U.S. Refiners in Path of Storm Barry to Keep Running

HOUSTON/NEW YORK — Most U.S. refiners whose plants are in the path of Tropical Storm Barry took steps on Friday to keep them running, even as forecasters warned that the second named storm of the season could become a hurricane just before landfall this weekend.

Exxon Mobil Corp plans to run its 502,500 barrel-per-day (bpd) Baton Rouge, Louisiana, refinery through Barry’s expected slow move across the state this weekend, said sources familiar with plant operations.

Royal Dutch Shell Plc’s refineries in Norco and Convent, Louisiana, also plan to remain in operation with essential personnel, as the state is drenched with as much as 2 feet (61 cm) of rain, sources familiar with operations at those plants said.

Exxon is taking steps to minimize the risk of heavy rain to its workers and equipment, said spokesman Jeremy Eikenberry, who added that its Baton Rouge and other U.S. Gulf Coast plants were operating normally. Shell operations also were continuing at the two Louisiana refineries, spokesman Ray Fisher said.

“Flooding rains could be the main story from this system as it heads toward Louisiana with some locations closing in on 15-inch totals through early next week,” said Bradley Harvey, a meterologist with space technologies firm Maxar Technologies.

Barry has shut 1 million barrels per day (bpd) of U.S. Gulf of Mexico oil production, one-half of the region’s daily crude and 44% of its natural gas output, according to the U.S. Bureau of Safety and Environmental Enforcement.

U.S. crude futures rose 0.18% to $60.31 a barrel and natural gas futures were up 1.4% on Friday, even as an International Energy Agency report projected a growing global surplus of oil. For the week, West Texas Intermediate crude has climbed 5.5%.

Natural gas output in the Lower 48 U.S. states could drop to a seven-week low of 87.2 billion cubic feet per day (bcfd) on Friday from a record 91.1 bcfd on July 5.

Most of the loss was in the offshore Gulf of Mexico region where producers were expected to cut output to just 1.3 bcfd on Friday, from more than 3.1 bcfd a week ago, according to data provider Refinitiv.

The amount of gas flowing to liquefied natural gas supplier Cheniere Energy Inc’s Sabine Pass plant on the Texas-Louisiana border dropped to a 13-week low of 2.9 bcfd on Thursday and Friday from an average of 3.6 bcfd over the prior seven days, according to Refinitiv.

Cheniere declined to comment on the decline, but said it did not expect the tropical storm to have a major impact on plant operations. There were four LNG tankers in the northern Gulf of Mexico on Friday, most of them waiting to enter Sabine Pass, according to vessel tracking data.

The storm, expected to bring as much as a 6-foot storm surge and cause coastal and interior flooding, was moving slowly and centered about 95 miles (155 km) southwest of the mouth of the Mississippi River with winds of 50 miles per hour (85 km/h) on Friday morning.

Barry is expected to strengthen during the day and could become a category one hurricane with at least winds of 74 mph (119 km per hour) late Friday night or early Saturday morning, according to the National Hurricane Center.

Refiner Phillips 66 was shutting down its 253,600-bpd Alliance, Louisiana, refinery, which has regularly been inundated by tropical storms by over the past 14 years.

PBF Energy Inc’s Chalmette and Valero Energy Corp’s Meraux refineries, both in Louisiana, were expected to remain open through the storm, according to people familiar with their operations. The Meraux refinery is about 17 miles north of the Alliance refinery.

Representatives of PBF and Valero were not immediately available for comment.