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		<h1 class="Utility--no-margin Utility--uppercase">IHS issues Hurricane Harvey updates</h1>
		<p>By Scott Jenkins | <time datetime="2017-08-31T09:28:45+00:00" pubdate>August 31, 2017</time></p>
		
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                </div><p>IHS Markit (Houston; www.ihs.com), a world leader in critical information, analytics and solutions, is releasing periodic updates on the impact of Tropical Storm Harvey on the crude oil, refining and chemical sectors.</p>
<p></p>
<p>A summary of the latest update (as of end of day Tuesday, August 29) follows below.</p>
<p></p>
<p>The complete report is available at <a href="http://bit.ly/2vJuhad">http://bit.ly/2vJuhad</a></p>
<p></p>
<p><b>Crude <br /></b></p>
<p></p>
<ul></p>
<li>As of Tuesday, U.S. Gulf of Mexico operators have shut down approximately 320,000 b/d of crude oil output, equal to around 18 percent of total Gulf of Mexico production. In addition, about 0.62 Bcf/d of natural gas output was shut in, or about 19 percent of Gulf production.</li>
<p></p>
<li>International crude prices continue to be mostly unchanged, although WTI at Cushing continues to be weaker, as a result of stranded crude unable to be consumed along the Gulf Coast.</li>
<p></p>
<li>Drilling and completion operations in the Eagle Ford, which were paused ahead of the storm are likely to resume later this week. The ability of personnel and oil field services to return to work, however, is still in question. The Eagle Ford produces about 1.3 MMb/d of crude and condensate, about 14 percent of all U.S. output.</li>
<p></p>
<li>A key limitation at the moment for producers, refiners and exporters along the Texas Gulf Coast is the shutdown of many key crude oil pipelines. With limited pipeline takeaway to the Gulf, Permian operators may begin to be impacted.</li>
<p></p>
<li>The port of Corpus Christi sustained some damage but is working to resume normal operations by September 4. Corpus Christi is a key port for exporting U.S. domestic light crude such as WTI and Eagle Ford.</li>
<p>
</ul>
<p></p>
<p><b>Refining</b></p>
<p></p>
<ul></p>
<li>The past 24 hours have included heartening signs of recovery from the Corpus Christi refining industry. Flint Hills’ Corpus Christi refinery will begin a staged restart process as early as today, with the other three plants in the area likely to follow suit later this week. Together these four plants represent around 4.5 percent of U.S. refining capacity – and nearly 40 percent of the capacity currently offline.</li>
<p></p>
<li>The news is far more uncertain in Houston, which is forecast to receive another 8-12 inches of rain over the next several days. In fact, sources reported today that Marathon Petroleum is idling production at its two Houston refineries. These reports have not been confirmed by the company. If true, this would increase the number of shuttered plants in the city to six.</li>
<p></p>
<li>So far, no Houston refineries have reported significant damage. But the situation is still evolving and a full reckoning of the storm’s impact is simply not possible at this point. All four Houston area ports remain closed Tuesday, and will not likely re-open before Thursday.</li>
<p></p>
<li>Tropical Storm Harvey is now setting its sights on the sizeable Port Arthur/Lake Charles refining hub along the Texas-Louisiana border. This region has already received significant rainfall and it is expected to receive another 5-15 inches through Friday.</li>
<p></p>
<li>Port Arthur/Lake Charles is home to seven refineries with a collective distillation capacity of nearly 2.3 million b/d – about 12.3 percent of the national total.</li>
<p></p>
<li>The total amount of distillation capacity confirmed offline remains at 2.0 million b/d. However, the amount of refining capacity operating at reduced rates has effectively doubled, rising from 1.1 million b/d to 2.2 million b/d. Another 1.3 million b/d is under imminent threat to reduce operations. Together, the affected facilities represent more than 30 percent of U.S. refining capacity.</li>
<p>
</ul>
<p></p>
<p><b>Chemical</b></p>
<p></p>
<ul></p>
<li>Ethylene – Approximately 70 percent of the total U.S. production for ethylene lies in Texas and 65 percent of the total ethylene equivalent consumption capacity, with most units potentially impacted by the storm. The amount of confirmed outages has increased, pushing the percentage of total U.S. ethylene production offline to 41 percent and total U.S. ethylene consumption capacity to 33 percent.</li>
<p></p>
<li>Propylene – Approximately 92 percent of the total U.S. production for PGP/CGP lies in the potentially affected regions along the Texas and Louisiana coastline. Likewise 88 percent of the total propylene equivalent consumption capacity based on PGP/CGP feed also lies within the potentially affected zone. As the storm and subsequent catastrophic flooding continue to plague the U.S. Gulf Coast, 30 percent of the PGP/CGP supply is confirmed offline with 22 percent of the RGP supply is confirmed offline.</li>
<p></p>
<li>Polyethylene – The first day business day following the landfall of Hurricane Harvey on the Texas coast saw the issuance of a flurry of Force Majeure declarations. Ineos, CPC, LYB, EM, are among the companies that have issued letters to date. Additional declarations are expected.</li>
<p></p>
<li>Polypropylene –Currently we estimate that up to 65 percent of North American PP capacity could be offline. Ineos, Formosa, and LyondellBasell are under force majeure.</li>
<p></p>
<li>Benzene – The Houston area refineries continue to be shut down, including XOM Baytown and Deer Park. Marathon Galveston Bay has reduced rates but could also shut down due to feedstock concerns. Those three refineries account for 30 percent of U.S. benzene production. That is offset by derivatives being down for Styrene, Cumene and Cyclohexane. The Corpus Christi plants are planning to restart but logistics in and out of the plants will continue to be a concern for the next week.</li>
<p></p>
<li>Chlor Alkali/Vinyls – The chlor-alkali/vinyls market on the USGC continues to feel the impact of Tropical Storm Harvey. Four Texas plants are currently down, with others running at reduced rates. Product logistics are the current concern that may further impact operating rates.</li>
<p></p>
<li>Methanol – There were no methanol or methanol derivative units in the direct path of the hurricane, however one of Hexion’s formaldehyde units is only 40 miles west of where the hurricane made landfall. Current estimate is that 14 percent of U.S. formaldehyde capacity is affected. In acetic acid, 83 percent of U.S. capacity is in the affected area. For methanol, 45 percent of U.S. capacity is in the affected area. At least one Texas based methanol/acetic acid unit has been confirmed shutdown by loss of power. It is reasonable to assume that other units are similarly affected and if not, will suffer from logistics constraints to move material out as much of the product in the Houston area is moved up river or out by sea with river and port traffic closed currently. The U.S. imports a lot of methanol as well, with as much as 12 percent currently coming in through Houston.</li>
<p>
</ul>
<p></p>
<p class="Default"><b> </b></p>
<p></p>
<p>The complete report is available at <a href="http://bit.ly/2vJuhad">http://bit.ly/2vJuhad</a></p>
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