The Texas Gulf Coast was drying out Tuesday, more than a week after Harvey pummeled the region and dumped record rainfall across the Greater Houston area, the nation’s largest energy complex. The oil and natural gas industry was back to work after the Labor Day holiday, while experts were attempting to make sense of long-term impacts from the devastation.

“The resolve of Texas to rebuild and come back greater than ever remains unquestioned,” said Raymond James & Associates Inc. analysts. However, the impact of Harvey on the energy complex will be felt “for a material amount of time to come.”

Meanwhile, midstreamers with Gulf Coast exposure continue to experience outages but “structural damage appears to be mild. Oil and gas output in the Gulf of Mexico (GOM) is already reviving, and recovery in the Eagle Ford Shale (where the situation is less clear-cut) is on deck as well…Eagle Ford activity disruptions should taper off in the weeks ahead.”

Eagle Ford A Question Mark

“As the effects of Hurricane Harvey settle in, a theme seems to have developed across midstream infrastructure — long-lasting damage is minimal, but floodwaters will be a persistent logistical obstacle,” said analysts.

For the onshore, the Eagle Ford Shale in South Texas “presents more of a question mark. Unlike the Interior Department’s daily reports on GOM status, there is no aggregated real-time data for the Eagle Ford, and thus the production impact is more difficult to quantify.”

Few exploration and production (E&P) companies reported any asset damage from Harvey, which suggests that most of the shut-ins announced were driven by Gulf Coast refinery outages, causing a reverse domino effect in the value chain.

“Midstream assets, which carry E&P output to market, sustained minimal damage from the storm, but operators are now at the mercy of refinery restarts, thereby pigeonholing Eagle Ford production recovery,” said analysts. “Further, refinery outages have potentially widespread implications for other major producing areas, including the Permian Basin and Midcontinent region, as much of production in these plays is transported to the Gulf Coast hub given its proximity.”

Reduced fractionation and storage capacities at Mont Belvieu weakened domestic natural gas liquids (NGL) consumption and multiple port closures halted international exports, exacerbating Harvey’s effect on E&P operations in the region.

“We expect the impact of gas/NGL issues to be more short-term relative to crude oil consumption issues, given the nature of the gas/NGL markets and infrastructure,” according to Raymond James.

Assuming midstream operations resume concurrently with refinery restarts, Eagle Ford oil production mostly should be back to normal in the next few weeks, although “it is hard to know for sure until more operational updates come to light,” analysts said.

The impact to most oilfield service operations following Harvey should be temporary.

“Though the Eagle Ford has a significant number of rigs (81), the areas that experienced the most intense amounts of rainfall also have a smaller amount of rig activity as compared to the more western parts of the resource play. Thus, the areas that carry the heaviest impact likely only amount to 35-40 rigs in Southeast Texas and up to 30 rigs in Louisiana,” analysts said.”

Completions activity may be harder hit, but that should be only temporary.

“Given that much of oil and gas activity occurs in areas only accessible via dirt roads, the heavy rainfall usually makes the movement of trucks and supplies much more difficult,” said the Raymond James team. “Nevertheless, this likely just slows the process rather than stopping it. We believe the temporary stoppage could delay 5-10% of U.S. pressure pumping demand for a week or more.”

All things being equal, refining should continue to be the most affected subsector, as outages remain widespread and supply “will undoubtedly become tight in the weeks to come, and localized instances of gasoline shortages are likely.”

Mont Belvieu Resuming Service

Enterprise Products Partners LP said the Mont Belvieu complex, the nation’s largest NGL processing facility, has resumed commercial service, including ramping up its eight NGL fractionators, six propylene splitters, isomerization facility and octane enhancement unit.

“While NGL storage remains operational and brine containment has stabilized, the partnership continues to carefully monitor this situation. Enterprise has not curtailed NGL fractionation or storage services.” The two marine terminals on the Houston Ship Channel also have resumed commercial service to load ethane, liquefied petroleum gas and polymer grade propylene ships. Seaway’s marine terminals in Texas City and Freeport also have resumed service. The partnership’s Beaumont marine terminals are operational “but are not currently receiving ships since the port remains closed to traffic.”

Enterprise said its eight NGL processing plants and two fractionators in South Texas also have begun full operation and its natural gas, NGL and crude oil pipelines are in commercial service.

“While a final assessment of certain locations is still underway, the company has not incurred significant physical damage to facilities,” Enterprise said. “Operationally, the partnership continues to face challenges resulting from curtailments or allocations by some critical third-party service providers.”

Crestwood Equity Partners LP’s Tres Palacios Gas Storage facility on the Gulf Coast in Matagorda County also has resumed normal operations. The temporary shut-in should have no “meaningful impact” to operations, it said.

In Harvey’s wake, the Raymond James team reiterated its medium-term oil macro views as unchanged as global demand is outpacing supply. Modeling out Harvey’s impact on U.S. inventory trends, there may be a “blip” before a return to large undersupply in the oil markets.

The Corpus Christi-area plants bounced back quicker than expected and are in restart mode. Houston area refineries are working to restart in the coming days and weeks. Port Arthur/Beaumont “is the largest unknown,” because flooding was extensive. Midstream infrastructure damage also appears minimal, with pipeline restarts happening in parallel with refineries.

GOM Nearly Normal

Activity in the GOM was returning to normal by Sunday. Workers remained evacuated from only 14 production platforms, and personnel had returned to all five of the previously evacuated non-dynamically positioned rigs operating in the GOM, according to the Bureau of Safety and Environmental Enforcement (BSEE).

A total of 121,484 b/d (6.94%) of crude oil was shut in on Sunday, down from the peak 428,568 b/d reported Aug. 26. Also declining was shut-in natural gas, which reached 259 MMcf/d (8.05%) Sunday, compared with a peak of 835 MMcf/d Aug. 26. BSEE said its Sunday report would be the last related to Harvey’s impact in the GOM.

“Needless to say, the GOM is a big place, and the vast majority of offshore production was unaffected,” said Raymond James analysts. “As powerful as Harvey was, even at the peak (Aug. 26) the shut-ins affected only one-quarter of total GOM oil output, 429,000 b/d, and a similar portion of gas output…

“Having been hardened and elevated (by an average of 20 additional feet) following Katrina, offshore production platforms appear to have suffered little to no structural damage.”

Motiva Enterprises, which operates the nation’s largest refinery in Port Arthur at 603,000 b/d, said Tuesday it “is in the final phases of equipment assessments and initial phases of refinery start-up. We expect the refinery to initially return to approximately 40% production by the end of this weekend, provided that the final assessments meet our operational standards.”

ExxonMobil Corp., which operates the nation’s second largest refinery, said it was making progress to restart its 584,000 b/d Baytown complex, “which was spared significant damage from Harvey.

“Timing on a return to normal operations will depend largely on the availability and condition of transportation infrastructure. We are working with the Port of Houston to expedite vessels through the Houston Ship Channel, and we are coordinating with railroads to help facilitate necessary repairs.”

ExxonMobil’s Beaumont refinery remained shuttered because of flooding in the lower part of the complex, but chemical manufacturing facilities “are dry, and we are initiating startup activities at the polyethylene plant.”