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:
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.
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
Murphy Meraux -- 125 mbd -- same area as Alliance
guess 40-50 mbd mogas. 30-40 diesel/jet no real info.
Baton Rouge area:
Exxon/Mobil Baton Rouge -- The big one 495 MBD. Reported to be operational and ready to go.
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.
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???
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.
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.