Hurricane Laura shuts 84% of US oil output in Gulf, one-third of SBR capacity

Author: Al Greenwood

2020/08/25

HOUSTON (ICIS)--Hurricane Laura has led to companies shutting down at least a third of synthetic rubber capacity in the US and more than 84% of oil production in the Gulf of Mexico.

Hurricane Laura is expected to make landfall by Thursday near the border between Texas and Louisiana, home to many petrochemical plants and refineries.

By then, it should be a major hurricane with wind speeds of at least 111 miles/hour (179 km/hour), according to the National Hurricane Center.

OIL SHUT-INS
By midday on Wednesday, companies had shut-in 1.56m bbl/day of US oil production in the Gulf of Mexico, 84.3% of the total, according to the Bureau of Safety and Environmental Enforcement (BSEE). Gas shut-ins totalled 1.65bn cubic feet/day, 60.95% of the US total in the Gulf.

Companies have evacuated 299 production platforms, 46.5% of the 643 manned platforms in the Gulf of Mexico.

Platforms produce oil and natural gas offshore. Unlike drilling rigs, which typically move from location to location, platforms stay in place throughout a project’s duration.

The Gulf of Mexico hosts several offshore oil wells, accounting for 17% of the nation's crude production, according to the Energy Information Administration (EIA). The region is home to more than 45% of its refining capacity and 51% of its natural-gas-processing capacity.

Oil prices continued to rise in response to shut-ins.

However, US futures prices for natural gas fell slightly amid long supply. Laura could cause demand to fall from shutdowns at plants, refineries and liquefied natural gas (LNG) terminals.

CHEMICAL PLANTS AND REFINERIES
Hurricane Laura has led to a wave of plant shutdowns as companies prepare for the storm.

US styrene butadiene rubber (SBR) producers Goodyear, Lion Elastomers and Arlanxeo have shut down their sites in southeast Texas, according to market sources.

All of the sites are within Jefferson and Orange counties, which are under mandatory evacuation orders.

They represent 34% of US SBR production capacity, according to the ICIS Supply and Demand Database.

SBR is used to make tyres.

In addition, Excel Paralubes and Motiva have shut down their base-oils operations. These plants represent 29% of total US base oil refining capacity, including rerefined material. They represent 42% of Group II base oil capacity in the US.

Base oils are used to make engine oil and other lubricants.

INEOS Styrolution is shutting down its styrene plants in Bayport, Texas, and Texas City, Texas, according to a company source.

INVISTA is shutting down it adiponitrile (ADN) and hexamethylene diamine (HMDA) plants in Orange, Texas, the company said.

CITGO is shutting down its refinery in Lake Charles, Louisiana, according to sources. The company was not immediately available for a request for comment.

ExxonMobil's refinery and chemical operations in Beaumont, Texas, are running at reduced rates in anticipation of the hurricane, the company said. Its refinery in Baytown, Texas is operating normally.

Chevron Phillips Chemical is shutting down its high-density polyethylene (HDPE) plant in Pasadena, Texas, according to a filing with the Texas Commission on Environmental Quality (TCEQ).

RB Fuels is shutting down its biodiesel plant in Port Neches, Texas, according to a filing with the Texas Commission on Environmental Quality.

INEOS is shutting down its cracker in Chocolate Bayou, Texas, according to a filing with the Texas Commission on Environmental Quality (TCEQ).

Lucite is shutting down its methyl methacrylate (MMA) plant in Beaumont, Texas, the company said.

Phillips 66 shut down its base oil production in Lake Charles, the company aid.

Sasol shut down its Lake Charles plants ahead of the storm, the company said.

Thailand’s Indorama Ventures PCL (IVL) said it has begun preparations to shut its Port Neches site. It makes ethylene oxide (EG), ethylene glycols (EG), surfactants and propylene oxide (PO) among others.

Total said it is shutting down its refinery in Port Arthur.

Valero is also shutting down its refinery in Port Arthur, sources said.

Motiva Enterprises is shutting down its refinery and cracker in Port Arthur, according to filings made with the TCEQ.

Louisiana Pigment Company (LPC) said it is is shutting down its titanium dioxide (TiO2) plant in Lake Charles, Louisiana. The company is a joint venture between Kronos Worldwide and Venator Materials.

BASF Total's cracker in Port Arthur was already down before the storms.

A table at the bottom summarises some of the major chemical plants along the Gulf Coast.

Cameron LNG in Louisiana has planned for reduced rates ahead of Hurricane Laura, while Cheniere’s Sabine Pass suspended operations.

HURRICANE LAURA
Hurricane Laura is 480 miles southeast of Lake Charles, Louisiana, and 510 miles southeast of Galveston, Texas, the National Hurricane Center said. The storm has strengthened since midday, with maximum sustained wind speeds now at 80 miles/hour.

A storm-surge warning remains from San Luis Pass, Texas, to the mouth of the Mississippi. A hurricane warning remains from San Luis Pass to Intracoastal City, Louisiana.

The following map shows the forecasted path of Laura.

Source: National Hurricane Center

In response to the storm, Jefferson county in Texas and Calcasieu parish in Louisiana have each issued mandatory evacuation orders.

Jefferson county is home to Beaumont, Port Neches and Port Arthur. Calcasieu is home to Westlake and Lake Charles.

RAILROADS
The New Orleans Flood Protection Authority closed the last floodgate on Monday, disrupting rail shipments passing through New Orleans and Mobile, Alabama, said the railroad company Norfolk Southern.

Union Pacific is shutting down its intermodal terminal in Avondale, Louisiana, it said.

Another railroad company, BNSF, said it is holding all New Orleans-bound trains from moving into the area and re-routing traffic as needed.

The CSX terminal in New Orleans has been evacuated and inbound traffic is being diverted to Pensacola, Florida. CSX expects to resume normal operations in New Orleans by the end of the week.

MARCO DISSIPATES
Tropical storm Marco dissipated early on Tuesday after making landfall on Monday evening off of the southeastern coast of Louisiana

Company Site(s) Product(s) Status
BASF Geismar, LA BDO, EO, isocyanates, polyols, fatty alcohols, plasticizers Assessing
CITGO Lake Charles, LA Fuels Shutdown
Cornerstone Waggamon, LA Melamine, ACN, urea, sulphuric acid Operating for Marco; assessing for Laura
ExxonMobil Baton Rouge, LA Gasoline, refined products Operations normal
ExxonMobil Beaumont, TX Gasoline, refined products Reducing rates
ExxonMobil Baytown, TX Gasoline, refined products, base oils, NGLs Prepping for severe weather, operations running
Indorama Port Neches, TX EO, EG, surfactants, PO Shutting down
Louisiana Pigment Co Lake Charles, LA TiO2 Shutting down
LyondellBasell Lake Charles, LA PP Ride out crew; moving inventory
LyondellBasell Lake Charles, LA Bayport, TX Channelview, TX Chocolate Bayou, TX Corpus Christi, TX La Porte, TX Olefins, derivatives Assessing
MEGlobal Oyster Creek, TX EO, EG Assessing
Methanex Geismar, LA Methanol Assessing
Motiva Port Arthur, TX Ethylene, propylene, refinery, base oil Down as of 24 Aug
NOVA Chemicals Geismar, LA Ethylene, propylene, BD Assessing
Phillips 66 Lake Charles, LA Gasoline, refined products, base oil Shutdown
Phillips 66 Sweeny, TX Gasoline, refined products Operating/assessing
RB Fuels Port Neches, TX Biodiesel Shutdown
Sasol Lake Charles olefins, EO/EG, phenol, LDPE, LLDPE, surfactants, n-butanol, alkylbenzene, hexene-1, linear alcohol Shutdown
Total Port Arthur, TX Gasoline, diesel, jet fuel Shutdown
Valero Port Arthur, TX Gasoline, refined products Shutdown
Lion Elastomers Port Neches, TX Orange, TX SBR Shutdown
INEOS Chocolate Bayou, Texas Ethylene, propylene, BD Shutdown
Lucite Beaumont, TX MMA Shutdown

Additional reporting by Amanda Hay, Alex Snodgrass, Zachary Moore, Tarun Raizada, Ruth Liao and Michael Sims