Hurricane Beryl strikes at heart of US energy industry

Storm damage is seen in Houston's Shepherd Forest subdivision after Hurricane Beryl came through on Monday. Photo / Karen Warren, Houston Chronicle via Getty Images

Hurricane Beryl shuttered ports and curtailed refinery operations in Texas on Monday as 130km/h winds slammed into America’s energy capital.

The first Atlantic hurricane to make landfall in the US this year caused widespread disruption as it swept northwards along the US Gulf, which is home to roughly half of the country’s oil refining capacity.

“We’re experiencing right now the dirty side of a dirty hurricane,” said Houston mayor John Whitmire. “We know we have a lot of infrastructure challenges.”

Beryl made landfall in the US as a category one hurricane. Last week it wreaked havoc in the Caribbean as the earliest category five storm on record.

There were 2.7 million people without power in Texas at midday on Monday, according to poweroutage.us, while local authorities said two people had been killed by falling trees.

The region’s role as a global energy hub meant the impact reverberated throughout markets. Oil slipped 1% as traders fretted about the effect of refinery outages on crude demand.

“Beryl is having a bigger impact on some refineries in Texas in the path of the storm, which have reduced their production rates,” said Giovanni Staunovo, an analyst at UBS. “This reduces the demand for crude and likely weighed on prices.”

Marathon Petroleum, one of the biggest US refiners, said a power outage had forced it to flare at its massive 630,000 barrels a day Galveston Bay Refinery.

Citgo reduced rates at its 175,000 b/d Corpus Christi refinery, according to the Oil Price Information Service, a consultancy.

Chevron said it had “followed hurricane preparation procedures” at its 125,000 b/d Pasadena refinery, but that it “continue[d] to serve our customers”.

Exporters were also hit as shipping lanes closed. The Port of Corpus Christi — the US’s biggest export hub — halted operations on Sunday. The ports of Houston, Galveston, Freeport and Texas City also took similar steps.

The storm caused some disruption to offshore oil production in the Gulf of Mexico, home to about 15 per cent of US output, though analysts cautioned this was less significant.

Shell, BP and Chevron said they had removed some personnel from offshore rigs in recent days as drillers braced for the storm. Shell shut its Perdido platform, evacuating all personnel.

Analysts at oil consultancy Enverus estimated Perdido, which produced about 78,000 b/d in April, would take about a week to fully bring back operations.

“I think Beryl is a warning sign as opposed to a market-making event,” said Tom Kloza at OPIS.

“All hurricanes that make US landfall destroy demand, but it is only the rarest of storms that suppress supply, and that appears to be the case with Beryl.”

“[But] Beryl could be the precursor to storms that had much more dramatic global impact [such as] Katrina and Harvey,” he added, referring to destructive storms in 2005 and 2017.

Written by: Myles McCormick in Houston

© Financial Times