according the Friday morning report from the National Hurricane Center. If the storm behaves as predicted, Harvey will make landfall on the middle Texas coast tonight or early Saturday morning.

Rain totaling 15 to 25 inches is expected over the storm’s footprint, and there is a possibility of up to 35 inches in some areas. A storm surge of 6 to 12 feet is expected at the north entrance to the Padre Island National Seashore, with diminishing levels northward along the coast.

Oil and gas companies along the coast are shutting in operations and evacuating people, which is driving gasoline prices up. Producers are also evacuating platforms and rigs out in the Gulf.

According to S&P Global Platts, refiner Flint Hills (owned by Koch Industries) is shutting down is 296,470 barrel a day refineries in Corpus Christi. Other refiners (Valero, Marathon, Phillips 66 and Shell) say they are monitoring the storm and have not announced any closures. The Gulf Coast is home to 4.94 million barrels a day of refining capacity in Texas and another 3.7 million barrels a day in Louisiana.

Just over 9.5% of oil production (about 167,000 barrels a day) from the Gulf of Mexico had been shut in as of around noon Thursday. More than 14.5% of Gulf natural gas production (472 million cubic feet per day) also has been shut in. Production companies have evacuated 39 platforms (about 5.3% of the 737 manned platforms in the Gulf of Mexico).

We noted on Thursday that Shell has shut in its Perdido floating platform, which produces about 100,000 barrels of crude per day. Exxon Mobil is curtailing its Galveston 209 platform, and Anadarko has shut down production at four fields.

Statoil and ConocoPhillips are suspending drilling and completion operations in the Eagle Ford shale play.

NuStar Energy and Magellan have shut down terminals in Corpus Christi, but Magellan’s pipelines in the Houston Ship Channel area are operating as usual.

Ship-to-ship transfers of crude and products (lightering) has been suspended at least through Sunday.

To add even more threats, the NHC noted this morning that isolated tornadoes are possible across portions of the middle and upper Texas coast on Friday.