Daily GPI / NGI The Weekly Gas Market Report

Houston Ship Channel Collision Delays Exports, Imports

The Houston Ship Channel, the 52-mile convoy that delivers close to 11% of U.S. refining capacity for the Port of Houston, was shuttered for a third day Monday as cleanup continued to remove close to 4,000 bbl (168,000 gallons) of residual fuel oil that spilled after an oil barge and cargo ship collided.

Portions of the channel, which allow oil barges and cargo ships to sail from the Gulf Coast to refiners and terminals further inland, may be shut through the week, the U.S. Coast Guard (USCG) said. Authorities were attempting to reopen a portion of the shipping lates Monday afternoon.

The estimated economic impact of closing the Houston Ship Channel is $330 million/day, according to the Port Authority of Houston.

Refiners that line the Ship Channel southeast of Houston offered little information on how the closure was impacting operations, but ExxonMobil Corp. said it had reduced rates at its 560,500 b/d refinery in Baytown. Marathon Petroleum Corp., Royal Dutch Shell plc and Valero Energy Corp. are among the biggest refiners in the region. Valero's two refineries near Houston and in Texas City have combined capacity of more than 300,000 b/d.

Last year about 2.15 million b/d of fuel products, including gasoline and diesel, were exported from the Gulf Coast, while 3.76 million b/d of crude was imported, according to the Energy Information Administration. When imports are delayed, refiners may use more domestic crude from pipelines. However, exports are impacted because the refineries provide almost more than one-tenth of the nation’s fueling capacity for gasoline, diesel and other petrochemical products.

As of Monday afternoon, 93 vessels were waiting to move through the Houston Ship Channel, with 56 outbound and 37 inbound, the USCG stated. The lanes are closed from north of Texas City to the entrance at the Bolivar Peninsula. USCG data indicated there were six collisions in the Houston Ship Channel in 2013, which closed the waterway for a combined 26 hours, versus 5.5 hours in 2012 and 157.2 hours in 2011.

Heavy oil continued to wash ashore from the collision, which occurred about 12:30 p.m. Saturday in heavy fog. The USCG received a call from the captain of the 585-foot cargo ship Summer Wind, which said it had collided with a barge being towed from Galveston Island to Bolivar Peninsula. Kirby Inland Marine is owner of the tow vessel Miss Susan and the barge, officials said. Kirby Corp. was cooperating with the USCG and the Texas General Land Office to contain the spill.

Kirby Inland Executive Vice President Jim Guidry said the company was "very concerned. We're focused on cleaning up" and plans to take responsibility for the costs. Earlier this month Kirby Inland announced that it plans to add 830,000 bbl of inland tank barge capacity to its Houston operations to carry growing U.S. unconventional oil production.

Cleanup crews by Sunday had pumped all of the remaining fuel oil from the barge, which then was refloated and moved to a different position.

According to the Texas City Office of Emergency Management (OEM), the spill could have been far worse because the barge was holding close to one million gallons of oil at the time of the collision. An OEM spokesman said there was a "reasonable amount of oil" in the water. Environmental crews, boats and oil booms were being deployed from the Texas City Dike, which juts five miles into the ship channel.

Warnings to mariners were in place for Galveston Bay, the third largest sailboat harbor in the country. There also is a fragile shorebird habitat on both sides of the ship channel; the Bolivar Flats Shorebird Sanctuary attracts up to 70,000 shorebirds at this time of the year.

"The timing really couldn't be much worse since we're approach the peak shorebird migration season," said conservation director Richard Gibbons.

Officials also closed bay area parks and asked people not to fish in the popular areas along the bay and to dispose of any fish that had been caught. Ferry services between Galveston and Bolivar were suspended, but the USCG Monday was attempting to restore partial service.

Six people were on the barge at the time of the collision; two people were transported to the hospital after coming into contact with hydrogen sulfide, officials said.

Recent Articles by Carolyn Davis