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Some of the largest U.S. refineries are winding down in advance of Tropical Storms Marco and Laura, which could become a major hurricane before landfall, potentially shutting in more than 1 million barrels a day of capacity. Oil operators in the Gulf of Mexico have already shut in more than half of their output. The last time two storms hit the Gulf together was more than six decades ago.
READ: Rare Double Storm Blow Menaces U.S. Gulf With Stronger Laura
Oil and gasoline prices rallied on the disruptions, as fears that the shuttering of the key refineries would mean less availability for oil products. Gasoline futures jumped as much as 7.4% in the day, while the the spread between the prompt and second-month contracts, a closely watched indicator for supply and demand, rallied to as much as 58.8%.
Motiva Enterprises LLC is shutting both its 607,000 barrel-a-day oil refinery and chemical plant in Port Arthur, Texas, according to people familiar with the matter and a regulatory filing. Valero Energy Corp (NYSE:VLO). is also shutting its 335,000 barrel-a-day Port Arthur facility, sources said. Oil major Total SE is cutting crude runs by more than 50% at its 225,500 barrel-a-day refinery there. Port Arthur Mayor Thurman Bartie plans to a issue a mandatory evacuation for the city beginning at 6 a.m. local time tomorrow, according to a a Beaumont TV station tweet.
A Motiva official could not immediately be reached for comment. A Valero spokeswoman said the company is monitoring the storms and assessing protocols but did not specifically comment on the shutdown. Total declined to comment on operations.
Meanwhile, at Exxon Mobil Corp (NYSE:XOM)., officials are readying production units for a possible shutdown at its 369,000 barrel-a-day Beaumont refinery, sources said. An Exxon spokesman said the company is making preparations for any severe weather associated with the storms, though its downstream operations are normal.
At LyondelBasell Industries N.V., which has a refinery in Houston, a spokeswoman said it is “assessing refining operations, securing equipment” and ensuring adequate supplies. Shell (LON:RDSa) said its onshore operations remain normal, though it is one of the many companies that evacuated some personnel from offshore platforms as it shuts in production.
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