Gulf Refiners Report Minimal Ike Damage, to Restart

By Robert Tuttle and David Wethe

Sept. 15 (Bloomberg) -- Oil refiners in Texas and Louisiana prepared to restart plants after Hurricane Ike caused minimal damage to facilities in an area that supplies about 50 percent of the fuel and crude used in the eastern half of the U.S.

Valero Energy Corp., the largest U.S. refiner, said it found ``no significant structural damage'' at three Houston-area refineries shut before the storm. Royal Dutch Shell Plc said it was assessing its Texas plants and it was too early to say when they will restart.

``We think in probably a week to 10 days we should have a majority of the refineries back up,'' James Cordier, founder of Tampa-based OptionSellers.com, said in a telephone interview from New York. ``Very little damage was done.''

A total of 14 Texas and Louisiana refineries, with combined crude processing capacity of 3.57 million barrels a day, are closed because of Ike. Exxon Mobil Corp. said its Baytown refinery, the largest in the U.S., has power and damage appears ``limited.'' Ike came ashore near Galveston Sept. 13, shutting about 20 percent of the U.S.'s oil-refining capacity.

Valero said power has been restored to ``most production units'' at its Houston refinery and is working to resume electricity supply to its Texas City and Port Arthur plants. All three refineries are working on ``startup plans,'' Bill Day, a company spokesman, said in a telephone interview yesterday.

ConocoPhillips said its Sweeny, Texas, refinery has power and its condition is being assessed. The company's Lake Charles refinery is operating at reduced rates and continues the restart process. Exxon Mobil said it is checking its Beaumont, Texas, plant, which is without electricity.

`Several Days'

LyondellBasell Industries Houston refinery will be down for at ``least several days,'' David Harpole, a company spokesman said. Exxon Mobil and Marathon Oil Corp.

Shell said ``varying levels'' of services were available at its Deer Park, Texas, refinery and there was no electricity at its Port Arthur plant, which it operates in a joint venture with Saudi Arabia's state oil company. ``It is too early to predict when the refinery will resume normal operations,'' Shell said in a statement on its Web site at 6 p.m. yesterday Houston time.

Colonial Pipeline Co. said yesterday it restored operations to its gasoline and distillate pipelines, which carry from the Gulf Coast to the Northeast.

Strategic Reserve

The U.S. Department of Energy said yesterday it has released a total of 939,000 barrels of crude oil from its Strategic Petroleum Reserve because of shortages at refineries caused by Ike and Hurricane Gustav, which struck the Louisiana Coast on Sept. 1. Companies that have received oil from the reserve include ConocoPhillips, Placid Oil and Marathon Oil Corp.

Deliveries were to begin for the ConocoPhillips refinery at Wood River along the Capline pipeline system and Placid Oil's Port Allen refinery, the Energy Department said in a statement. Ike weakened to a tropical depression as it moved inland over Missouri and Illinois. The storm left Houston without drinking water and severed power to millions after ripping through America's fourth-largest city.

Citgo Petroleum Corp., owned by Venezuela's state oil company, requested yesterday for 1 million barrels of crude oil from the U.S. Strategic Petroleum Reserve.

The oil is needed for its refinery in Lake Charles, Louisiana, after Gustav and Ike disrupted crude deliveries, Citgo Chief Executive Officer Alejandro Granado said in a statement late yesterday.

About 2.2 million Texas households, mostly in the Galveston and Houston area, were without power because of the storm, the U.S. Federal Emergency Management Agency said yesterday.

Ike was the first storm to hit a major U.S. metropolitan area since Hurricane Katrina devastated New Orleans in 2005.

Output Shut

A total of 99.6 percent of oil production and 91.9 percent of natural-gas output was idled in the Gulf of Mexico because of the storm, the U.S. Minerals Management Service said yesterday. Gulf fields produce 1.3 million barrels of oil a day, about a quarter of U.S. output, and 7.4 billion cubic feet of gas, 14 percent of the total, government data showed.

Shell, Europe's largest oil company, said in a statement at 7 p.m. Houston time yesterday that it had redeployed a total 175 people to offshore oil and gas facilities. A flyover of its offshore Gulf facilities found ``no major structural damage,'' the statement said.

The company will continue to deploy workers until it reached pre-storm staffing levels of 1,400 people, Darci Sinclair, a company spokeswoman, said.

Exxon Mobil also said it was sending workers to Gulf oil and gas facilities that weren't in the direct path of the storm.

Marathon said it was sending workers to the Ewing Bank oil and gas platform to asses its condition. The platform, which produces 11,700 barrels of oil and 10.5 million cubic feet of gas a day, appears ``structurally sound,'' the company said.

The Louisiana Offshore Oil Port, the biggest U.S. oil- import terminal, was scheduled to start offloading tankers today, Barb Hestermann, a spokeswoman for the port, said in a telephone interview yesterday.

To contact the reporter on this story: Robert Tuttle in New York at rtuttle@bloomberg.net; David Wethe in New York at dwethe@bloomberg.net.