May 16, 2011
The massive diversion of water poses a risk to “28,000 residences within the floodway that are outside ring levees” the Times-Picayune said. The flood waters also threaten a number of oil and gas production facilities.
May 13 (Reuters) - The U.S. Army Corps of Engineers said on Friday it anticipates opening the Morganza Spillway on the western bank of the swollen Mississippi River to divert floodwaters into the Atchafalaya River basin and protect Baton Rouge, Louisiana, New Orleans and refineries from flooding.
The Corps of Engineers had been planning next week to open the spillway, about 45 miles (72 km) northwest of Baton Rouge, but could do so as soon as Saturday as high water continues making its way downriver.
Valero Energy Corp's (VLO.N) 185,000 barrel-per-day (bpd) and Motiva Enterprises' (RDSa.L) 234,700-bpd refineries in St. Charles Parish, Louisiana, west of New Orleans, will be flooded if the Morganza is not opened, the St. Charles Parish emergency preparedness director said on Wednesday. [ID:nN11256696]
Exxon Mobil Corp's (XOM.N) 504,500-bpd refinery in Baton Rouge, the country's second-largest, also will be threatened if the spillway remains shut.
Opening the spillway will disrupt operations at Alon USA Energy's (ALJ.N) 80,000-bpd Krotz Springs, Louisiana, refinery.
An Alon spokesman said on Friday that the plant was operating normally as crews continued to build a second levee to prevent Atchafalaya River waters from flooding the refinery within 10 to 14 days of the Morganza opening. The new levee will supplement existing levees.
Scores of U.S. heartland rivers from the Dakotas to Ohio have flooded following a snowy winter and heavy spring rains, feeding near-record crests on the lower Mississippi River.
U.S. Midwest flooding continued to shut Ohio River terminals, limited barge movements and threatened to disrupt refinery operations along the Mississippi to the Gulf of Mexico.
There are 10 refineries located along the Mississippi River which can process 2.4 million barrels per day of oil, or 13.7 percent of the country's refining capacity.
REFINERIES AT RISK FROM FLOODS (in bpd)
*Alon USA Energy (ALJ.N) Krotz Springs, Louisiana : 80,000
*Chalmette Refining (XOM.N) Chalmette, Louisiana: 192,500
*ConocoPhillips (COP.N) Belle Chasse, Louisiana: 247,000
*Exxon Mobil Corp (XOM.N) Baton Rouge, Louisiana: 504,500
*Marathon Oil Corp (MRO.N) Garyville, Louisiana: 436,000
*Motiva Enterprises (RDSa.L) Convent, Louisiana: 235,000
*Motiva Enterprises (RDSa.L) Norco, Louisiana: 234,700
*Murphy Oil Corp (MUR.N) Meraux, Louisiana: 120,000
*Valero Energy Corp (VLO.N) Memphis, Tennessee: 180,000
*Valero Energy Corp (VLO.N) St. Charles, Louisiana 185,000
NUCLEAR FACILITIES AT RISK FROM FLOODS
* Entergy's (ETR.N) 1,176-megawatt Waterford nuclear plant in St. Charles Parish, Louisiana.
* Entergy's 978-megawatt River Bend nuclear plant in West Feliciana Parish, Louisiana.
* Entergy's 1,268-megawatt Grand Gulf nuclear station in Clairborne County, Mississippi.
Magellan Midstream Partners (MMP.N) said it discontinued operations at its 2.8 million-barrel storage terminal in Marrero, Louisiana, close to New Orleans, after it finished loading barges on Friday.
Nearly 20 percent of barge terminals that the U.S. Coast Guard monitors on the Ohio River remained closed on Thursday. The Smithland Lock and Dam at mile marker 918.5 on the river remains closed, obstructing barge traffic both up and downstream. [ID:nN09291512]
The tanker Zaliv Baikal turned back from going to a dock in Baton Rouge because its captain didn't think the vessel had enough clearance beneath the I-10 Bridge over the Mississippi at Baton Rouge.
Berths at Exxon's docks in Baton Rouge were flooding on Thursday, which may make docking tankers difficult in the coming days, according to sources familiar with refinery operations. Exxon said the refinery continues to operate normally.
Barge traffic is moving along the Mississippi River with some restrictions and no closures. Barges were running near Baton Rouge, but facing difficult river conditions.
Mississippi River restrictions include length of barge (no greater than 600 feet), energy requirement (greater than 250 horsepower), speed (3 miles/hour) and prior notification requests before navigation starts. To that end, barge traffic is open in places like St. Louis and Memphis with restrictions.
OIL AND GAS PRODUCTION AT RISK IF MORGANZA SPILLWAY OPENED:
(Source: Jefferies & Co and La. Dept. of Nat. Resources)
Operator Barrels oil equivalent/day
BP (BP.L) America Production Co 10,703
Petroquest (PQ.N) Energy LLC 8,757
Apache Corp (APA.N) 4,986
ConocoPhillips (COP.N) Inc 2,661
Stone Energy (SGY.N) Corp 2,232
Chevron (CVX.N) USA Inc 1,467
Dune (DUNR.OB) Operating Co 1,407
Swift Energy (SFY.N) Optg LLC 1,241 (Reporting by Erwin Seba, Kristen Hays, Selam Gebrekidan, Janet McGurty, Bruce Nichols; Editing by Dale Hudson and Lisa Shumaker)
The devastation of Gulf Coast refineries caused by hurricanes surging in from the Gulf of Mexico is well documented.
A lesser known fact is that about 14% of the national refining capacity is potentially at risk from a worse-case scenario of the Mississippi River flooding and inundating the low-lying facilities. Ten refineries (nine in Louisiana and one in Tennessee) are in the immediate floodplain of the Mississippi, protected only by levees.
To date (as the Mississippi gets set to crest in Memphis tonight) Valero Energy reportsthat its 180,000-barrels-per-day Memphis plant is secure, as is its 185,000-barrel-per-day St Charles refinery in Norco, Louisiana. Norco is also where Motiva Enterprises has a refinery. Motiva’s joint venture partner Royal Dutch Shell has a facility further west along the Mississippi at Convent, Louisiana.
West of New Orleans, Marathon Oil reported some minor flooding at its 436,000-barrels-per-day Clarksville, Louisiana refinery, causing minor supply problems. Other refineries east of New Orleans and in Baton Rouge, belonging to Exxon Mobil and Murphy Oil, are reporting that they are monitoring for possible flooding but that all is normal.
Hopefully the careful management of levees and slipways will mean that this critical refining infrastructure will be protected from severe flooding. But if the levees are overwhelmed the nation faces the prospects of one or several refineries being shut down.
And we all know what that means — a tighter supply and higher gasoline prices.
Posted on May 9, 2011 at 3:01 pm by Brett Clanton in Commodity Prices, Commodity Trading, Crude Oil Prices, Gasoline,
Oil prices spiked Monday, once again topping $100 a barrel and climbing back from a freefall last week that slashed crude costs by 15 percent.
Crude rose more than $5 to settle at $102.55 in trading on the New York Mercantile Exchange, marking yet another sharp swing in prices in recent days.
Fluctuations in the dollar’s value were behind crude’s early gains today, said Addison Armstrong, senior director of market research at Tradition Energy in Stamford, Conn.
But “the real story today seems to be the strength in gasoline,” Armstrong said, referring to upward movement in the wholesale price of gasoline, or what distributors pay refiners for the fuel before taxes, transportation fees and other costs are added.
“From what we can tell that’s being driven by some fears that all this flooding along the Mississippi could lead to some closures of refineries in a couple of weeks time,” he said. But he dismissed the notion as “bizarre.”
“I don’t believe we’ve ever shuttered refineries on warnings of floods. We’ve only shut them after the flood waters have come,” he said.
If the floods turn out to be a non-event, then crude and wholesale gasoline prices should retreat, Armstrong said.
Oil prices have been on the rise this year amid a post-recession rise in demand for petroleum products, especially in China and other parts of the developing world. Political instability in oil-producing countries in the Middle East and North Africa has also been a factor, along with a U.S. dollar that is near its three-year low in value. Oil and many other commodities are priced in dollars, so when the value of the dollar falls, the price of those commodities tends to go up.
After recent heavy rains, the Mississippi River was forecast to crest today in Memphis, Tenn, at levels not seen in 74 years. Apart from potential damage to homes and commercial areas, the flooding is also seen as a threat to 11 oil refineries in south Louisiana near New Orleans and Baton Rouge. Together, the plants account for about 13 percent of U.S. fuel output, meaning if they were to close even temporarily, it could put a strain on supplies and drive prices upward.
Valero Energy Corp.’s 195,000 barrel-per-day refinery in Memphis was still in operation on Monday afternoon, and did not expect an interruption in output, said Bill Day, spokesman for the San Antonio-based company. Valero was also taking flood precautions at its 250,000 barrel per day refinery in St. Charles, La., which is near New Orleans, he said.
ExxonMobil, with refineries in Baton Rouge and Chalmette, La., was “monitoring river conditions very closely,” said company spokesman Kevin Allexon. The Irving oil giant was also placing sand bags at the facilities where necessary, moving some equipment to higher ground and staying in close touch with local officials, he said. But plant operations remained normal.
Shell, which has a chemical complex in Geismar, La, and co-owns a refinery through its Motiva joint venture in Norco, La., said if the U.S. Coast Guard closed waterways it could affect the company’s ability to load barges and ships at some of the docks at the two facilities.
“We are coordinating efforts to limit the effects this may have on supplying our customers and will be moving as many products by rail and truck as our logistics assets and the railroad’s schedules allow,” said the company in a prepared statement.
Houston’s Marathon Oil was also monitoring the Mississippi for potential impact on its 436,000 barrel-per-day Garyville, La, refinery. But company spokesman Robert Calmus declined to comment on the current status of plant operations.
The spike in crude prices today was also attributed to more signs that the global economic recovery is stabilizing. As Bloomberg noted, German exports surged to a record in March and the U.S. Labor Department said last week that payrolls expanded.http://fuelfix.com/blog/2011/05/09/crudes-climb-tied-to-mississippi...
Coffeyville Resources Refining & Marketing, LLC. v. Liberty Surplus Ins. Corp. et. al.(United States District Court, District of Kansas, May 3, 2010)
This complex environmental coverage matter arose out of a flood of the Verdigris River on June 30, 2007. During the flood, a large amount of crude oil from policyholder’s oil refinery was released into flood waters and was carried into Coffeyville, Kansas, resulting in widespread environmental damage to downstream homes and businesses. The policyholder alleged that as a result of this oil pollution release and resulting environmental contamination, it incurred more than $50,000,000 to investigate and remediate the contamination, and resolve claims arising from the spill...http://insurancecoverage.typepad.com/insurance_and_reinsurance/2010...