(EnergyAsia, September 27) — US President George Bush, who toured the hurricane-devastated southern parts of the US, has given an overview of the hurricanes’ impact on the energy situation in the Gulf of Mexico.
As a result of Hurricanes Katrina and Rita, President Bush said about 1.56 million barrels of oil has been shut in. Before Rita, about 880,000 b/d were shut in due to Katrina. Both hurricanes struck much of the oil production facilities in the Gulf of Mexico.
While oil producing companies are assessing the extent of damage to their platforms and rigs, President Bush said it is important for Americans to “understand the situation” and that we’re willing to use the Strategic Petroleum Reserve to mitigate any shortfalls in crude oil that could affect our consumers.
He said the government is keenly watching gasoline prices, which have risen to record levels as a result of supply disruptions with many refineries badly affected by the storms.
He said: “There are a lot of — a lot of gasoline refineries in the Houston area, in the Beaumont area, in the Port Arthur area, as well as Lake Charles, and the Louisiana area. There was about 5.4 million b/d that were shut in as a result of Rita and Katrina. A million of it is back up already, and we expect another 1.8 million b/d to get back on line relatively quickly because the storm missed a lot of refining capacity down the Texas coast.
“We don’t know yet about 1.7 million b/d that were located right in the path of Rita. And the Energy Secretary has got his people in contact with the energy companies to find out exactly what we have to deal with. About 900,000 b/d are still shutdown as a result of Katrina.”
President Bush also talked about the damage to oil and gas pipelines that deliver energy to consumers across the country. He said that three of the four major gasoline pipelines in the affected area play an important role in supplying the Midwest and the East Coast.
The Plantation Pipeline on the East Coast is operating at full capacity as it was the only not affected by the hurricanes.
The Colonial Pipeline, which sends gasoline up to the Midwest, is operating at 52% capacity that will soon rise to 100% by the end of the week. The Explorer in the Midwest, sending gas to the Midwest, is at 67% capacity and 100% b y next week. The Capline, which sends gasoline to the Midwest, as well — it’s a major crude pipeline, by the way, that sends crude to be refined in the Midwest — will be at about 75% capacity now.
President Bush said: “Here’s what we have done and will continue to do. We have suspended certain EPA winter blend rules so that it makes it easier to import gasoline from overseas. In other words, there’s a supply of gasoline in Europe, and by suspending these rules, it’s a lot more likely to be able to get gasoline into our markets. And so while there’s a shortfall because of down refining capacity, we will work with — we have instructed EPA to leave the rules in place, or to suspend the rules that were in place, keep the suspension in place, which would make it easier to increase supply, and continue to get supply of gasoline here. And that’s important for our consumers to know.”
“We’ll use the Strategic Petroleum Reserve to help refineries with crude oil. We will continue the waivers to allow the winter blends of fuel to be used throughout the country. We will continue to waiver that — to allow broader use of diesel fuel. Because we understand there’s been a disruption in supply and we want to make sure that we do everything we can to help with the supply disruption.
“The Homeland Security waived the Jones Act on restrictions on fuel transportation. We’re allowing foreign flag ships to temporarily transport fuel from one US port to another. That’s going to be important for expediting supply to deal with bottlenecks. We will continue that waiver. The Treasury and IRS announced that dyed diesel fuel for off-road use would be allowed on on-road use without penalty. In other words, we’re taking action to help deal with the shortfall caused by Katrina and Rita.
“We can all pitch in by being better conservers of energy. People need to recognise that the storms have caused disruption and that if they’re able to maybe not drive when they — on a trip that’s not essential, that would helpful. The federal government can help, and I’ve directed the federal agencies nationwide — and here’s some ways we can help.
“We can curtail nonessential travel. If it makes sense for the citizen out there to curtail nonessential travel, it darn sure makes sense for federal employees. We can encourage employees to carpool or use mass transit. And we can shift peak electricity use to off-peak hours. There’s ways for the federal government to lead when it comes to conservation.
“These storms show that we need additional refining capacity to be able to meet the needs of the American people. The storms have shown how fragile the balance is between supply and demand in America. I look forward to working with Congress to expedite the capacity of our refiners to expand and/or build new refineries.”