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Rita's damage will make gasoline supplies even tighter

WASHINGTON—Gasoline prices are expected to climb again because Hurricane Rita seriously damaged two major refineries in Port Arthur, Texas, and may have damaged as many as four more in Texas and Louisiana.

Hurricane Katrina last month idled four large refineries that provided 5 percent of the nation's refining capacity, sending the average price for all three gasoline grades up by 38 cents a gallon, according to the Lundberg Survey. Rita may have knocked out more than that, leaving tight gasoline supplies even tighter.

"Now it's really a question of how much damage there is," said Kevin Lindemer, an oil expert with Global Insight in Boston, Mass.

Lindemer predicted price increases similar to those in the wake of Katrina for the next two or three weeks—"assuming the damage assessments don't get worse than we've already heard."

The Houston-area refineries that account for about 13 percent of the nation's refining capacity appeared to escape serious harm. There also didn't appear to be significant damage to the electric power grid, meaning that some pipelines and refineries may be able to resume operations later in the week.

"Based on our modeling and our initial reports, it appears that Houston's shipping channel may have received minimal exposure to the storm. So we are cautiously optimistic about refineries there," said Craig Stevens, a Department of Energy spokesman. "However, those around Port Arthur seem to have borne the brunt of the storm, and we will wait for additional reports and assessments from that area."

The gasoline outlook could get worse after damage assessments at large refineries in nearby Beaumont, Texas, and Lake Charles, La., which suffered the strongest winds and worst flooding.

In a statement Saturday afternoon, Royal Dutch Shell said that its Motiva refinery in Port Arthur, with a capacity of 285,000 barrels a day, sustained damage to a cooling tower.

Valero Energy Corp. said that its Port Arthur refinery, with a capacity of 255,000 barrels a day, sustained "significant damage to two cooling towers and a flare stack." The company anticipated that "it will take two weeks to a month to implement the necessary repairs and restart the refinery."

ExxonMobil didn't provide damage assessments for its massive Beaumont refinery, which has a capacity of 348,000 barrels a day. Citgo and ConocoPhillips didn't immediately discuss damage to their Lake Charles refineries, which have capacities of 324,000 and 239,000 barrels a day, respectively. The French company Total didn't report on damage to its 233,000-barrel-a-day refinery in Port Arthur.

Rita closed down gasoline pipelines that feed the Southeast and Midwest. However, Colonial Pipeline Co. of Alpharetta, Ga., said Saturday that its Colonial Pipeline, which feeds much of the southeastern United States, appeared to escape significant damage.

Explorer Pipeline of Tulsa, Okla., which distributes about 10 percent of the gasoline consumed in the Midwest, also was hopeful Saturday. Its pipeline escaped serious water and wind damage in Houston and Port Arthur, but its origin in Pasadena, a Houston suburb, was suffering power outages.

How quickly Explorer can resume sending gasoline through its 1,400-mile pipeline to the Midwest and Chicago depends on when it receives gasoline from refiners.

"We've had some people tell us they'll be ready in 24 hours, which seems optimistic," said Tom Jensen, director of operations. "Our best-case scenario is late Monday or early Tuesday."

While the onshore damages to the nation's energy infrastructure appeared mixed, the impact was unclear to offshore oil production in the Gulf of Mexico, where 1,200 production platforms account for 20 percent of U.S. oil production.

All that was known Saturday was that Transocean Inc.'s Deepwater Nautilus, an ultra-deep drilling rig, was adrift in the Gulf. It was heavily damaged by Katrina and was being towed for repairs when its towline broke in rough seas late Thursday, stranding 45 crewmen. A contracted company rescued the last 14 from the drifting platform shortly before sundown Friday in a daring helicopter rescue.


(c) 2005, Knight Ridder/Tribune Information Services.

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