Oil and gas companies in Texas are working to resume operations following Hurricane Beryl’s impact on the state. The storm brought 80-mph winds, causing facility damages and extensive power outages, complicating the recovery process.
Beryl made landfall early Monday near Matagorda, Texas. Preemptively, energy firms shut down operations, and major ports and navigation channels were closed. However, the storm’s impact on oil and gas production is expected to be minimal.
Recovery Efforts
By Tuesday, several ports had reopened, and many producers were ramping up output, though some were hampered by slow power restoration to homes, businesses, and industrial customers. Approximately 2.2 million customers in Texas, Louisiana, and Arkansas remained without power, including about 1.7 million CenterPoint Energy (NYSE: CNP) customers. CenterPoint aims to restore power to 1 million customers by Wednesday.
Weather and Power Challenges
Houston faced high temperatures, reaching the high 90s Fahrenheit (32.2°C), exacerbating concerns as power outages knocked out air conditioning. The Heat Index in southeast Texas could hit 106 degrees Fahrenheit, according to the National Weather Service. Although Beryl weakened to a post-tropical cyclone by Tuesday, flash flooding and tornado risks persisted from the mid-Mississippi to the Lower Ohio Valley.
Impact on the Energy Sector
Texas, the largest U.S. oil and gas producer, accounting for 40% of oil and 20% of gas output, is a crucial shipping and refining hub. Any disruptions could affect crude and fuel production, as well as imports and exports. Goldman Sachs noted that while the hurricane didn’t cause severe disruptions, ongoing port closures and power outages could impact oil demand.
Operational Status
Flooding in urban areas was subsiding as water quickly receded following heavy rainfall, which exceeded 11 inches in some regions south of Houston. Most Houston and Texas City refineries are designed to operate amid heavy rain but may face issues with prolonged power interruptions.
Marathon Petroleum Corp (NYSE: MPC) prepared to restart multiple units at its 631,000-bpd Galveston Bay refinery in Texas City, pending power restoration. Phillips 66 (NYSE: PSX) returned its 265,000-bpd Sweeny refinery to normal operations after a temporary shutdown. Citgo Petroleum reduced production at its 165,000-bpd Corpus Christi plant over the weekend.
Ports from Point Comfort through Houston, including Freeport, Galveston, and Texas City, reported various damages and operational delays. The Port of Corpus Christi and Port of Freeport reopened on Monday, though Freeport lacked full power. The Port of Houston’s terminals remained closed on Tuesday for facility assessments, with deep draft ship movements expected to resume Wednesday. The Port of Galveston, a key maritime center, suspended operations due to ongoing power outages, although one cruise ship was cleared to dock on Tuesday.
Shell (LON: SHEL), Chevron (NYSE: CVX), and BP (NYSE: BP) began redeploying personnel to Gulf of Mexico platforms. Freeport LNG, the third-largest U.S. liquefied natural gas facility, has not provided updates since ramping down production on Sunday. Formosa Plastics temporarily shut its Point Comfort plant, while Enterprise Products Partners (NYSE: EPD) reported weather-related issues at its Mont Belvieu NGL processing facility. Energy Transfer (NYSE: ET)’s Mont Belvieu NGL facility resumed full operations on Tuesday.
Investment Implications
Investors should monitor recovery progress and operational updates from affected companies. While immediate disruptions appear limited, ongoing power and infrastructure challenges could affect short-term production and profitability. Strategic investments in companies with robust recovery plans and diversified operations may offer growth opportunities.
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