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US Mogas -- really all that bad???

by HiD Wed Aug 31st, 2005 at 07:50:16 AM EST

 The situation is not good as far as price goes.  We're all going to pay a lot more without much good reason in my opinion.

A healthy chunk of US refining capacity was/is shut down due to the storm, lack of power and some will stay down a while with damage.  But what does is really mean and what, if anything, can regular folks do to mitigate the problem.


First, what's likely to be damaged:

Refineries:

Chevron Pascagoula MS-- 325 MBD.  Very complex refinery producing lots of mogas/jet/diesel. Gotta guess on max mogas maybe 150-200 MBD mogas, 30 jet, 60 diesel.They are right in the path of the storm surge and are likely to be down quite a while.  Last big storm surge cost them 3 months+ IIRC.
http://www.chevron.com/products/about/pascagoula/refineryprofile/

Conoco/Phillips Alliance LA -- 250 mbd  per their website 100 MBD mogas. 120 jet/diesel.  You'd have to guess the eye went right over them.  Storm surge not as bad as in MS but who knows how badly flooded, if at all.

Exxon/Mobil/Venz Chalmette LA -- 187 MBD same general location as Alliance  BUT per Forbes "no damage" and ready to go. see
http://www.forbes.com/business/feeds/ap/2005/08/29/ap2195586.html

Murphy Meraux -- 125 mbd -- same area as Alliance
guess 40-50 mbd mogas. 30-40 diesel/jet no real info.
http://arkansasbusiness.com/news/headline_article.asp?aid=41667

Baton Rouge area:

Exxon/Mobil Baton Rouge -- The big one 495 MBD.  Reported to be operational and ready to go.
http://aolsvc.news.aol.com/business/article.adp?id=20050829185409990015&cid=1214

Marathon Garyville -- 245 mbd,  no info re status I can find  figure 100-120 mogas???  Well up the river and west of the eye.  Should be ok fairly soon

Motiva = Shell/Saudi Convent -- 225 MBD.  Near Exxon, should be ok.

Motiva = Shell/Saudi Norco 242 MBD  Should be ok as well.  170mbd mogas

Valero St. Charles (old Good hope refinery) 260 MBD -- not seriously damaged.  Back in 2 weeks or less.
http://money.cnn.com/2005/08/30/news/fortune500/valero_refinery.reut/

Valero Krotz springs  80 MBD -- well north of Baton Rouge.  should be fine

Other small units roughly 100 MBD -- small beer.

Well west -- Conoco Westlake (240 MBD) and Cities Lake Charles 425 mbd -- out of harms way.

These are the 12 big MS/LA refineries.   Assume Chevron/Conoco Alliance/Murphy/ are down for an extended period.  That's 700 MBD crude capacity and maybe 350-400 MBD mogas.  The rest are ready to go.

That is only 5% of US summer mogas demand and we're heading into winter so BFD.  Why the big panic?

What else is down -- Colonial pipeline -- this the short term killer.  This is a huge pipeline (one 40 inch line and one 36 inch line leaving Houston (a spur starts in Corpus) and heading 1050 miles to New Jersey.  It is down due power outages in LA.  My old data shows 2 MMBD capacity on the 2 lines.  That's about 15% of the entire nations demand for trans fuels.  This is what is causing the panic IMHO.  There are other pipelines up into Pad II (midwest) that may have issues as well.  I'm no pipeline expert but IIRC most of these come out of Houston rather than LA.

But the pipe will be back soon.  They'll find a way to get power back on even if they have to haul in generators to serve the 30,000 HP pump stations!
I'd be shocked if they are down more than a week or two.  Still, 2 weeks is 30 million bbls of products which is a huge hole in our stocks.

Mississippi River -- lots of mogas leaves this area for Florida  all the away around to Savannah via barge.  The river needs to be checked as do all the docks etc before any refiner will risk a shipment by barge.  1 week???

Other mitigating factors

Heating oil stocks are already at the level of December last year and we had been building at 1.5 MMB/week.  There's no panic on heating oil in September with these stock levels.  Don't get caught up in panic buying.

Shutdown(repair) season for refiners is either Sept/Oct or Feb/April.  So some of the nation's capacity was coming down anyway to do repairs.  These can be pushed out 6 months if need be (almost all the time) so we may have a little less production shortfall that you'd anticipate.

Nothing too major here so why the panic on the NYMEX and physical markets???

HUMAN NATURE

When people from Major Oilco's to wholesalers to regular folks see a shortfall they tend to buy what they need in a panic plus a little extra.  

If all 250 million cars in the US top off "just to be safe" we move the average in tank up by say 5 gallons per car.  That's roughly 30 millions barrels of mogas or about 3 days extra demand  The system can't handle that well.  Add on 3 days demand worth of lost pumping time on the Colonial pipe   and we have a very tight situation.  Still, I don't think we'll have real shortages UNLESS we all start hoarding.

We only have about 200 million bbls in primary storage right now (refineries) while secondary and tertiary (wholesalers and stations) are much much less. I can't find a figure but for some reason 25-30 MMB sticks in my head.

So if we all rush to the pumps to top up and keep filling up every time we hit 1/2 tank instead of the more normal 1/8 to 1/4, we suck the system's stocks down very hard.  Esp. as the wholesalers start bidding the NYMEX to cover their own fears.

If we had real national leadership, we could jawbone people off the panic button.  But it'll never happen.  Most wouldn't believe this Pretzeldent anyway.  Too many lies in 5 years.

So do what you can to conserve for the next month or two. Don't just talk about it, do it.  we need to drop demand fast this fall or get hosed on price for months.

The faster mogas backs up into the system to restore normal levels, the sooner the what little power in the market the consumers have will be back.  Long side speculators will not liquidate until they sweat getting stuck with material that no one really needs and have to eat a big loss.

Unfortunatly, most will just keep topping up and we may have gas lines  in PADs 1-3 like we did in 1979 (again with no real shortfall).

Update [2005-8-31 20:5:21 by HiD]: Big good news. Colonial pipeline is re-starting with flow at around 30% tonight. 60% by the weekend. http://www.colpipe.com/press_release/pr_73.asp This will help a lot.

Update [2005-9-1 1:40:49 by HiD]: Plantation is back up at 25% of normal 600 MBD as well. Will be back full when a pump station south of Jackson MS has it's power back. See: http://phx.corporate-ir.net/phoenix.zhtml?c=93621&p=irol-newsArticle&ID=751422&highlight=

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By your accounting, I'd say: yep.

So how do you think this will impact Europe?

"Once in awhile we get shown the light, in the strangest of places, if we look at it right" - Hunter/Garcia

by whataboutbob on Wed Aug 31st, 2005 at 08:01:53 AM EST
Your wholesale price will go up.  Traders and blenders will be scouring the market for stray alkylates and other blendstocks to make US grade gas for export.  it was a regular trade back in the day.  The US imports about 1 MMBD of mogas.  Much of that comes from the Venz but quite a bit from Europe.

The guy I sat next to at GS is now a big player at Morgan and probably already has 2 ships on subs....hope he gave up the sauce and gets his blends right these days.

Many European refiners can meet US specs.  Just not as many as in 1990.  I'd guess Norway (Statoil Mongstadt), Finland (defn can do as they could do LA Carb spec in 1995), Repsol, maybe Tex UK,  a few of the ARA boys can do it.

May not move your prices too terribly as your mogas season is over too.

by HiD on Wed Aug 31st, 2005 at 08:46:04 AM EST
[ Parent ]
Thank HiD for posting this level headed analysis.

Just a silly question - what does "mogas" stand for? I understand it's gasoline for cars, but where does the name come from?

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Wed Aug 31st, 2005 at 08:06:49 AM EST
motor gasoline as opposed to avgas which is for aviation use.  Both are roughly the same size molecules though Avgas is usually seriously high octane IIRC.

Essense, en francaise??  (My french is really lame but I did have to call a French refiner in the middle of the night to talk about a visbreaker design about 1980. Elf Grandpuits which I think is near Paris)

by HiD on Wed Aug 31st, 2005 at 08:40:35 AM EST
[ Parent ]
According to several sources I have now seen, Port Fourchon and the Louisiana Offshore Oil Port have been severely damaged. Here, I'll ask for your help what do the facilities at Port Fourchon do? How are they different - if they are in fact diff't - from the facilities you describe?

The following is from Singapore Today

Here's an article from the USA Today - Katrina cripples 95% of Gulf's Oil Production

This is from some Dallas/Ft.Worth newschannel

by Ben P (wbp@u.washington.edu) on Wed Aug 31st, 2005 at 04:00:38 PM EST
My experience is the regular press has a hard time with technology much more complicated than a pencil (at least describing it)

from the Oil and Gas Journal:

Cumulative production losses in the gulf through Aug. 31 following Katrina reached 6,055,220 bbl of oil, or 1.106% of the 547.5 million bbl yearly total, and 34.19 bcf of gas, or 0.937% of the 3.65 tcf yearly total, MMS said.

Offshore drilling contractors said that two jack up rigs were lost and four semisubmersibles broke free of their moorings in the high winds (see story elsewhere on OGJ Online). Crews were evacuated before the storm arrived, and flyovers afterward did not reveal major surface damage, the companies said in separate releases.

Near-shore and coastal producers said flyovers generally showed little damage to their operations, although flooding and damage in surrounding areas could affect restoration of full production. More detailed assessments will be conducted once employees return to the sites, they added. .....

While supply effects could be substantial, he cautioned that early dire predictions of retail price spikes and supply interruptions may not necessarily materialize. Cavaney cited the Louisiana Offshore Oil Port, where early reports suggested major damage but which now will be able to resume operations once electricity is restored.

as for your other questions, I really don't know that much.  My time in real engineering was mostly focused on refinery process design.  The little work I did for upstream units was on the West Coast.  The 2nd half of my career I traded oil products rather than crude so what I know is 2nd hand from the others sitting at my elbow (literally if you've ever seen a "chicken line" trading floor.

What I've been able to glean:

The LOOP is just a giant single point mooring that sits in 100ft of water, roughly, so that a ULCC drawing 75+ft of water can pull up and unload without lightering to smaller ships (the other way it's done).  It lets a ship unload much faster and in worse weather.  These big ships are frigging expense to sit around.  In my day a VLCC wanted $30k/day or more for demurrage.  Now that shipping is tight you have to  pay double that.  Cutting 3-4 days of demurrage off the bill is big money over time.

Port Foucheron looks like a gathering area for all the offshore pipelines from the individual platforms.  

by HiD on Wed Aug 31st, 2005 at 04:46:19 PM EST
[ Parent ]
Don't overlook the complication factor, i.e. the complexity of the dependent unknowns is at least as great as the independent knowns.

This isn't the end of the world, but it is surely much worse than it looks.

etrans.blogspot.com

by joel3000 on Wed Aug 31st, 2005 at 07:43:58 PM EST


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