NEW YORK (Reuters) - The second-largest refinery on the U.S. East Coast suffered some flooding and a power outage from Hurricane Sandy, and two smaller plants also lost power, as glitches threatened to slow the recovery in fuel supplies disrupted by the massive storm.
While the region's biggest plant, in Philadelphia, and several others were ramping up operations after escaping damage, other facilities, pipelines and terminals were struggling to restore the flow of supplies that had slowed to a trickle.
Phillips 66
News of trouble at Bayway, nicknamed the "gasoline machine" for its key role in supplying motor fuel to the New York City area, pared losses in gasoline futures which had fallen more than 2 percent as output recovered elsewhere and traders bet that fuel consumption would be hit.
RBOB futures on the New York Mercantile Exchange (NYMEX), which was due to reopen its trading floor on Wednesday, closed down 1 percent, their first loss in three days. By late afternoon they had erased losses and turned higher.
Other power-related glitches also surfaced after the storm, which left more than 8 million customers without electricity, shut seven major regional airports and all but halted traffic on the nation's most heavily traveled roads.
As the storm moved north, a power outage shut Imperial Oil's
Hess Corp's
The northern Line 3 segment of the Colonial Pipeline, a conduit that supplies as much as 15 percent of the East Coast's 5.2 million bpd of gasoline, diesel and fuel demand, was still idle, but the company said it had not suffered any operational damage. Portable generators were being brought in to restore power to the Linden tank farm and resume shipments.
The company asked customers to divert fuel shipments bound for the New Jersey area to southern markets.
The flooding at Bayway, which had been seen by experts as the refinery most vulnerable to Sandy's record 13-foot (4-meter) storm surge and subsequent power outages, is a potential second nightmare for Phillips 66, which had struggled to restore its Alliance, Louisiana, refinery after Hurricane Isaac in August. That storm pushed more than 2 feet of floodwater into the plant.
PHILLY PLANTS SEEN OK
Operations in the Philadelphia area appeared set to resume quickly. Philadelphia Energy Solutions' 330,000-bpd refinery, the biggest in the region, escaped damage and was restoring operations at the Point Breeze half of the plant that was shut, the company said, confirming a Reuters report.
Industry group Genscape said its infrared cameras detected the restart of key crude and vacuum distillation units.
Delta Air Lines
PBF Energy was ramping up its Delaware City refinery after minimal run-cuts, another such source said. A company spokesman confirmed reports that the plant had flared briefly, but said the incident had not affected operations.
Delaware City and PBF's 180,000-bpd Paulsboro plant in southern New Jersey, which had throttled back to reduced rates ahead of Sandy, "ran well through the storm", spokesman Michael Karlovich said.
He said personnel had completed a "thorough assessment" of the facilities, and that PBF would not provide further updates on logistics or operations.
The precautionary refinery closures were more widespread than during Hurricane Irene in August 2011, when only the Bayway plant shut completely.
John Auers, senior vice president and refining specialist at Turner, Mason & Co in Dallas, said East Coast plants, even those near the water, are better protected from potential flood damage than those that suffered weeks-long outages on the Gulf Coast following hurricanes Katrina and Rita seven years ago.
Still, even minor flooding can be a concern and plants without sufficient on-site generators may have to wait for utilities to restore outside power. The largest risk may simply lie in restarting vast, intense equipment.
"You're talking about heating up oil to fairly high temperatures, putting it through processing units at high pressure," Auers said. "Anytime you interrupt that steady-state there is always the potential for issues."
The vast network of terminals and smaller pipelines that serves the region - seen as a potentially greater danger than refinery outages - was also being assessed.
NuStar Energy
Major ports that supply the area with some 1 million bpd of imported fuel were starting to reopen. The Port of Boston opened without restrictions and was expected to unload a gasoline cargo later on Tuesday, an official said.
DEMAND IN FOCUS
Barring major damage, most experts expected the region's fuel supplies could bounce back quickly, while demand was likely to take a much deeper knock. Some 170,000 bpd of jet fuel demand alone was shut for a third day as all three major New York area airports remained shut, with no date for resuming flights.
Benchmark New York gasoline futures prices, which rallied more than 6 percent before the storm as traders feared a disruption in supplies, were still down 1 percent or 3 cents on Tuesday as the focus shifted to the likely cut in fuel consumption due to grounded flights and empty roads. U.S. crude oil futures rose slightly, reversing Monday's dip.
One trader offering to sell physical cargoes in the New York Harbor market found no buyers on Monday.
"For the moment you have a big black hole where there used to be oil demand," said Credit Suisse oil analyst Jan Stuart. He said 80 percent of demand in the New York metropolitan area had been affected somehow.
"In the end, the demand deficit outweighs the supply deficit."
Airlines had canceled more than 15,770 flights in the past four days, flight-tracking service FlightAware said.
(Reporting by Janet McGurty; Additional reporting by Jonathan Leff and David Sheppard in New York, Jeffrey Jones in Calgary; Editing by Michael Urquhart, Chizu Nomiyama, Leslie Gevirtz, Dale Hudson and Jim Marshall)
Source: http://news.yahoo.com/outages-floods-hit-two-n-j-refineries-others-214516864--finance.html
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