Daily Blog

Laura - The Hurricane's Possible Impacts on Mont Belvieu, NGLs, and Maybe Even the Permian

Yet again, the Texas-Louisiana coast is bracing for a hurricane that has the potential to be really bad, not just for the people and homes in the storm’s path, but for the region’s all-important energy sector. Hurricane Laura will be crossing a swath of the Gulf of Mexico dotted with oil and gas production platforms, and is headed for an area chockablock with tank farms, refineries, and steam crackers, as well as export terminals of every stripe: crude oil, refined products, ethane, LPG, and LNG. There’s a good chance there’ll be a lot of disruption to many energy-related activities for at least the balance of this week — and maybe longer — but one of the biggest hits could come to Mont Belvieu, TX, the center of NGL storage and fractionation. Today, we discuss how the storm might affect not only storage at the U.S.’s largest NGL hub, but gas-processing activity hundreds of miles inland.

Laura strengthened into a Category 1 hurricane Tuesday morning, and it’s now expected to be upgraded to a catastrophic Category 4, with sustained winds of at least 130 mph, by the time it makes landfall late tonight or early Thursday morning. As of Tuesday evening, the hurricane’s projected landfall is within the area between San Luis Pass, TX (near Galveston), and Morgan City, LA (about 250 miles to the east); it also is expected to batter inland areas like eastern Houston; Beaumont, TX; and Lafayette, LA. As we said in our introduction, that geography includes a lot of significant energy infrastructure, much of which has the potential to be impacted by hurricane-force winds and flooding, and to be affected by interruptions at other facilities they depend on. We’ve been through this before, of course — many times — and we know the drill. Offshore platforms in the Gulf are evacuated. Shipping lanes within and near the path of the hurricane are shut down. And, as we discussed in our After the Storm blog series on Hurricane Harvey, which dumped as much as 50 inches of rain in southeastern Texas three Augusts ago, refineries and other onshore operations do all they can to protect their personnel and their assets.

Of course, each Gulf Coast hurricane impacts energy infrastructure differently. Generally speaking, though, a major hurricane like Laura will result in most offshore production of oil and gas being shut in; imports of crude oil being curtailed; and a good number of refineries being taken offline. There’s a natural balancing in all that — less crude available for a few days, less crude demanded by refineries — so it’s quite possible that the crude oil side of the market does not get thrown wildly out of whack. (Of course, there may be shortfalls of gasoline, diesel, and other petroleum products.)

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