Port Fourchon, refineries out for weeks, raising short- and long-term questions

Port Fourchon in the wake of Hurricane Ida (Courtesy Sen. Bill Cassidy)

When Hurricane Ida blasted ashore, its 150 mile per hour winds not only laid waste to southeast Louisiana but to the nation’s fossil fuel infrastructure.

In her wake were Port Fourchon, Galliano and Houma, the major resupply center and home of offshore transport, warehousing and a nexus for offshore oil and gas pipelines.

“The area is completely devastated,” Tony Odak, chief operating officer of Stone Oil Distributor, a top supplier of fuel to the offshore industry, told Reuters. “You have infrastructure that needs to be rebuilt.”

According to Reuters, offshore energy companies have started searching for new bases away from Louisiana’s devastated ports as oil and gas companies launch efforts to resume their Gulf of Mexico operations.

Dozens of oil and gas companies operate in the U.S. Gulf of Mexico, which supplies 1.7 million barrels per day—or about 16%—of the nation’s oil production. Supply companies in Port Fourchon and nearby Houma are critical links in that production, providing food, fuel, equipment and boat and helicopter transportation to Gulf of Mexico deepwater platforms.

Only late this week is major debris finally being cleared from Louisiana Highway 1 so crews can begin assessing the damage to Port Fourchon, which was where the Category 4 hurricane made landfall Sunday.

There are more questions than answers at this point, but one thing is certain:

“It will create instability in the price of oil and increases in the cost of gasoline at the pump,” says David Dismukes, executive director of the LSU Center for Energy Studies. “The Gulf of Mexico is a significant crude oil production basin and Port Fourchon is a very significant port.”

How significant?

Some 90% of the Gulf of Mexico’s deep water oil and gas passes through Port Fourchon. That represents somewhere between 16-20% of the nation’s entire fuel supply.

Not only was Port Fourchon badly damaged, but refineries throughout the area were crippled, according to The New York Times.

• Floodwaters spilled over a temporary levee erected near a Phillips 66 refinery in Plaquemines Parish.

• Almost two dozen barges unmoored by the hurricane’s winds damaged the dock at the giant Valero refinery in St. Bernard Parish.

• Shell’s refining and chemical complex in Norco appeared to have suffered extensive flooding.

The ripple effects are already being felt in energy markets. Crude oil prices closed slightly higher Monday at $69 per barrel, though experts don’t expect long or sustained price hikes in oil because production from deep water platforms does not appear to have been hampered.

Refining capacity, on the other hand, will be impacted because of damage to the refineries and the port, which will translate into higher prices at the pump.

Port Fourchon Executive Director Chett Chiasson told NPR last week that it will be weeks before the port is back up and running but there’s no way to know yet how many weeks that might be.

While the short term effects are worrisome, experts are concerned longterm about the vulnerabilities of the nation’s aging fossil fuel infrastructure.

“We’ve seen the premature retirement of some of our fossil fuel infrastructure of late,” Dismukes says. “I hope this storm doesn’t result in the retirement of still more infrastructure. I’m not saying it’s going to happen, but it’s something to think about.”

Late Thursday, Exxon Mobil issued a statement saying that its fuels terminal had provided more than 230,000 barrels of fuel—enough to fill more than 1,200 truckloads or more than 9.5 million gallons of fuel to Southeast Louisiana. The terminal produces 517,000 barrels per day.

“It’s ExxonMobil’s priority is to ensure our Fuels Terminal has gasoline and diesel to meet local emergency responder and community demand. We have inventory on hand to continue to supply the terminal, and we anticipate meeting local needs,” said ExxonMobil Baton Rouge Refinery Manager Dave Oldreive.

At the time, Exxon said the refinery, Port Allen Lubricants Plant, and other chemical plant sites were beginning the process of safely progressing restart procedures—a process expected to take several days because they are all integrated with one another and share feedstocks.

Ida’s economic cost could hit $70 billion to $80 billion, AccuWeather estimates—much of it attributed to oil industry and supply chain delays. Some 1.7 million barrels of daily oil processing is offline at seven Louisiana refineries, the U.S. Department of Energy said. According to Reuters, consultancy Rystad Energy forecast losses will continue at least through the end of next week, depending on flood damage.