US Gulf Coast oil companies resume Ida recovery as Nicholas recedes

US Gulf energy companies have been able to quickly restore pipeline service and electricity after Hurricane Nicholas passed through Texas, allowing them to double down on efforts to repair the significant damage a previous storm, Ida, caused weeks ago.

Nicholas, downgraded to a tropical depression on Tuesday, caused rain, minor flooding and power outages in Texas and Louisiana, where some refineries remained offline in the wake of Category-4 Hurricane Ida. The earlier storm has kept shut a large portion of the U.S. Gulf offshore oil and gas output.

Colonial Pipeline, the largest US fuel line, resumed gasoline and diesel shipments on Wednesday after Nicholas passed, while the Exxon Mobil-operated HOOPS pipeline system, which carries crude from large offshore production facilities to Texas, is expected to restart later on Wednesday, the company said.

Royal Dutch Shell plans to resume production at its Perdido offshore oil platform, shut ahead of Nicholas, once power is fully restored to HOOPS.

US liquefied natural gas producer Freeport LNG's export plant in Texas was expected to take in more natural gas, according to pipeline data from Refinitiv, signaling the facility might return to service soon after a power outage from Nicholas.

Freeport LNG, however, said the plant remained offline on Wednesday until the local power company completes repairs.

The Texas ports that had closed for vessel traffic ahead of the storm also reopened on Wednesday, the US Coast Guard said.

CONSTRAINED MARKETS

Even though operational resumptions after the storm have been faster this time, markets are very tight, said Infrastructure Capital Advisors analyst Andrew Meleney, as gasoline and other refined product stocks are near five-year lows. Oil prices rose about 2% on Wednesday after a larger-than-expected decline in US crude inventories.

About 30% of the US Gulf of Mexico's crude production and 39% of natural gas output were shut on Wednesday, while 36 platforms remained evacuated, the offshore regulator said, giving a new signal on how slow recovery from Ida has been, which made landfall more than two weeks ago.

The storm has removed 25.5-million barrels of oil and 31-billion cubic feet of natural gas from the market. About 537,000 barrels per day (bpd) of crude production and 879-million cubic feet per day of gas remain offline.

"The tropical storm that just came through slowed down recovery efforts from Hurricane Ida," said Tony Headrick, energy market analyst at CHS Hedging. "We will continue to see the effects from Ida."

About 103,000 customers in Texas and 79,000 in Louisiana were still without power on Wednesday as Nicholas slowly moved across southwest Louisiana, down from more than 500,000 on Tuesday, according to PowerOutage US.

Texas coastal oil refineries sailed through Nicholas. But at least two in Louisiana are expected to remain offline through early October due to damages from Ida, while others are still working to restart, including Valero Energy Corp's refineries in St. Charles and Meraux and PBF Energy's refinery in Chalmette.

Reuters