After Ida, Energy Facilities in Gulf Inching Back to Life

In the aftermath of Hurricane Ida, people wait in line for gas Tuesday, Aug. 31, 2021, in New Orleans, La. (AP Photo/Eric Gay)

Oil companies began gradually restarting some of their refineries in Louisiana, and key fuel pipelines fully reopened Tuesday, providing hopeful signs that the region’s crucial energy industry can soon recover from Hurricane Ida’s onslaught.

Exxon Mobil said crews were starting to resume normal operations at its Hoover platform in the Gulf of Mexico that managed to avoid storm damage. And the company said its fuel terminal in Baton Rouge, Louisiana, restarted operations Monday.

And in a dose of good news for motorists on the East Coast, Colonial Pipeline said it restored flows late Monday to two pipelines that run from Houston to Greensboro, North Carolina, after crews had inspected the facilities. The reopening of the conduits, a major source of gasoline and other fuels, will help ease fears of big price spikes for consumers.

In addition, Philips 66 said its Gulf Coast lubricants plant in Sulphur, Louisiana, would reopen Tuesday, though one of its refineries in nearby Belle Chasse, which took on water, remained shut down. Valero said crews were checking its refineries in St. Charles and Meraux, which remained down Tuesday.

Ida ravaged the region’s power grid, leaving all of New Orleans and hundreds of thousands of other Louisiana residents in the dark with no clear timeline on when electricity would be restored. The refineries that are beginning to restart operations weren’t in the heart of Ida’s path and didn’t lose power, making the task of restarting much more manageable.

Energy and chemical companies throughout the region have been surveying damage since Ida barreled onshore Sunday, bringing ferocious winds and heavy rain. The companies are focusing their efforts on both offshore platforms that are used to pump oil and natural gas from below the Gulf of Mexico and the refineries that turn the crude into finished products.

All told, nine Louisiana refineries, which collectively account for about 13% of the nation’s refining capacity, were forced to close, at least temporarily, by the storm, the U.S. Energy Department said Tuesday. The department noted that refinery operators can’t restart the plants until the power and other utilities they depend upon are restored. Some companies that said flooding was making it difficult to even reach some of their facilities.

Yet even with the disruptions at many refineries, analysts say they expect no major supply shortages. In part, that is because Gulf Coast inventories of gasoline and other petroleum products were above normal for this time of year, and oil stocks were in line with the five-year average.

On Tuesday, oil prices fell more than 1% before reversing some of that decline. Benchmark U.S. crude fell 71 cents, or about 1%, to settle at $68.50 in trading on the New York Mercantile Exchange.

Analysts at banking giant Citi estimated that Ida could shave about one-tenth of a percentage point from U.S. economic growth in the third quarter, “which would be hardly noticeable against a background of otherwise strong growth.” They warned, however, that the storm could further drive up demand for used cars, building materials and workers, adding to inflation.

The Citi analysts said Ida’s toll would be significant but less than the $161 billion cost of Hurricane Katrina, which hit New Orleans in 2005, and the $125 billion lost to Hurricane Harvey, which flooded Houston, including many of its refineries, in 2017. Ida’s winds were stronger, but it didn’t create as much flooding as those earlier storms.

The impact will be felt beyond the energy industry. Agribusiness behemoth Cargill said a huge grain terminal in Louisiana suffered significant damage. Cargill said safety concerns and power outages were slowing its ability to assess the damage at the terminal, which handles crops exported to China and other countries, and the company declined to predict when the facility will operate again.

Peter Meyer, an agricultural-goods analyst for S&P Global Platts, said there is a “logistical bottleneck in Louisiana” that has caused prices for corn and soybeans to slip – just weeks before harvest – while exporters try to figure out the damage.

Louisiana communities that were battered by Ida faced a growing danger as they began the immense task of clearing debris and repairing damage from the storm: The possibility of weeks without power in the stifling late-summer heat.

Entergy, Louisiana’s main utility company, said a crew of at least 20,000 would take several days to assess the damage in New Orleans and southeast Louisiana caused by the storm.

The Environmental Protection Agency granted emergency fuel waivers for Louisiana and Mississippi through Sept. 16. The move suspends requirements to sell low-volatility gasoline, which is required in the summer to limit the formation of ozone pollution.

– David Koenig and Paul Wiseman, AP

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