- DAILY GPI
- MEXICO GPI
- SHALE DAILY
Anadarko Petroleum Corp. has resumed production from its deepwater Lucius facility, one small step in returning to business in the wake of Hurricane Harvey.
On Tuesday afternoon the Bureau of Safety and Environmental Enforcement (BSEE) said workers had been evacuated from 102 (13.84%) Gulf of Mexico (GOM) production platforms -- four more than on Monday -- and five of the GOM's 10 non-dynamically positioned (DP) rigs. A total of 319,523 b/d (18.26%) of crude oil had been shut in along with 615 MMcf/d (19.1%) of natural gas, both about the same as in Monday’s BSEE report.
Anadarko said its Boomvang, Gunnison and Nansen platforms in the western GOM remained shut in “until the weather permits the safe return of our personnel to these facilities.”
While the offshore is limping back, the same cannot be said of the onshore energy sector. Harvey as of Monday had sapped about 1 Bcf/d from U.S. natural gas exports to Mexico, according to Genscape Inc. And because the Gulf Coast increasingly is the hub for gas exports and industrial demand, Harvey may foretell what could occur in future natural disasters, according to Barclays Capital.
According to a 4 p.m. CDT advisory on Tuesday from the National Hurricane Center (NHC), a preliminary report from a rain gauge has broken the Texas tropical cyclone rainfall record. The Cedar Bayou gauge, east of Highlands, reported 51.88 inches of rain as of 3 p.m. CDT.
“This total is higher than the previous record of 48 inches set during tropical cyclone Amelia of 1978 at Medina, TX,” NHC said.
A rain gauge in Mont Belvieu, where most natural gas liquids (NGL) in the state are processed east of Houston, also had registered 51.1 inches of rain through early Tuesday afternoon, according to Texas state climatologist John Nielsen-Gammon of Texas A&M University. Enterprise Products Partners LP maintains the world's largest NGL complex at Mont Belvieu.
A list of rainfall observations is being compiled by the National Oceanic and Atmospheric Administration’s Weather Prediction Center.
The storm is already one for the record books, one of biblical proportions that has separated people from their homes and livelihoods from South Texas into Louisiana. And it may take months before anything is close to “normal.”
For example, Anadarko said its offices in The Woodlands outside of Houston were not damaged by Harvey, but because of “widespread flooding and road conditions throughout Houston, it will remain closed until further notice.”
Many businesses, energy-related and otherwise along middle to upper Texas coast, have been crippled by Harvey’s rain of terror, either because of destroyed or flooded infrastructure or because they were not accessible as roadways were impassable.
The Boardwalk Pipeline Partners LP system “has had minimal operational disruptions and no service interruptions, only minor property damage and no safety issues,” spokeswoman Molly Ladd Whitaker said.
The natural gas and liquids operator’s principal operating subsidiaries, nearly all concentrated in Texas, many along the Gulf Coast, are Texas Gas Transmission LLC, Gulf South Pipeline Co. LP, Gulf Cross Pipeline Co. LLC, Boardwalk Field Services LLC and Boardwalk Louisiana Midstream LLC.
“With regard to construction activities, all pre-storm precautions were taken to protect equipment and the construction sites, and construction activities were shut down Friday in anticipation of the storm and resumption will occur once conditions allow,” she said.
Boardwalk has more than $1 billion of infrastructure projects underway, including the 66-mile Coastal Bend Header, to deliver gas to Freeport LNG Development LP's liquefied natural gas export terminal near on the Texas coast, which was about 50% completed in July.
The Natural Gas Pipeline Company of America LLC (NGPL) expanded its force majeure for the Louisiana Line. Compressor Station (CS) 302 in Montgomery County, north of Houston on Segment 25 of the TexOK Zone was unavailable as of Monday. CS 342 in Cameron Parish, LA, Segment 23 of the Louisiana Zone and CS 343 in Liberty County near Houston, Segment 25 of the Tex/OK zone, “continue to be unavailable until the force majeure event has been lifted.
However, Sempra Energy’s LNG export joint venture with Woodside Petroleum Ltd. in Port Arthur, TX, although in the path of Harvey’s wrath, was unaffected by the storm as there was no activity ongoing on the site, a spokeswoman told NGI.
The same could not be said for petrochemical and refinery infrastructure.
As of Tuesday afternoon, eight Texas refineries were shuttered, with the Motiva facility in Port Arthur sharply reducing output (estimated at 60%) from its 603,000 b/d plant. Motiva is the largest refinery in the United States.
Sandy Fielden, who directs oil and products research for Morningstar Commodities Research, said ’the closures already were impacting markets with crude prices lower on a perceived drop in demand and gasoline prices spiking in response to lower supply.
“Although refineries in Corpus Christi, TX were shut ahead of the storm in anticipation of damage, the bigger concern now is crude supply and product distribution for plants further east in Houston,” Fielden said.
“Should the flood disruption caused by Harvey continue to plague Houston and the close-by Beaumont/Port Arthur refining hub to the east, we estimate 11 more refineries with combined capacity of 1.3 million b/d are at risk of closure,” Fielden said.
Of the remaining plants on Fielden’s “vulnerable” list, the Kinder Morgan Inc. condensate splitter at Galena Park in Houston “is likely to shut down or reduce throughput if the Kinder Morgan Eagle Ford crude pipeline is not up and running to provide supply.
“The absence of Permian crude supplies via the Magellan pipelines will increase the chances of these refineries shutting down or reducing throughput. Continued port closures preventing imports will further increase the risk.”
Tudor, Pickering, Holt & Co. (TPH) shared some “field-based feedback” on the Eagle Ford, where there are more than 70 horizontal rigs running and 35 fracture spreads.
“While the impacts invariably prove largely ephemeral,” analysts talked with private Eagle Ford service providers/vendors on Monday.
“Most service/equipment/consumables providers in-basin shut in operations sometime on Friday, and those operations remained largely halted until Tuesday, although some operators are apparently electing to let the mud (wet dust) further settle and as they plan to restart activity on Wednesday.
“Logistics are a material issue” for the oilfield services (OFS) operators because moving equipment, people, rail, trucking and transloading all have been impacted by the storm.
One proppant producer said transloading issues were causing “certain operators to request quick truck delivery of fracture sand in hopes of avoiding completions delays in the coming days/weeks, while another service provider informed us they ceased operations on half a dozen rigs, representing the large majority of the company's activity in the region.”
However, TPH noted, “a large flowback player” said workers were already going back to work on wellsites where setups were in place. Another noted some planned completions “went off over the last few days sans much of an issue. None of these hold-ups seem long lasting and the impacts are likely pretty muted for most OFS players…”
Meanwhile, around 44% of total U.S. cracker capacity, nearly all sited on the Gulf Coast, was estimated to be offline as of Monday.
The number could rise to 56%, said TPH, if Dow Chemical Co.’s Freeport project and Lyondellbasell’s Channelview go offline. They are the only two crackers running in the Corpus and Houston regions, according to analysts.
“With the storm predicted to continue moving northeast, attention will next shift to the Beaumont/Port Arthur/Lake Charles market, which holds 20% of U.S. cracking capacity.”
The rest of the country could feel the pinch of Harvey in the coming weeks. California’s 1 billion gallon/day gasoline consumption may see higher prices, but refinery operations and general supplies should be unaffected, state officials said Monday.
With its low-carbon fuel standard blending renewables into retail gasoline sold in the state and a lack of pipeline ties to Texas, industry representatives downplayed any impact on operations.
Senior fuels specialist Gordon Schremp of the California Energy Commission said the state fuel supplies should not be impacted by Harvey. "California does not normally receive transportation fuel imports originating from Texas or Louisiana," he told NGI on Monday. "However, California fuel prices will likely increase. How much prices will increase will depend largely on how the market responds to what emerges over the next week about how much refinery operations are impacted by the storm."
According to a recent analysis by Morningstar’s Fielden, refiners and operators in California have more to fear longer-term from the state's aggressive climate change regulations than from occasional hurricanes in the GOM.
Officials at the Western States Petroleum Association and the California Independent Petroleum Association also said Harvey was not expected to affect production in the West.
Well beyond Texas in the Bakken Shale, North Dakota’s Department of Mineral Resources officials said there likely would be no impacts to production, which is now shipped to the Gulf Coast through the Dakota Access Pipeline.
"Our field staff is hearing that there may be delays in getting parts for repairs or service on wells because many companies operate out of Houston," a spokeswoman told NGI.