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UPDATE 1-Houston Ship Channel closure prompts refinery rate cuts

Wed, 11th Mar 2015 21:36

(Adds declaration of force majeure, diversion of tanker toother port, efforts to contain vapors)

By Kristen Hays

HOUSTON, March 11 (Reuters) - Exxon Mobil Corp saidon Wednesday that it cut production rates at the second-largestrefinery in the United States as crude deliveries were held upby wreckage that partially closed the Houston Ship Channel for athird day.

Exxon said it was working with the U.S. Coast Guard and thePort of Houston to resume crude shipments as soon as possible toits 560,500 barrels per day (bpd) refinery in Baytown, Texas,which sits along the country's busiest petrochemicals waterway.

Royal Dutch Shell Plc also said it was evaluatingthe closure's impact on its 327,000 bpd joint-venture refineryin Deer Park, Texas, and LyondellBasell said its 263,776 bpd plant in Houston had experienced nooperational impacts.

The Coast Guard said crews launched a plan on Wednesday tocontain flammable vapors emanating from a damaged tanker so itcould be safely moved, which would allow the channel to reopen.

On Monday, the double-hulled Carla Maersk tanker carrying216,000 barrels of gasoline additive methyl tertiary-butylether, or MTBE, collided with a bulk carrier hauling steel nearMorgan's Point, just south of Baytown, prompting the closure.The bulk carrier was moved on Tuesday.

J.J. Plunkett, port agent for the Houston Pilots, said 43inbound and 33 outbound vessels were waiting to move onWednesday, up from 36 inbound and 28 outbound on Tuesday. Thoseinclude all kinds of ships.

Enterprise Products Partners suspended dockingoperations for ships and barges at its Oiltanking Partners uniton the ship channel, applying force majeure retroactively to theshutdown on Monday, according to a Bloomberg story seen bytraders.

One of two tankers carrying Mexican crude that had beenwaiting outside of Houston since fog held up deliveries for fourdays last week had started moving east to Nederland onWednesday, according to ClipperData, which tracks crudemovements. Sunoco Logistics Partners has a huge storagecomplex in Nederland.

Traffic in and out of Galveston, Texas City and Bayport onthe south end of the waterway has been operating as usual.

An unknown amount of MTBE spilled upon impact. The CoastGuard said on Wednesday that crews would contain vapors withdense foam so the liquid cargo could be removed, allowing forsafe movement of the tanker.

Plunkett said the hope was to get traffic moving by daybreakon Thursday. (Additional reporting by Jessica Resnick-Ault in New York andArpan Varghese in Bengalaru; editing by Andrew Hay and MatthewLewis)

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