Nicholas’ punch didn’t disrupt oil facilities or alter price of oil
The price of oil hardly budged Tuesday after Hurricane Nicholas swept through the Houston region leaving most oil and gas facilities undamaged.
West Texas Intermediate, the U.S. crude benchmark, settled 1 cent higher at $70.46 on Tuesday. It had jumped to $71 a barrel earlier in the day, the highest price in six weeks, after the Category 1 storm rolled up the Texas coast.
“Prices flattened in the closing as traders did not yet see any disruptions from Hurricane Nicholas, but they could rise again in coming days as first reports of production outages arrive,” said Bjornar Tonhaugen, head of oil markets for Norwegian research firm Rystad Energy.
The storm threatened to again halt oil and gas operations offshore and on the coast two weeks after Hurricane Ida ravaged industry facilities in Louisiana and the Gulf of Mexico. Offshore, about 40 percent of oil production and nearly half of natural gas production remains offline because of Ida.
Nicholas, however, didn’t deliver the same kind of punch, analysts say. In the Houston region, the storm’s maximum wind speeds reached about 55 mph and rain totals topped 4 inches in a few places.
“We dodged a bullet because the heavy rainfall ended up mainly being off the coast,” said Debnil Chowdhury, vice president, oil markets and downstream refining at IHS Markit.
It is unlikely that Nicholas caused extensive damage at any of the refineries in the path of the storm, although some may have reduced production as a precautionary measure because of potential power outages, Chowdhury said.
While some ports in Texas temporarily halted operations before the storm and the Colonial Pipeline shut down part of its system, the storm’s effect won’t rise to the level of Hurricane Ida, he said.
Nevertheless, as the storm moved out of Texas on Tuesday evening, oil producers, refiners, petrochemical manufacturers and liquefied natural gas companies began assessing damage.
Power outages, which CenterPoint said left some 440,000 customers in the dark early Tuesday, were the main concern at oil and gas facilities in the region.
Freeport LNG said all three of its natural gas liquefaction facilities were offline at its Quintana Island export facility because of power outages. LyondellBasell’s Matagorda complex in Bay City and several Phillips 66 pipelines in Southeast Texas also were hampered by a loss of electricity.
Kinder Morgan said most of its facilities that lost power were back in service or were being powered by generators. The Houston pipeline operator said early indications are that there are no significant damages to its operations along the Texas Gulf Coast.
Colonial Pipeline, the major fuel line connecting Houston’s refineries to the East Coast, temporarily shut down two lines Tuesday morning when power went out in the Houston area. Service on one was restored Tuesday afternoon. The Georgia-based pipeline company, which carries nearly 3 million barrels of fuel a day between Texas and New York, said the rest of its pipeline network was operating normally.
In the Gulf of Mexico, Royal Dutch Shell said its Perdido offshore platform, which was shut down Monday as a precaution, would restart when power was restored at a downstream facility not owned by the company.
Port of Houston, one of the nation’s largest, was closed most of the day but expected to be operating normally by Wednesday.