Hurricane Yolanda prompts the controlled shut-down of ten oil refineries in Louisiana and Texas. Seven of these refineries remain off-line due to significant damage. Production of refined product plummets.
At least 60 percent of mid-Atlantic gasoline supplies originates with Gulf Coast refineries. Within five days of the shutdowns, some gasoline blends are unavailable between Philadelphia and Richmond. Many gasoline stations are not receiving new supply. Long lines form at those service stations still operating. Hoarding behavior increases.
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How does the reduced supply of fuel impact your mid-Atlantic supply chain capacity?
ReplyDeleteHow does the reduced supply of fuel impact your employees?
How does the reduced supply of fuel impact your customers (and/or their customers)?
How does the reduced supply of fuel impact your readiness for sustained loss of electricity?
Do you have existing arrangements for accessing fuel not dependent on Gulf state refineries?
We do have supply storage and some mobile distribution capacity. Having said that without fuel we would be severely hampered in our core operations. Sustained loss of electricity would be an issue, we use LNG for back up power, so not so much of an issue.
ReplyDeleteWe can get fuel from Canada, need to investigate it origin.
OK this happened after Katrina too. Somehow our fuel vendor was able to access European refined product barged into Baltimore. It was last-minute kind of stuff, but it kept us working. Not sure how they did it though. Will try to reach out today.
ReplyDeleteLet me be sure I understand the calendar:
ReplyDeleteAfter Yolanda hits it will take about five days for the shortage to reach us? (Fuel already in the pipeline?)
We don't know it yet, but at some point in the early stages of the shortage we're going to get hit by hurricane Zachary?
So I've got maybe five days to get set-up for one fuel shortage that will quickly get worse after that?
Anon:
DeleteYes. Your calendar is what the scenario anticipates. We are told about 60 percent of this region's refined product is delivered through the Colonial Pipeline. As product stops being supplied at the Gulf end, it will take about 3-to-5 days for it to run out at this end.
I hope you can try to separate response to Yolanda from preparedness for Zachary. In fact, if you could be specific about how preparing for Zachary (which in the real-world you wouldn't know about yet) is different than responding to Yolanda, that might help.
We have fuel storage in our network. We also have several outlets/operations north of affected areas which we would deploy. We would execute our emergency fuel contracts with our vendors.
ReplyDeleteWe would have diminished capacity.
We have fuel on-site sufficient for generator back-up and full operations for 48-to-72 hours and as long as we can keep getting fuel, for as long as the generators hold out.
ReplyDeleteYesterday I asked our trucking partners how they would access fuel in the situation set out. They didn't have an immediate answer. Glad I asked the question. They don't have any fuel source that they own.
I asked my Ops guy about contracted fuel for our generators. We have a contract in place, but don't know how the contractor would get fuel in the situation set out here. Glad we're asking the question now.
To be honest, if I didn't know Zachary was on the way, I wouldn't be too worried. We've got enough in place to take care of the problems caused by Yolanda. But because I getting ready for next Tuesday I'm asking more questions than I problably would in the real world.
Another fuel issue I see emerging. Hurricanes produce evacuations. Evacuations need fuel. This scenario could put a few 100,000 people between the threat of a hurricane and the threat of running out of gas while trying to get away. Combine a real supply problem with all the Yolanda tv coverge and then throw another hurricane into the mix. Well, it's not pretty in any way, but especially for fuel. So if my trucks don't have fuel, I might as well hunker down and wait for the storm to move over. Even with five days notice, I don't see how I can do much to be sure I have enough diesel. And like someone else said, in the real world I'm probably not even thinking about another hurricane yet.
ReplyDeleteFROM THE SEPTEMBER 7, 2005 WASHINGTON POST
ReplyDeleteSome stations in the area remained without gasoline and some suppliers continued to have trouble obtaining gas. A number of major oil companies are limiting the amount they will sell to firms that deliver it to stations. But as more supplies come in, some companies are allowing distributors to buy more gasoline.
Tight supply and heavy demand has elevated prices in the Washington area and nationally. Prices eased nationally between Saturday and yesterday, falling about a penny and a half to about $3.04 for a gallon of regular, according to a survey sponsored by AAA.
Analysts said that barring any additional hurricanes or major refinery malfunctions, they doubted that gasoline prices would move higher nationally. However, they said prices could fluctuate regionally depending on local supply and demand.
As the Gulf Coast begins to recover from Katrina, oil companies are slowly repairing damage to production. They were also starting up some of the out-of-service refineries that turn crude oil into gasoline.
In addition, oil company officials said tankers are on the way to the United States carrying gasoline and other oil products, which will help to boost supply.
"It's still going to take a few more days before these ripples created in the supply chain by Hurricane Katrina are going to smooth out," said Scott Dean, a spokesman for BP PLC. "The bottom line is, it's still going to be several days before all these wrinkles get worked out in the system."
But with major refineries still unable to operate, some industry officials said they are unsure how long it will take before supplies in the Washington area return to normal. Neither oil companies nor the companies that operate the pipelines leading to the area will say whether deliveries via the pipelines have returned to pre-hurricane levels.
"It's good news that the pipeline is back up," said Peter Horrigan, president of the Mid-Atlantic Petroleum Distributors' Association, which represents companies that supply service stations in Maryland, the District and part of Delaware. "The problem is: What is going into it? There is still a lot of production offline in the Gulf Coast."
The largest refinery offline in the Gulf Coast region is Chevron's facility in Pascagoula, Miss., which can process 325,000 barrels of crude oil a day. Water broke through a levee protecting the plant, damaging equipment and flooding areas critical to production. Chevron said in a statement last night that it expects the levee to be repaired this week but that it would take days to fully assess the damage.
"They haven't determined when we'll be back to normal yet," said Janice Gillis, an operator at the refinery, "but we're trying to do all we can."
FROM THE SEPTEMBER 2, 2005 USA TODAY
ReplyDeleteThe governors of several states, including Georgia, South Carolina, North Carolina and Pennsylvania, asked residents to curb discretionary driving and instead stay home with friends and family this weekend to conserve gasoline as some gas retailers have temporarily run out.
President Bush on Thursday asked Americans to be prudent in their consumption of energy, but said supply disruptions caused by Hurricane Katrina were temporary, adding: "Don't buy gas if you don't need it."
Panicked buying was blamed for some of the gas stations running dry in states that ranged from Alabama, Florida, Georgia, Illinois, Indiana, Massachusetts, North Carolina, Pennsylvania, West Virginia to Wisconsin.
"We don't want to get caught out there trying to get gas," said Lucius Monroe, who had planned for weeks to leave this weekend with his wife on a monthlong, cross-country trip to Mount Rushmore, Yellowstone and the Hoover Dam.
The retired couple postponed the trip this week after they saw gas lines stretching into the streets and prices hovering around $4 per gallon in their suburban Atlanta neighborhood.
"People are on the edge. They just want to be reassured there's going to be gas wherever they're going," said Garrett Townsend, manager of a AAA office in Atlanta, which was being deluged with calls from members inquiring about gas availability.
While it will be weeks before all eight of the Gulf refineries that shut down are back in action, some key pipelines had resumed partial service by Thursday. However, analysts said it would take days, if not longer, for the supply constraints to be worked out of the system.
FROM AUGUST 29, 2005 OIL DRUM (ONLINE INDUSTRY DISCUSSION BOARD)
ReplyDeleteUpdate [2005-8-29 4:35:58]:I urge you to check out these forecasted (and these are very experimental, but made to fit past data including Ivan) disruptions, 86% of Gulf oil production is predicted to be cut for less than 10 days, 51% of oil production is predicted to be cut for 10-30 days, and 23% cut for over 30 days. Natural gas is just about as bad. That, folks, is a big deal if it's right. (Ironically, that little jog Katrina took to the NNE at landfall may benefit NOLA, but may be worse for the oil industry, more rig damage and more exposure to MS and AL)
Katrina IS a big deal today and will be for weeks to come, not just because New Orleans is below sea level and not just because she could cause massive loss of life and property, but because Katrina could also disrupt Gulf supplies of petroleum (the GOM supplies around 1.3mbpd, we use around 20mbpd in the US) from rigs, refineries, and pipelines, etc., for a while..
There is simply no more extra oil (except maybe the SPR?) we can call upon to put into the system...and with supply and demand balanced as it is (and with demand only growing over time), it only takes one "something" (terror, weather, malevolent world politician) to disrupt the system.