Bloomberg News

Flights Planned Over Houston Ship Channel to Assess Reopening

March 25, 2014

Houston Ship Channel Spill

A barge loaded with marine fuel sits partially submerged in the Houston Ship Channel, March 22, 2014. Photographer: PO3 Manda Emery/U.S. Coast Guard via AP Photo

U.S. authorities are planning inspection flights over the Houston Ship Channel, home to 11 percent of the nation’s refining capacity, as the waterway remains closed for a fourth day.

The flights over of the channel and Galveston Bay, following a 4,000-barrel fuel oil spill, are scheduled today to assess conditions for reopening, Tim Hicks, U.S. Coast Guard watch supervisor, said in an e-mail.

Exxon Mobil Corp. (XOM:US) said it reduced rates at its 560,500-barrel-a-day refinery in Baytown, Texas, because of the closing caused by the March 22 accident. Valero Energy Corp. (VLO:US), Marathon Petroleum Corp. (MPC:US) and Royal Dutch Shell Plc (RDSA) also own all or part of refineries on the 52-mile (84-kilometer) shipping lane. The combined capacity is 2.1 million barrels a day, said Andy Lipow, president of Lipow Oil Associates LLC in Houston.

“The impacts are delays in crude deliveries and shipping out of gasoline and diesel,” Lipow said by telephone. “A closure of four to five days becomes serious. Refiners don’t have enough crude on hand or storage of finished products for that long a delay.”

There are 140 vessels waiting to move through the Houston Ship Channel, the Coast Guard said. The channel is closed from just north of Texas City down to its entrance, at Bolivar. To reopen the channel, the Coast Guard needs an uncontaminated lane for ship traffic and be sure the traffic won’t impede cleanup, Captain Brian Penoyer said yesterday at a press conference.

The Galveston Bolivar ferry has been given permission to to operate and will run from 7 a.m. to 7 p.m., the Coast Guard said.

Closing Impact

The closing’s impact is similar to that caused by fog, Greg Bram, senior vice president of supply chain for Valero, said yesterday in New Orleans, where he was attending the Howard Weil energy conference. Fog can close the channel for days.

Refiners can use more domestic crude from pipelines when shipments are delayed, Bram said. Valero has two refineries on the channel, in Texas City and Houston, with combined capacity of more than 300,000 barrels a day.

The spill occurred when a barge being towed by the vessel Miss Susan was struck at 12:35 p.m. local by the 585-foot bulk carrier Summer Wind, causing one of the barge’s six tanks to leak fuel oil, the Coast Guard said. The fuel from the remaining five tanks has been transferred and the vessel will be moved to a local shipyard, the Coast Guard said.

Workers have refloated the barge, whose tanks were carrying 22,000 barrels of ship fuel at the time of the incident near Texas City, Texas, Lieutenant Junior Grade Kristopher Kidd, a spokesman for the Coast Guard, said yesterday.

Six Collisions

There were six collisions in the channel last year, Coast Guard data show. Incidents closed the waterway for 26 hours in 2013, compared with 5.5 hours in 2012 and 157.2 hours in 2011. An average day on the channel in 2013 saw 38 tankers, 22 freighters, one cruise ship, 345 tows, six public vessels, 297 ferries, 25 other transits and 75 ships in port.

The spill may pose a risk to migratory birds who have their habitat on both shores of the channel, the Associated Press reported, citing Richard Gibbons, the conservation director of the Houston Audubon Society. Seven oiled birds have been captured, eight have been “verified” oiled but not captured and seven have died, the Coast Guard said.

The vessel was identified as Kirby Barge 27706, according to the Port of Houston Authority. Kirby Inland Marine LP, the company that owns the Miss Susan and the barge, declined to comment when reached by phone yesterday.

‘Like Hurricane’

There were about 27 vessels working to skim and recover the oil, aided by containment booms stretching for more than 71,000 feet, the Coast Guard said.

The estimated economic impact of closing the channel is an $330 million a day, according to the port authority.

“This is like a hurricane or a tropical storm,” Peter Fasullo, a principal at Houston-based energy consultant EnVantage Inc., said by telephone. “The ship channel could be shut for several days or even a week.”

In 2013, an average of 2.15 million barrels a day of products like gasoline and diesel were exported from the Gulf Coast, and 3.76 million barrels of day of crude were imported, according to the Energy Information Administration.

To contact the reporter on this story: Barbara Powell in Houston at bpowell4@bloomberg.net

To contact the editors responsible for this story: Dan Stets at dstets@bloomberg.net Ramsey Al-Rikabi, Pratish Narayanan


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Companies Mentioned

  • XOM
    (Exxon Mobil Corp)
    • $93.64 USD
    • 2.48
    • 2.65%
  • VLO
    (Valero Energy Corp)
    • $48.88 USD
    • 1.81
    • 3.7%
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