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Floods, outages stall energy firms’ restart efforts after Ida By Reuters

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© Reuters. FILE PHOTO: Energy power crews work to restore power after Hurricane Ida struck New Orleans, Louisiana, U.S., August 30, 2021. REUTERS/Devika Krishna Kumar

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By Marianna Parraga and Stephanie Kelly

HOUSTON (Reuters) – Widespread flooding from Hurricane Ida and power outages on Tuesday slowed efforts by energy companies to assess damages at oil production facilities, ports and refineries.

A substantial portion of Louisiana lost electricity on Monday after Ida downed transmission lines and flooded communities, leaving more than 1 million customers without power. Coastal areas were swamped by a storm surge so great it reversed the flow of the Mississippi River.

Analysts said it could take two to three weeks to restart producing platforms and fully resume output at Louisiana refineries. Restoring power, critical to refineries, also could take weeks, utilities officials said.

“This restoration is not going to be a likely quick turnaround,” said Rod West, head of utility operations at Entergy Corp (NYSE:). “This was a significant catastrophic wind event, whereas Katrina was a water event by comparison.”

Disruptions at oil infrastructure are testing U.S. fuel distribution systems. Offshore oil and gas pipelines that feed processing plants remained largely shut, with a few beginning to restart.

The Colonial Pipeline – the largest fuel line to the East Coast – restarted late Monday the main gasoline and distillate lines it had shut ahead of the storm.

Phillips 66 (NYSE:) has yet to begin damage assessments at its 255,600-barrel-per-day refinery on the Mississippi River in Belle Chasse, Louisiana, a spokesman said. The plant, which was put up for sale last week, was swamped when a nearby levee failed.

Floods have been reported at other facilities in Louisiana. Nine refineries have reduced production or shut operations, including Exxon (NYSE:)’s 520,000-bpd Baton Rouge, taking offline 2.3 million bpd of capacity, or 13% of the country’s total, the U.S. Department of Energy estimated.

Most offshore U.S. Gulf of Mexico oil and gas output was halted with 94% of oil and production suspended on Tuesday, U.S. regulator Bureau of Safety and Environmental Enforcement said. A total of 278 production platforms and nine rigs remained evacuated.

Ports from New Orleans to Pascagoula, Mississippi, were closed on Tuesday, including Louisiana Offshore Oil Port (LOOP), the largest U.S. privately owned crude export and import terminal. LOOP’s initial review found no major damage to marine operations, a person familiar with the matter said, and the company was working with oil shippers to minimize disruption.

“With widespread refinery outages and debris on waterways, we expect no imports into the impacted ports in the coming days,” analysis firm ClipperData said in a note to clients.

Oil prices fell on Tuesday, as the shuttering of refineries will temporarily sap demand for crude. U.S. gasoline futures were also lower. [O/R]

The U.S. Environmental Protection Agency on Monday waived an environmental rule to allow winter-grade gasoline to be sold in Louisiana and Mississippi.

Regional gasoline prices are expected to rise temporarily, the American Automotive Association said, though flooding could sap demand in the Gulf Coast.

Pipeline operator Enbridge (NYSE:) temporarily suspended some contracts under force majeure, while Energy Transfer (NYSE:) informed shippers that its Stingray Pipeline, which brings gas from the U.S. Gulf to Louisiana, would not accept deliveries.


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