Some Refineries May Have Weathered Rita

More than a quarter of the nation's oil refining takes place along the Gulf Coast of Texas and Louisiana; most of those refineries were shut down in anticipation of Hurricane Rita. Energy companies are still assessing the impact of the storm, but it appears that at least some of the refineries may have escaped serious damage.

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DEBBIE ELLIOTT, host:

Most of the oil refineries along the Gulf Coast of Texas and Louisiana were shut down in anticipation of Hurricane Rita. Energy companies are still assessing the impact of the storm, but it appears that at least some of the refineries may have escaped serious damage. Joining us now is NPR's Scott Horsley.

Hi, Scott.

SCOTT HORSLEY reporting:

Good to be with you, Debbie.

ELLIOTT: What do we know about how the refineries fared?

HORSLEY: Well, as you say, there's really no place along the Gulf Coast that this hurricane could have struck that wouldn't have affected some refineries. But it seems the densest concentration in the Houston-Texas City area escaped more serious damage. We've had crews on the ground there who have gone back into the refineries and said that they seem to have come through OK. The Energy Department says they're cautiously optimistic that those refineries, which account for a little more than 13 percent of the nation's total capacity, came through the storm relatively OK.

Further to the east in Beaumont, Port Arthur and Lake Charles, Louisiana, there we're hearing reports of more severe damage to the refineries. You just heard a moment ago about the stiff winds in the Beaumont-Port Arthur area, and both the Shell/Motiva refinery there and the Valero refinery there reported some serious wind damage, although fortunately for them no flood damage. But even with the wind damage, Valero says it will be two weeks to a month before they can get their refinery up and running again.

ELLIOTT: Rita must have also cut into crude oil production in the Gulf of Mexico?

HORSLEY: Well, crude oil production in the Gulf is really at a standstill right now. It had been largely shut down, of course, by Hurricane Katrina as a precautionary measure. Then as--by sort of the beginning of last week, about half the Gulf crude oil production had come back on line from Hurricane Katrina only to have people have to evacuate those platforms again. And according to the Interior Department today, 100 percent of the Gulf crude production is stopped. Some of that will come back in fairly short order. But depending on how much damage there is to the platforms and to the underwater pipelines and so forth, a significant portion of that crude production in the Gulf could be out for an extended period. And remember, the Gulf of Mexico accounts for almost 30 percent of all the domestic crude oil protection.

ELLIOTT: I mean, and not only have you got the offshore stuff, but the oil pipelines go under these parishes that are now feeling the impact of this storm.

HORSLEY: That's right. And then you also have pipelines which carry refined product from these refineries along the Gulf Coast, overland to points as far as Chicago and indirectly to points as far west as Phoenix and Albuquerque. So the ripple effects of this storm and its effect on pipelines, refineries and crude oil production are going to be felt really throughout the country.

ELLIOTT: What do you think it's going to mean for gasoline supplies for the average person who wants to go get gas and doesn't want to pay $5?

HORSLEY: Well, you can't knock out this much refining capacity even for a short time without having at least a hiccup in the fuel network. And if a significant number of those refineries are out for a longer period of time, then we're going to see upward pressure on prices. I don't know that we're going to see prices go as high as you mentioned, but surely there's going to be some impact, at least in the short term. And with this big piece of the supply taken out of commission, the last thing you want to see is a big spike in demand. We did see some of that panic buying after Hurricane Katrina, and already today we've had the authorities urging people, `Don't resort to panic buying. If you've got a half a tank, don't go out and top it off.'

ELLIOTT: NPR's Scott Horsley following the oil industry.

Thank you, Scott.

HORSLEY: My pleasure, Debbie.

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