By Erwin Seba
HOUSTON, Sept 1 (Reuters) – Louisiana oil refineries shut by Hurricane Ida could take weeks to restart, costing operators tens of millions of dollars in lost revenues as they wait for water and electrical power to be restored, analysts said this week.
Idaslammed into Port Fourchon, Louisiana, on Sunday packing 150-mile-per-hour (240 km-per hour) winds that knocked out power to much of the state. Utility outages are hampering refinery, shipping and pipeline operators’ ability to resume operations.
Louisiana Governor Jon Bel Edwards on Tuesday advised residents of areas hit by the storm not to return until utilities can be restored.These areas include the homes of refineries operated by PBF Energy Inc (PBF.N), Phillips 66 (PSX.N) and Valero Energy Corp .
“Like everyone else, we are waiting on the results of the utility’s damage assessment and their plans for re-energizing the grid,” said Michael Karlovich, spokesman for PBF Energy, which shut its 190,000-barrel-per-day Chalmette, Louisiana, refinery on Sunday.
Spending on repairs and lost revenue could cost each company could tens of millions of dollars. Last year, after Hurricane Laura struck the Lake Charles area in western Louisiana, Citgo Petroleum Corp (PDVSAC.UL) reported repair expenses were $29 million net of insurance recoveries. A nearby Phillips 66 plant was out of commission for up to seven weeks due to lack of power and wind damage.
In Plaquemines Parish, home to Phillips 66’s storm-idled Alliance refinery, officials have been told to expect power will be out three weeks, said parish spokeswoman Jade Duplessis.
Exxon Mobil Corp (XOM.N) said it began restart procedures at its 520,000-bpd Baton Rouge, Louisiana, refinery after external power supply was returned. The plant was running at half-capacity into the storm and halted operations only when power was jeopardized.
Most refineries generate internal electrical power using gases produced in the refining process. But electricity supplied by utilities such as Entergy Corp (ETR.N) is required for the needed balanced power supply.Utilities also supply electricity to pipelines that supply crude oil to refineries, said Andrew Lipow, president of Lipow Oil Associates in Houston.
“In essence, electrical power from utilities is required in every step in this process,” Lipow said.
Robert Yawger, director of energy futures at Mizuho Securities USA, said restarts are neither safe or easy. “You can’t simply flip the switch and bring neither production nor the refinery back online,” he said.
The time to restart the refinery units or entire refineries would begin after power was restored.
Some refiners, like Marathon Petroleum Corp (MPC.N) at its 578,000-bpd Garyville, Louisiana plant, are using diesel generators to make repairs so it begin restarting once a stable power supply is restored.