Rita 'significant blow' to refining, but no 'knockout punch': EIA

Washington (Platts)--28Sep2005

Hurricane Rita dealt a "significant blow" to the US refining
infrastructure, but failed to deliver the "knockout punch that some had
feared," the US Energy Information Administration said Wednesday.
     EIA, the statistical arm of the US Department of Energy, projected that
as much as 15% of all US refining capacity could be out of service for at
least another two weeks when Rita is added to the affects of Hurricane
Katrina, which made landfall near New Orleans last month.
     About 5% of US refining capacity is still offline from Katrina, EIA said
in its This Week in Petroleum report.
     The agency estimates that these refinery outages amount to about 1.3-mil
b/d of lost gasoline production, over 700,000 b/d of lost distillate fuel
production, and nearly 400,000 b/d of lost jet fuel production. 
     With Rita making landfall near the Beaumont/Port Arthur, Texas, and Lake
Charles, Louisiana, refining centers, seven refineries, amounting to 1.7-mil
b/d of refining capacity -- 10% of total US capacity -- were directly in or
very near the path of the hurricane, EIA noted. Damage to some of these
refineries, and the lack of electrical power supply to others, is preventing
their immediate return to service. 
     EIA noted that while much of the Gulf Coast refining capacity shut just
ahead of Rita's landfall has returned, shutdowns are "still significantly
greater than at the peak following Hurricane Katrina."
     "While some of the lost production from inoperable refineries can be made
up from increased production from unaffected refineries and increased product
imports, the rest of it will likely be made up from additional draws from
inventories and lower demand due to higher prices," EIA commented.
      EIA said that although Rita did not deal a knockout blow, it expects
prices to increase over the next few weeks, particularly gasoline. 
     "For now, the critical factor is how much of the refining capacity that
is still shut down can return to service over the next few weeks," EIA said.
"With the data for the week ending Sep 23 showing gasoline, distillate fuel,
and crude oil inventories all at or above the average range for this time of
year, it appears that inventories, along with increased product imports, may
be sufficient to make up for lost production due to refinery outages for a
brief period," EIA said. "However, the longer these refineries remain shut
down, the more serious the situation becomes, particularly with the heart of
the winter season just a few months away." 
---Cathy Landry; cathy_landry@platts.com

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