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Texas Floods Affect Some Oil Wells, Refineries Mostly Unaffected

Texas Floods Affect Some Oil Wells, Refineries Mostly Unaffected

More than a dozen people were killed as massive rain storms hit Texas, flooding large swathes of land across much of the state.

The storms first hit central Texas and Oklahoma, but moved on to Houston by mid-week. At least 15 people died. The NBA’s Houston Rockets played a playoff basketball game on May 25 and fans were asked to stay in the arena after the conclusion of the game because the storms were so severe. Some fans even spent the night in the arena. Related: Oil Industry Can No Longer Ignore Climate Action

The floods also impacted the state’s oil and gas operations. Bloomberg reported that Devon Energy shut down some of its oil wells due to the floods. And Kinder Morgan also closed some of its operations – a fuel loading facility in Pasadena, Texas had to be temporarily shut down. The effects will be short-lived, however.

The Texas coast in and around Houston is home to some of the nation’s largest refineries. Despite horrendous rain and flooding, Texas’ refineries appear to be unaffected. Refiners are continuing to churn out new product despite the conditions.

The governor has declared a state of emergency and the federal government said it is ready to help. Related: Why Tesla’s Battery’s Won’t Work For Rooftop Solar

Texas is no stranger to natural disasters affecting its energy industry. In 2008 Hurricane Ike crashed into the Gulf Coast, knocking about 700,000 barrels per day of oil production offline in the Gulf. It also forced several refineries to close their doors, dropping gasoline production by around 300,000 barrels per day.

Hurricane Rita in September 2005 struck the Gulf Coast as well, only a month after Hurricane Katrina, forcing many oil platforms offshore to close down. More than 34 million barrels of oil were not produced because of the two hurricanes, equivalent to about 6 percent of a year’s worth of production. Related: Oil Markets Can’t Ignore The Fundamentals Forever

The latest floods are nowhere near that level of destruction, but they are a reminder that the backbone of US energy infrastructure is located in Texas, Oklahoma, and Louisiana, three states that routinely experience natural disasters. After Hurricane Katrina and Rita, gasoline prices spiked because of the outage.

The current glut of supply means that a much larger natural disaster will be needed to move the needle on prices, however.

By Charles Kennedy of Oilprice.com

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