Hurricane Harvey Forces Oil Refineries in Texas to Shut Down

Oil refineries are shutting down in the wake of rainfall and flooding from Hurricane Harvey in southeastern Texas, US.

The damage could mean a loss of more than 1 million barrels per day in refining capacity just in the Houston and Galveston, Texas, areas — that's not including hundreds of thousands of more barrels in the Corpus Christi, Texas, area.

The Houston area has seen 24-34 inches of rainfall. Flash flood watches are in effect for more than 11 million people, and another 10-20 inches of rainfall is possible over the next 72 hours.

Analysts said the refinery outages could last for weeks or months if workers find significant damage due to flooding at the facilities. While refineries in Corpus Christi appear to have emerged relatively unscathed after Harvey made landfall as a hurricane, the picture is not yet clear for the Houston area, said Tom Kloza, global head of energy analysis at Oil Price Information Service.

ExxonMobil Corporation cut production at its Beaumont, Texas, refinery northeast of Houston due to "weather impacts" from Harvey at the 363,000 barrel-per-day facility, a spokesperson told CNBC. Exxon did not disclose how much capacity had been affected at the plant.

Exxon previously shut down its massive plant in Baytown, Texas, on the Houston Ship Channel, with a capacity of more than 560,000 barrels per day, CNBC has confirmed. The Ship Channel is the busiest in America and remains closed by the storm.

Sources told Reuters that Motiva Enterprises LLC was considering a shutdown of its Port Arthur refinery, the largest in US.

Royal Dutch Shell plc has shut down its massive Deer Park refinery in southeastern Houston, among the largest in US with a crude oil capacity of 340,000 barrels per day.

The company said in a statement obtained by CNBC, "On August 27, we made the decision to initiate a controlled shut down of the Deer Park, Texas, refinery and chemical plant as a result of heavy rainfall and associated nearby flooding from Hurricane Harvey. Only essential personnel will stay on site through the end of the week."

Also, Petrobras said it would shut down its Pasadena, Texas, refinery, with a capacity of 110,000 barrels per day, thanks to "severe weather," according to Dow Jones.

Traders and oil industry news services also say that the Phillips 66 Sweeny Texas Refinery (260,000 b/d) is shutting down, and that output at Marathon Petroleum's Galveston Bay refinery (460,000 b/d) and the Access Industries plant in Houston (260,000 b/d) are slowed because of the closed ship channel.

Marathon personnel responded to an odour incident at a gasoline storage tank at the Galveston facility. The company said air monitoring showed "no actionable levels of emissions."

The Magellan pipeline company has announced its shutting down its crude oil and refined product pipeline in Houston, which means remaining refineries there might be shutting down as well.

Refineries in Corpus Christi owned by Flint Hills, Valero Energy Corporation and Citgo Petroleum Corporation, totalling more than 700,000 barrels per day, had also been slated for controlled shutdowns according to an Oil Express news alert.

Valero was considering whether it could resume operations at its Corpus Christi and Three Rivers refineries, which have a combined refining capacity of about 380,000 barrels a day.

The Port of Corpus Christi is indefinitely shut down until a 449-foot drill ship that broke free of its mooring and beached in the ship channel's entrance to the Gulf of Mexico can be removed, according to the San Antonio Express-News. The Army Corps of Engineers must inspect the port before it can it reopen, the paper reported.

Even if the damage near the refineries is controlled quickly, widespread damage throughout the area will make it hard for refinery workers to get to work — the Shell plant, for instance, has more than 3,000 workers and contractors.

Cheniere Energy said its Corpus Christi construction site saw only a minor impact from Harvey. The company said early assessments of the site by Cheniere and EPC partner Bechtel showed only "minor cosmetic impacts."

Cheniere said it is currently working to contact all employees to ensure they are safe and to assess their needs.

The storm is affecting production as well. The Bureau of Safety and Environmental Enforcement said that almost 22 percent of current oil production in the Gulf of Mexico has been "shut-in," based on reports from operators. That's about 378,000 barrels per day, out of a total of 1.75 million in the region.

Mexico will be significantly affected as a large buyer of gasoline refined in the area, as tanker traffic in and out of Texas has basically stopped.

Harvey, now a tropical storm hovering over the Houston area, could set a Texas rainfall record with more than 50 inches, said the National Weather Service.