On Monday 27th August US Gulf Coast refiners shut more than 1.3 million bpd of capacity as a precaution against Hurricane Isaac’s landfall which was expected from Tuesday 28th. At the time Isaac was moving from Florida and heading for New Orleans.
Seven years ago Katrina took the same route and devastated New Orleans. Refined product prices soared as refiners suffered major flooding and wind damage. Some refineries did manage to recover quickly, however, others were offline for months. Isaac is much smaller and far less damage is expected, as the industry is also more prepared.
So far it has been reported that 1.3 million bpd in crude oil processing capacity is offline. A typical barrel from the Gulf Coast yields 46% gasoline, 25% diesel/heating oil and 6% NGLs. The means that approximately 598 000 bpd of gasoline, 325 000 bpd of diesel and 78 000 bpd of NGLs is likely to be shut in for at the most four days. Gasoline stocks in PAD II are standing in the middle of the five year average. Diesel inventories are at the low end of their five year average.
There is refining capacity in PADD II outside of Louisiana that could make up for the shutdowns should they be extended beyond four days. Last week, Gulf Coast refiners ran at 90.6% of their total operable capacity, which was squarely in the middle of their three year range.
Adapted from press release by Claira Lloyd.