August 5, 2008

Energy Operations Returning to Normal After Storm

By Brett Clanton and Tom Fowler Houston Chronicle, Houston Chronicle

Aug. 5--Oil and gas companies and chemical makers in the region had no reports of damage from Tropical Storm Edouard this morning, and some began making plans to return to normal operations.

But several companies were still watching the storm closely before giving the all clear.

Marathon Oil Corp., for instance, said it will keep its 72,000 barrel per day refinery in Texas City closed until it appears the facility is out of harm's way, said Angela Graves, spokeswoman for the Houston firm.

Dow Chemical Co., the Midland, Mich.-based chemical giant, also had not reopened plants in La Porte and Clear Lake, but could make that call later in the day, depending on the storm, company spokeswoman Gina Foster-Gibbs said.

Valero Energy Corp. refineries in Port Arthur, Texas City and Houston continued to run at slightly reduced rates, with port closures tightening crude supplies in Texas City, the company said in an e-mail to reporters this morning.

The Port Arthur refinery experienced minor power disruptions, the company reported, but did not anticipate production to be "materially affected at any of our refineries."

The Motiva Enterprises Port Arthur Refinery also had temporary power problems ias the storm made landfall this morning but was largely unaffected and continues to operate, Shell said in a statement. Units that lost power are in the process of being brought back on line. Motiva is a joint venture of Royal Dutch Shell and Saudi Arabia's state oil company.

Chemical producer Huntsman Corp. experienced minor disruptions at its Port Nueces plant near Corpus Christi due to power failures and high winds, said Russ Stolle, spokesman for the Salt Lake City-based firm with administrative headquarters in The Woodlands. But operations at the plant were either back up or coming back online late this morning, he said. Company plants in Conroe and Dayton did not appear to have any storm-related issues so far, he said.

Sharon H. Rogers, spokeswoman for German chemical giant BASF, said the storm had a minimal effect on company plants in Beaumont and Port Arthur and did not affect facilities in Freeport, Clear Lake, and Pasadena. She said non-essential personnel did not report to work this morning, but that the company plans to resume normal work schedules later today and Wednesday.

Elsewhere, oil companies with oil and natural gas production facilities and in the central and western Gulf of Mexico, as well as offshore drillers, indicated the worst had passed.

BP, in a recorded message, said it was returning its offshore operations to normal.

Shell Oil said the storm had no impact on its platforms and will begin today returning the few workers it evacuated, weather permitting.

And offshore driller Noble Corp. said workers that were evacuated Monday from two submersible rigs in the Gulf may return by midday Wednesday.

Tropical Storm Edouard made landfall on the upper Texas coast early this morning and began inching inland east of Houston. Galveston Island avoided the direct hit some had predicted, but the Beaumont-Port Arthur area was pounded with heavy winds and rain.

Still, early reports indicated that neither oil refineries nor chemical plants in the Beamont-Port Arthur area were harmed by the storm.

Wall Street continued to treat the tropical storm with indifference as it appeared Edouard would spare vital oil and gas operations in the region.

Crude oil for September delivery fell 80 cents to $120.61 a barrel in midday trading on the New York Mercantile Exchange, after earlier falling to $118, the lowest level since May 5.

Natural gas futures were barely changed at $8.727 following Monday's 66.3-cent plunge to $8.726, the fuel's lowest level in nearly six months.

Given the mostly upbeat storm reports, several companies were planning to return to normal staffing levels by Wednesday after telling non-essential and some administrative workers to stay home today.

That was the case at Dow's Freeport chemical plant, which never shut down, but was running today with fewer staff, Foster-Gibbs said.

Shell's Deer Park refinery and chemical plant was running normally this morning, said spokesman David McKinney. One of the chemical process units had an upset early this morning that led to some flaring, but it was unrelated to the storm, he said.

Meanwhile, gasoline distributors said there were relatively few problems delivering fuel to gas stations in the area, although a few stations ran out for brief periods on Monday, said Brooks Smith, vice president of Bay Oil Inc. in Dickinson.

"Most of those outages were at stations that had a big weekend and then sold so much Monday morning before their regular deliveries showed up," said Smith.

Business at the terminals where tanker trucks fill up with gasoline for delivery to stations was brisk on Monday, but Smith said the refiners that operate those sites did a good job of keeping traffic moving quickly.

Bill Tilger, operations manager for fuel wholesaler Sun Coast Resources, said operations were running smoothly and that even in Beaumont, where the storm is hitting the hardest, his drivers are reporting normal deliveries.

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