Genscape : Freezing Temperatures Disrupt Refinery Operations & Products Demand Across PADD 3

Below-freezing temperatures swept across Texas and Louisiana the evening of January 16 and into January 17, causing several disruptions as refineries and local infrastructure contended with the frigid conditions. The effects of these conditions had a greater impact on refinery operations compared to the 'Bomb Cyclone' storm that hit the East Coast earlier in the month, as Gulf Coast refineries are much less equipped to handle the extreme cold than those in the East Coast.

Cold Front Hampers Refinery Operations in Texas and Louisiana

Two refineries in Louisiana completely halted operations due to loss of power as freezing conditions caused damage to local power lines, according to Reuters reports. Valero's 135,000 bpd refinery in Meraux, LA, shut down during the evening of January 16 and flaring was ongoing at the refinery into the next day, according to Genscape monitors. Marathon's 543,000 bpd Garyville, LA, refinery began shutting units during the early morning of January 17, also due to a loss of power, according to a company spokesperson.

Other minor impacts have been observed in the region due to cold weather affecting the operation of refinery equipment. The larger, 69,000 bpd Fluid Catalytic Cracker (No. 2 FCCU) at Citgo's 165,000 bpd Corpus Christ East Plant experienced an upset during the overnight hours of January 16-17; activity was increasing at the unit on January 16, but remained below normal operating levels, according to Genscape. The FCC upset reportedly reduced rates at the plant's crude units as well, according to Reuters.

Also in Texas, Exxon's 584,000 bpd Baytown refinery reported process upsets at the Catalytic Light Ends units resulting in flaring on January 16, according to a Texas Commission on Environmental Quality filing. Activity at all monitored units has remained at normal operating levels. At Motiva's 600,000 bpd facility in Port Arthur, TX, the nation's largest refinery, an upset at the 325,000 bpd crude section, VPS-5, resulted in flaring for about an hour in the morning of January 17, according to Genscape monitors. Operations at the crude section appeared to remain normal since the flaring; the malfunction was caused by frozen instrumentation, according to Reuters.

Also in Port Arthur, a hydrogen plant was malfunctioning due to cold weather at Valero's 292,000 bpd refinery, resulting in flaring on January 17. All monitored units at the refinery appeared to remain in normal operation as of that afternoon, according to Genscape imagery.

Refined Products Demand Dips with Temperatures

Refined products demand declined sharply from the previous week on January 16 as the inclement winter weather and cold temperatures shut roads across the Texas and Louisiana Gulf Coast, according to Genscape's Supply Side daily data. Typically, Tuesdays are one of the most active days of the week for gasoline and distillate rack activity amid commuting (gasoline, diesel) and commercial transport (diesel).

Rack activity for all gasoline grades (regular, midgrade, and premium) in PADD 3 fell 33.5 percent from the previous week on January 16 to just 730,000 barrels (30.6 million gallons). Specifically, rack activity dropped considerably in Houston, Pasadena, and Beaumont, TX, and New Orleans, LA, down as much as 57 percent in Houston, 65 percent in nearby Pasadena, and 47 percent in Beaumont.

Diesel rack activity also declined significantly across PADD 3 on January 16, falling 33.5 percent from the previous Tuesday to only 438,000 barrels (18.4 million gallons), according to Supply Side data. Houston rack activity was down by the largest amount along the Texas and Louisiana Gulf Coast, declining 75 percent from the previous week, with Beaumont diesel rack activity down nearly 60 percent from the previous week, and New Orleans rack activity down 43 percent week-on-week on January 16.

The effects of the cold snap are expected to be short-lived as temperatures are forecast to rise through the end of the week. Temperatures will stay above freezing and reach the mid-40s on January 18 and further climb to the mid-50s on January 19.

Genscape's Real-Time Refinery Intelligence Alertsprovides unmatched insight into crude supply, demand, and potential supply of refined products in North America and Europe. The real-time alerts give early notice of upsets and confirmation of planned maintenance at key refineries in both regions. To learn more, or to request a free trial of Genscape's Real-Time Refinery Intelligence Alerts, please click here.

Genscape Supply Side dataare derived from actual transactions at the rack level, where gasoline and diesel are distributed from secondary storage terminals to retail stations. On average, Genscape covers 74 percent of total gasoline rack activity and 68 percent of total diesel rack activity. This rack activity data can be used as an indicator of retail (or tertiary) refined products demand. To learn more, or to request a trial of Genscape's Supply Side Analyst and Supply Side Monitor, please click here.