US Gulf Coast refineries, pipelines and ports were in the process of returning
to service Saturday as the industry continued its recovery efforts following
Hurricane Harvey.

Roughly 2.3 million b/d to 3.2 million b/d of Texas refining capacity remained
offline, as Valero returned its 225,000 b/d Texas City, Texas, refinery to
full operations, and ExxonMobil began restart procedures at its 560,500 b/d
Baytown, Texas, plant.

Magellan Midstream restarted two long-haul Texas crude oil pipelines: the
400,000-b/d Bridge Tex and 275,000-b/d Long Horn line.

The US Coast Guard opened the port of Corpus Christi Thursday to vessel
traffic, with some restrictions, and Platts’ cFlow trade flow software shows
several crude tankers entering the port. cFlow also shows three crude vessels
having entered Lake Charles, Louisiana, which has also been opened to traffic.

REFINERIES

* At least 2.3 million b/d of Texas refinery capacity remained down Saturday,
or 13% of total US capacity. Assuming the plants in partial shutdown or
returning are at 50% of capacity, that would put the figure closer to 3.2
million b/d, or 17% of US capacity.

Full shutdown:
Company Location Capacity (b/d)
ExxonMobil Beaumont, TX 362,300
Magellan Corpus Christi, TX 50,000
Buckeye Corpus Christi, TX 50,000
Shell Deer Park, TX 340,000
Petrobras Pasadena, TX 112,229
Motiva Port Arthur, TX 603,000
Total Port Arthur, TX 225,500
Valero Port Arthur, TX 335,000
Phillips 66 Sweeny, TX 247,000

Total capacity closed 2,325,029
Share of US capacity 13%

Partial shutdown/returning:
Company Location Capacity (b/d) 50% of Capacity (b/d)
ExxonMobil Baytown, TX 560,500 280,250
Flint Hills*** Corpus Christi, TX – West 230,000 115,000
Flint Hills*** Corpus Christi, TX – East 70,000 35,000
Citgo*** Corpus Christi, TX 157,500 78,750
Valero*** Corpus Christi, TX 293,000 146,500
Valero*** Three Rivers, TX 89,000 44,500
Lyondell Houston, TX 263,776 131,888
Marathon*** Galveston Bay, TX 459,000 229,500
Marathon Texas City, TX 86,000 43,000
Valero Houston, TX 191,000 95,500

Total capacity reduced 919,638

Closed + reduced capacity 3,244,667
Share of US capacity 17%

***Returning

GOVERNMENT RESPONSE

* US Energy Secretary Rick Perry has authorized the Strategic Petroleum
Reserve to loan an additional 800,000 barrels of crude to refiners Valero and
Placid Refining, bringing the total approved loans so far up to 5.3 million
barrels, the Department of Energy said Saturday. The DOE will release 500,000
barrels of sweet crude to Valero and 300,000 barrels of sweet crude to Placid
from the Bayou Choctaw storage site in Louisiana. Placid operates one plant in
the US, its 75,000 b/d Port Allen, Louisiana plant. Valero has now been
approved for 1 million barrels of SPR crude. On Friday, it was approved for a
500,000-barrel loan of sweet crude, also from Bayou Choctaw, which the company
said would be run at its 195,000 b/d refinery in Memphis, Tennessee.

SPR AUTHORIZED EXCHANGES
Company Plant SPR Site Authorized Amount Crude type
(barrels)
Phillips 66 Lake Charles, LA West Hackberry 200,000 Sweet
Phillips 66 Lake Charles, LA West Hackberry 300,000 Sour
Phillips 66 Lake Charles, LA West Hackberry 200,000 Sweet
Phillips 66 Lake Charles, LA West Hackberry 300,000 Sour
Marathon Bayou Choctaw 3,000,000 Sweet
Valero Memphis, TN Bayou Choctaw 500,000 Sweet
Valero Bayou Choctaw 500,000 Sweet
Placid Port Allen, LA Bayou Choctaw 300,000 Sweet
Source: US Department of Energy; Companies

STRATEGIC PETROLEUM RESERVE INVENTORY (millions of barrels)
LOCATION CAVERNS SOUR SWEET TOTAL
Bryan Mound, Texas 20 173.6 67.1 240.7
Big Hill, Texas 14 92.3 66.0 158.3
West Hackberry, Louisiana 22 100.6 104.9 205.5
Bayou Choctaw, Louisiana 6 51.8 21.8 73.6
TOTAL 62 418.3 259.8 677.4
(As of June 30, 2017)
Source: US Department of Energy

PORTS AND TERMINALS

* A sunken dry dock in the Houston Ship Channel is delaying post-Harvey plans
to resume unrestricted vessel access to that portion of the key waterway, a
port executive said Saturday. “The dry dock sank in the storm close to 610
Bridge at Brady’s Landing and that’s along the channel,” Mike Cunningham,
director of project management with the Greater Houston Port Bureau, said in
an interview.

Salvage operations for the dry dock will start Sunday, Cunningham said,
adding once that work is done, the US Army Corps of Engineers will be able to
complete a post-storm survey of the ship channel. He did not give a timeline
for the salvage work to be complete.

* The three Lake Charles, Louisiana, refineries are no longer cut off from
tanker deliveries now that the Calcasieu Ship Channel and Lake Charles port
have reopened.

* The Coast Guard opened the port of Corpus Christi Thursday, but kept some
restrictions in place because it has not finished surveying all channels and
inlets in the harbor. Corpus Christi is still targeting September 4 for a
return to normal operations. Data from Platts’ cFlow trade flow software show
several vessels carrying crude entering Corpus Christi via Port Aransas since
Thursday. The Telleviken, Paramount Hanover and Galway Spirit were at
Ingleside Friday, having spent several days offshore.

PIPELINES AND RAIL

* Magellan Midstream has restarted two long-haul Texas crude oil pipelines.
The two pipelines are the 400,000-b/d Bridge Tex and 275,000-b/d Long Horn
line; both run from southeast Texas to Magellan’s East Houston terminal along
the Houston Ship Channel. BridgeTex originates in Colorado City, Texas, and
transports WTI, West Texas Sour and Eaglebine barrels, while Longhorn
originates in Crane and ships light crude grades into the same terminal.
Magellan expects to receive crude oil into Crane and Colorado City Saturday,
the company said, adding it is now assessing restarts of its Houston crude oil
distribution system in the ship channel with a target of resuming service over
the weekend. The Longhorn and BridgeTex pipelines provide a substantial amount
of takeaway capacity from Texas’ Permian Basin to the USGC.

* Magellan Midstream Partners has restarted a 180,000 b/d refined products
pipeline that starts at its East Houston terminal in Texas. Refined products
pipeline service from the East Houston Terminal has now resumed for gasoline,
diesel fuel and jet fuel deliveries to the Dallas and West Texas areas. Until
those markets can be adequately resupplied, Magellan will continue to deliver
refined products from a reversed pipeline segment that provides transportation
services from Oklahoma refineries into the Dallas/Fort Worth and West Texas
markets, the company added.

* Colonial Pipeline, the biggest US refined product pipeline, is pumping
products east from Lake Charles, Louisiana, despite problems with its
facilities in Texas resulting from Hurricane Harvey. Colonial is aiming to
restart pumping of gasoline and distillates from Houston and Beaumont on
Sunday. The Colonial system runs from Houston to Linden, New Jersey, and
supplies about 60% of the incoming supply of gasoline into the Atlantic Coast.
Colonial has the ability to ship 1.37 million b/d of gasoline on its Line 1
and 1.16 million b/d of middle distillates on Line 2.

TRADE FLOW

* Harvey’s impact on the US Gulf Coast has already delayed millions of
barrels of oil product cargoes bound for Latin America, which could lead to
further delays and increasing prices. Mexico, a large buyer of US Gulf Coast
refined products, has turned to refineries along the Canadian and US Atlantic
Coasts for fuel supply. A source with knowledge of Mexican imports said the
country has been looking to purchase gasoline “everywhere” and that it still
needs more imports to satisfy its supply needs.

OIL PRODUCTION

* US Gulf of Mexico offshore production was recovering Friday. The US Bureau
of Safety and Environmental Enforcement showed 152,989 b/d of oil output shut
in on Friday, or 8.74% of total Gulf of Mexico output. That was down from
428,568 b/d August 26.

–Staff, newsdesk@spglobal.com

–Edited by Kevin Saville, kevin.saville@spglobal.com

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