GAS: Repairs start at 7 refineries, but logistical problems may limit supplies

Texas oil companies have begun repairing seven flood-damaged refineries, the Energy Department said Sunday, marking the first step in a slow recovery after Hurricane Harvey swamped facilities that make about a quarter of the nation’s gasoline.

Another nine major refineries remain completely offline, and some may not fully reboot for a month. And though the region’s storage tanks have plenty of gasoline, myriad logistical problems in getting that fuel to the pump could continue to crimp supplies and keep prices elevated across the state. Companies still will have to deal with flooded or damaged roads, stalled-out trucks and closed pipelines and ports.

“All the trucks’ transmissions got full of water,” said Phillip Cavazos, a trucking company worker in Port Arthur, home to three major oil refineries. “We can’t move. We wouldn’t have been able to get on the road anyway.”

In Houston, the average price for a gallon of regular increased to $2.42, which is 6 cents higher than the day before and up 25 cents from a week ago, according to AAA. Analysts expect gas prices to keep moving up next week, especially if panicked motorists continue to compound the supply problem.

As gasoline prices spike in Houston, major markets in the eastern United States could eventually feel the fuel pinch, too, as key pipelines dramatically reduce the amount of gasoline car-

ried outside the Texas Gulf Coast.

The 5,500-mile Colonial Pipeline, which runs from Houston to New York, has sent far less gasoline eastward after floods knocked out more than a dozen major refineries along the coast and reduced the nation’s capacity to make gasoline by almost a quarter. “You may see bigger gas price jumps in New Jersey than in Texas,” said Tom Kloza, an oil analyst at Oil Price Information Service.

“Houston is the size of Connecticut, and that’s clearly a problem, but demand destruction has been pretty significant.”

The gasoline shortfalls may not be as acute in Houston because Harvey destroyed thousands of cars in the region and the city is only slowly getting back to work. Still, motorists across the United States will take to the streets on Labor Day — a day of high gasoline demand.

“During driving season, there’s never a glut of gasoline,” Kloza said. “When the logistics get crippled or the organs that supply gasoline get knocked down, it can be just intolerable. That’s what happens after a hurricane.”

No timeline yet

The nine refineries still offline usually turn 2.4 million barrels of crude into petroleum products each day. Four other refineries were still operating at reduced capacity, and one had reached full production. All told, Harvey initially knocked out almost a quarter of the nation’s refining capacity.

Even the refineries that have begun assessing the damage left by Harvey will have to fix logistical problems before they can restart. Several seaside ports and major railways across the Gulf Coast remained closed over the weekend.

Exxon Mobil, for example, said its Baytown refinery, the secondlargest facility of its kind in the United States, needs only minor repairs before it goes back into production. But it has no timeline because it needs ports and railways to reopen, said Suann Guthrie, a spokeswoman for Exxon.

The Irving-based oil giant has begun working with the Port of Houston to speed up tanker traffic coming through the Houston Ship Channel, and helped coordinate repairs to nearby railroads. Its pipeline unit has made progress restarting pipelines “so we can initiate supply of gasoline and diesel to the market,” she said.

Houston refiner Phillips 66 said Sunday that trucks are now loading fuel from a terminal in Pasadena, and the company has begun examining the damage to its Sweeny refinery 70 miles southwest of Houston.

Ports in Corpus Christi, Galveston, Houston, Texas City, Beaumont, Port Arthur, Lake Charles and several others were still only partially open to tankers. Those commercial traffic hubs usually collect some 2 million barrels of crude imports each day combined.

Rail company BNSF had reopened in Houston and Galveston but remained shuttered in Beaumont. Union Pacific lines were active between San Antonio and Hearne, but cleanup operations were ongoing in parts of Houston and South Texas.

Getting back online

Facilities along the length of the Colonial Pipeline, which carries oil to more than two dozen U.S. refineries, were still inoperable between Houston and Herbert, which is near the Beaumont and Port Arthur stations, though crews have begun reviewing the flood damage.

Pipeline operator Magellan Midstream Partners said two major arteries that carry oil from West Texas to the coast have rebooted, as has a refined products pipeline that begins in Houston.

Some refineries in Corpus Christi could be back online as early as Tuesday, which would help ease the local fuel market, according to AAA. Still, the logistical problems make it harder to predict how long it will take fuel to reliably reach local gas stations and how long it takes gasoline prices to fall back down again, said Daniel Armbruster, a spokesman for AAA.

“It doesn’t turn on a dime,” he said.