A New Storm Is Barreling Towards Texas Oil Terminals

A storm developing in the southwestern Gulf of Mexico could become the next hurricane to wreak havoc on Gulf Coast oil facilities.

Per a report by Argus, the system could evolve into a hurricane before it makes landfall, which is forecast to happen near Corpus Christi-a major Gulf Coast oil hub and home to the largest U.S. oil export terminal, which Canadian Enbridge recently bought.

The report said the U.S. Coast Guard had set Corpus Christi to condition X-RAY, which means sustained gale force winds of speeds between 39 and 54 miles per hour are expected to make landfall within 48 hours.

Per regulations, when a condition X-RAY is issued, port authorities must prepare for the storm landfall by, among other things, ordering slow-moving vessels such as oil tankers to depart if this is deemed necessary to avoid damage.

In addition to an export hub, however, Corpus Christi is also home to several refineries, including a 157,500-bpd facility operated by Citgo, a 200,000-bpd Valero refinery, and a 260,000-bpd facility operated by Flint Hills Resources.

The storm, dubbed Nicholas, is moving north, and Texas and Louisiana are both preparing for heavy rains and the possibility of floods.

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"This is a storm that could leave heavy rain, as well as wind and probably flooding, in various different regions along the Gulf Coast. We urge you to listen to local weather alerts, heed local warnings," Texas Governor Greg Abbott said.

"The most severe threat to Louisiana is in the southwest portion of the state, where recovery from Hurricane Laura and the May flooding is ongoing. In this area heavy rain and flash flooding are possible. However, it is also likely that all of south Louisiana will see heavy rain this week, including areas recently affected by Hurricane Ida," Louisiana Governor John Bel Edwards said.

Hurricane Ida shut in more than 90 percent of U.S. Gulf of Mexico oil production earlier this month, and much of it still remains offline. Refineries also had to shut down and have only recently begun restoring operations.

By Michael Kern for Oilprice.com

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