On Monday, the Texas energy industry prepared for Hurricane Beryl’s landfall as the powerful storm battered the U.S. Gulf Coast. The hurricane’s arrival led to the closure of key shipping ports, a slowdown in refining activities, and the evacuation of some offshore production sites.

Beryl made landfall near Matagorda, Texas, early Monday, with maximum sustained winds of 80 mph (129 kph), significantly impacting the core of the U.S. energy sector. Although initially a Category 1 hurricane, Beryl was downgraded to a tropical storm mid-morning and is expected to weaken as it moves across eastern Texas and into the Lower Mississippi and Ohio Valleys later this week, according to the U.S. National Hurricane Center (NHC).

Impact on Texas Energy Sector

Texas, the largest U.S. oil and gas-producing state, accounts for approximately 40% of the nation’s oil output and 20% of its gas production. As of Monday morning, power outages in Texas affected over 2.3 million people, with CenterPoint, a Texas-based electric utility, reporting nearly 2 million customers without power. Despite this, the company restored power to over 378,500 customers in the last 24 hours.

Flash flood warnings were issued for several southeastern Texas counties, including Houston, where many U.S. energy companies are headquartered. The region experienced thunderstorms producing up to six inches of rain, with an additional two to four inches expected.

In Houston, heavy winds and flooding were reported, with one fatality due to a tree falling on a home, as confirmed by Harris County Sheriff Ed Gonzalez.

Energy Industry Disruptions

Over the weekend, the Port of Corpus Christi, the nation’s leading crude oil export hub, ceased operations in anticipation of Beryl. Ports in Houston, Galveston, Freeport, and Texas City also shut down ahead of the storm.

Enbridge Inc., operator of crude oil export facilities near Corpus Christi, activated emergency plans for its Gulf Coast assets. Shell and Chevron suspended production and evacuated personnel from their offshore platforms. The U.S. Gulf of Mexico, responsible for about 1.8 million barrels per day (bpd) of oil production, approximately 14% of the nation’s output, saw undetermined production shutdowns due to the hurricane.

Freeport LNG, the third-largest U.S. liquefied natural gas facility, scaled back production over the weekend, planning to resume operations post-storm.

Formosa Plastics reported a malfunction in its gas compressor system during a shutdown at its Point Comfort facility, though the company has yet to comment further.

Citgo Petroleum Corp reduced production at its 165,000-bpd Corpus Christi refinery, while Marathon Petroleum, with plans in place for severe weather, did not comment on its 585,000-bpd Galveston Bay refinery operations. Chevron confirmed hurricane preparations at its Pasadena refinery but did not provide further operational details. LyondellBasell also refrained from commenting on the status of its 268,000-bpd Houston refinery.

Investment Analysis

The disruptions caused by Hurricane Beryl present both risks and opportunities for investors. The potential for supply constraints could drive oil prices higher, benefiting companies with resilient supply chains and diversified operations. However, prolonged outages and damage to infrastructure could negatively impact production and revenues for companies heavily reliant on Gulf Coast operations.

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