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Oil companies check for damage after Ike
14 Sep 2008 22:11:57 GMT
Source: Reuters
(Recasts, adds Coast Guard comment)

By Bruce Nichols and Eileen O'Grady

HOUSTON, Sept 14 (Reuters) - Oil companies checked their offshore platforms and coastal refineries for damage on Sunday after Hurricane Ike's direct hit on the Houston energy hub left fuel production hobbled and gasoline prices rising.

U.S. President George W. Bush said federal and state authorities were watching for price gouging at the pumps and added it was too early to determine the extent of the damage to U.S. energy infrastructure.

"It's a little early to fully assess where we stand, although I can say that one of the pipelines coming out of the Gulf Coast area is running," Bush said.

Ike forced the shutdown of 15 refineries, all the crude production in the Gulf of Mexico and a swath of pipeline, port and ship channel operations in the biggest hit to the U.S. oil sector since hurricanes Katrina and Rita in 2005. [ID:nN14349885]

Early indications from emergency officials showed the storm created less damage than initially feared -- a sign of a possible quick recovery -- but companies warned supply problems were still likely in the near term.

"It may not be possible for us -- and other manufacturers -- to maintain normal supplies in the coming days," Chevron Corp <CVX.N> said in a statement.

The U.S. Coast Guard said on Sunday it received some reports of damage to offshore production facilities in the Gulf of Mexico, but details were still coming in.

U.S. gasoline prices have jumped more than 11 cents to $3.795 a gallon since Friday, and $4 could be quick to follow as Ike hits U.S. gasoline inventories that are already running at their lowest levels since November 2000, according auto and travel group AAA.

BIG HURDLE

Fifteen Texas oil refineries, including the giant Exxon Mobil Corp <XOM.N> refinery in Baytown, were shut down as a precaution ahead of Ike, while another in Louisiana remained shut in the wake of Hurricane Gustav two weeks ago. Together, they make up a quarter of U.S. fuel production capacity.

A Reuters eyewitness said 12 of the shuttered Texas refineries showed no visible signs of flooding or significant damage, but less than half of them appeared to have power.

"Even though there is little indication of serious damage, I think it will be difficult to restart these oil refineries because of the power issue," said Chris Jarvis, senior analyst at Caprock Risk Management in Hampton Falls, New Hampshire. "Parts of the power system took a devastating hit."

Heavy rain on Sunday was expected to slow early efforts to restore electricity to Southeast Texas, where more than 2 million customers remained without electricity.

The storm also halted crude oil production in the Gulf of Mexico, representing a quarter of U.S. output. Oil companies said Sunday they were flying workers back offshore to check for damage and restart operations.

The U.S. government released 309,000 barrels of emergency oil to two refiners having trouble procuring supplies for their plants -- ConocoPhillips and Placid Oil -- but said refiners are unlikely to need a broader release from the reserve.

U.S. oil prices fell more than $2 on in a special Sunday trading session as dealers anticipated a quick recovery, though trade volume was thin. (Writing by Richard Valdmanis, Reporting by Erwin Seba, Bruce Nichols, Eileen O'Grady in Houston and Jeremy Pelofsky in Washington, editing by Ross Colvin and Andre Grenon)


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A woman walks with a bag with ice as Texas National Guard troops give supplies to residents after Hurricane Ike in Galveston, Texas September 14, 2008. Rescuers made their way through ...



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