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Tue, Sep 06, 2005 - Page 12 News List

US fuel system struggles as four refiners shut for weeks

AP , NEW YORK

The US refinery system was struggling back from Hurricane Katrina, with two storm-shuttered facilities restarting and flows of crude oil improving enough to allow refineries in the Gulf Coast and Midwest to ramp up production.

But four damaged Gulf Coast refiners appeared likely on Sunday to remain shut for weeks or even months, taking with them more than 5 percent of US capacity.

Hurricane Katrina has pinched fuel supply, causing spot shortages and price spikes throughout the US. The storm shut eight major refineries and caused 12 others to run at reduced rates when their crude-oil supplies were cut.

Louisiana refineries expect to be back running within the week. Motiva Enterprises has begun to restart its 235,000 barrel a day Convent, Louisiana, refinery. Motiva is a joint venture of Royal Dutch Shell PLC and state-owned Saudi Arabian Oil Co.

"The Motiva Convent Refinery has completed repairs and initiated its restart sequence," Shell said on its Web site.

The refinery is the second to restart after Hurricane Katrina. Marathon Oil Corp restarted its 245,000 barrel a day Garyville, Louisiana, refinery last week and expected the facility to be operating at full capacity yesterday.

The two refineries in Norco, Louisiana, about 40km west of New Orleans, may also restart this week: Motiva's 225,000 barrel a day Norco refinery and Valero Energy Corp's St. Charles refinery in Norco.

The prospects for the other four refineries that shut down ahead of the storm are more dire. The plants, in hard-hit areas southeast of New Orleans and in Mississippi, can process some 880,000 barrels a day of crude, more than 5 percent of total US capacity.

Chevron Corp's 325,000 barrel a day Pascagoula, Mississippi, facility and ConocoPhillips' 255,000 barrel a day Alliance refinery in Belle Chasse, Louisiana, have suffered "major damage," the US Energy Department (DOE) said.

Murphy Oil Corp's 120,000 barrel a day Meraux, Louisiana, refinery and the 183,000 barrel a day refinery at Chalmette, Louisiana, owned by ExxonMobil and Petroleos de Venezuela SA, suffered water damage, the DOE said. Murphy has said the flooding is a few meters deep.

"There's still some water in the plant," Murphy spokeswoman Mindy West said on Sunday. Once the water is out, Murphy will have to clean out units and repair electrical equipment, West said. She wouldn't say when Murphy expects to complete those procedures.

The Chalmette refinery continues to assess damage, spokeswoman Nora Scheller said on Sunday. There is no thought yet of a restart timetable, she said.

Outside the main hurricane-struck region, refining conditions were improving. Ten refineries in the Midwest and Gulf Coast were operating at higher rates on Sunday after receiving crude oil from the key Capline Pipeline and from the Strategic Petroleum Reserve, the DOE said.

The refineries ramping up operations this weekend include ExxonMobil's giant 494,000 barrel a day Baton Rouge facility; Total SA's 212,000 Port Arthur, Texas, facility; ConocoPhillip's 239,000 Lake Charles facility; and Mar-athon's 222,000 Catlettsburg, Kentucky, facility, which may have been at full capacity yesterday, the DOE said.

Nevertheless, spot shortages of fuel continue to be reported in the US and the system is expected to remain tight until all refineries are healthy again. US inventories of gasoline were 7 percent below last year even before the storm hit, according to the Energy Information Administration, the statistics arm of the Energy Department.

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