- The Washington Times - Saturday, September 13, 2008

NEW YORK | At least 13 oil refineries in Texas were shutting down Friday as Hurricane Ike approached the state’s coast, reducing the nation’s oil-processing capacity by about 19 percent.

Plants operated by companies including Exxon Mobil Corp., Valero Energy Corp., ConocoPhillips and Royal Dutch Shell PLC were shut or in the process or closing as Ike bore down on the coast with winds near 105 mph.

The storm idled about 98 percent of oil production and 94 percent of natural gas output in the Gulf of Mexico, the U.S. Minerals Management Service said Friday. Gulf fields produce 1.3 million barrels oil a day, about a quarter of U.S. output, and 7.4 billion cubic feet of gas, 14 percent of the total, government data show.

“This is more of a refinery issue than an oil and gas issue,” said Jim Rouiller, senior energy meteorologist at Planalytics Inc. in Wayne, Pa. “A storm as massive as Ike has the capacity to generate massive storm surge.”

Gasoline for October delivery rose 2.08 cents to settle at $2.7696 a gallon on the New York Mercantile Exchange as the refineries closed. Prices have risen 3.1 percent this week.

But wholesale gas prices on the Gulf Coast soared into uncharted territory, jumping from $3.25 Wednesday to $4.85 a gallon Friday, according to the Oil Price Information Service.

Wholesale prices were much lower in other regions such as Chicago, New York and Los Angeles, but even those areas saw prices rise.

Chevron Corp., the second-largest U.S. energy company, urged U.S. consumers outside the Gulf Coast region to conserve gasoline and other fuels to help avert shortages.

The company said it is concerned about “the potential impact of Hurricane Ike and the additional pressure it could have on an already stressed petroleum-distribution system.”

ExxonMobil is shutting its Baytown, Texas, refinery, the biggest in the U.S., with processing capacity of 590,500 barrels of oil a day, and its Beaumont plant, which can process 363,100 barrels a day, according to the Energy Department.

Valero, the largest U.S. refiner, closed three Texas refineries with a combined capacity of 589,000 barrels a day.

They are the 294,000-barrel-a-day Port Arthur refinery, a Texas City plant with a capacity of 210,000 barrels and a Houston facility that can process 85,000 barrels, spokesman Bill Day said Thursday.

Planalytics’ Rouiller said Ike is similar to Hurricane Alicia in 1983.

“It took them over a year to get their feet on the ground again,” he said. “The refineries were down for months. Basically, the whole infrastructure around the Houston metropolitan area was devastated.”

Gas supplies across the Southern and Eastern U.S. may be disrupted by the storm, Mr. Rouiller said.

“We could have this capability lost for a long period of time,” he said.

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