(Bloomberg) — Oil refineries owned by Citgo Petroleum Corp. and Phillips 66 in Louisiana may be facing many more weeks of downtime as they wrestle with the loss of power and damage related to Hurricane Laura’s assault on the area last week.
Citgo has assessed the damage to its Lake Charles refinery, which has a capacity of 418,000 barrels a day, as moderate to severe, according to the Louisiana Department of Environmental Quality. Phillips 66 told the department the damage to its 260,000 barrels-per-day refinery is mild to moderate.
Extended downtime for the two refineries, which represent about 4% of U.S. crude processing capacity, could help shrink abundant supplies of gasoline and diesel that have stayed high as the Covid-19 pandemic decimated demand.
“This reduces supplies at a time that gasoline inventories are more than adequate, and diesel inventories are nearly 30% higher than last year,” said Andy Lipow, president of Lipow Oil Associates in Houston.
The lengthy outage for the two sites comes during a particularly tough time for some of America’s biggest fuel makers. The margin to refine a barrel of crude into fuel, as measured by futures prices, is stuck below $10 a barrel, the lowest for this time of year in almost a decade.
Entergy Corp. estimated on Friday that it will be about two to three weeks before power is available to customers in the Lake Charles area. “Due to the complexity of the restoration effort, restoring power may take longer for some customers in the region,” the power provider said in a statement on its website.
The infrastructure damage is still being assessed by Citgo’s teams, Kate Robbins, a spokeswoman for Houston-based Citgo, said Friday in an email. “We are working diligently to get the units back in service.”
Citgo’s initial view of the storm damage on Aug. 27 was that the plant wouldn’t see production for about four to six weeks, according to a person familiar with the matter.
Phillips 66 said Thursday in a status update that operational restarts “remain largely dependent on resources including access to electricity and other utilities in the region.”
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