Oil and gas firms work to restore output after Isaac

HOUSTON (Reuters) - Energy firms worked on Friday to resume oil, gas and refining operations in the U.S. Gulf region following Hurricane Isaac, with most offshore production still shut and several refineries offline.

Nearly 95 percent of oil and 68 percent of natural gas production in the U.S. Gulf of Mexico remained shut as of Friday, little changed from Thursday, according to government figures.

Four refineries representing 878,000 barrels-per-day (bpd) of capacity remained shut, government figures showed. Several other refineries continued to operate at reduced rates.

The idle refineries represented 5 percent of total U.S. capacity. Shut-in offshore production represented the lion's share of the 23 percent of U.S. oil production and 7 percent of U.S. natural gas output normally supplied from the Gulf.

Major offshore producers including Royal Dutch Shell and Chevron Corp were working to restaff and restart platforms on Friday. That process could take several days, energy experts said.

To bring refining throughput levels along the Gulf Coast back to near pre-storm rates could take at least five to 10 days since plants will restart slowly for safety reasons, according to a source at a major Gulf Coast refiner, who asked not to be named.

Uncertainty remained about one refinery's prospects for restarting. Phillips 66 said that parts of its 247,000-bpd Alliance refinery in Belle Chasse, Louisiana were inundated with two feet of water after Isaac-related flooding. Phillips was working to assess any damage and pump out the water, but offered no timeline for a restart.

Oil futures rose on Friday afternoon by 1.9 percent to $96.44 a barrel. Gasoline futures and natural gas also rose.

Shell said Motiva Enterprises expects to restart some units at its 233,500-barrel-per-day refinery in Norco, Louisiana, on Friday.

SPR CRUDE LOAN

Marathon Petroleum Corp said its 490,000-bpd refinery in Garyville, Louisiana, was operating at reduced rates. The U.S. Department of Energy (DOE) said Marathon will receive a loan of 1 million barrels of crude from the U.S. Strategic Petroleum Reserve (SPR) to supply the refinery with crude it needs to ramp up to normal processing rates.

"This is a small, limited time swap in response to Isaac and should not have a major impact on crude prices," said Bob McNally, head of the Washington-based consulting firm The Rapidan Group.

The DOE said it continues to analyze a broader release of crude from its SPR in response to any crude supply disruptions.

The DOE will "keep all options on the table to address additional or sustained oil supply issues," it said in a Friday statement.

CRUDE IMPORT TERMINALS, GAS AND POWER

Facilities that receive U.S. crude imports were re-opening on Friday after Isaac-related shutdowns this week.

The Louisiana Offshore Oil Port (LOOP), which receives up to 13 percent of U.S. crude imports, has restarted deliveries from its onshore storage facilities at Clovelly, Louisiana and expects to restart offshore crude tanker offloadings as soon as possible, a spokeswoman said.

The U.S. Coast Guard said the Port of Morgan City in Louisiana had reopened late on Thursday.

Power utilities were working to restore electricity to hundreds of thousands of homes and businesses along the Gulf Coast.

Henry Hub, the Louisiana delivery point for U.S. natural gas futures, and most of the pipeline connections to it were operating normally and weren't affected by Isaac, Sabine Pipe Line LLC said.

(Reporting by Houston and New York energy desks; Editing by Dale Hudson and Leslie Gevirtz)

Source: http://news.yahoo.com/oil-gas-firms-restore-output-isaac-193622071--finance.html

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