Saudi Arabian Oil Co.’s Motiva refinery in Port Arthur, Texas, shown Monday, is among facilities shutting down in advance of Hurricane Laura.
Photo: Callaghan O'Hare/Bloomberg NewsRefineries, petrochemical facilities and ports along the Gulf Coast were closing as Hurricane Laura barreled toward the Texas-Louisiana border.
The storm was expected to strengthen into a Category Four hurricane Wednesday, with winds surpassing 130 miles an hour, before making landfall near the Texas-Louisiana border late Wednesday or early Thursday, according to the National Oceanic and Atmospheric Administration.
Hurricane Laura’s winds and storm surge threatened much of America’s fuel making and chemicals infrastructure. About a third of U.S. refining capacity, capable of processing roughly six million barrels of oil a day, is located within the storm’s potential path, analytics firm IHS Markit said. As of Tuesday afternoon, companies had closed or said they planned to shut around half of that capacity, IHS said.
In the Port Arthur, Texas, area, near the Texas-Louisiana border, Saudi Arabian Oil Co.’s Motiva facility, the nation’s largest refinery, was among those shutting down in advance of the storm. Total SA and Valero Energy Corp. also said they were closing nearby fuel making facilities.
Phillips 66 said it planned to close its refinery near Lake Charles, La. as well as nearby terminals and pipelines by midday Wednesday. Farther west, Chevron Corp. said late Tuesday that it planned to close its refinery in Pasadena, Texas.
Almost half of the nation’s capacity to produce ethylene, a building block in plastics manufacturing, could shut if the Gulf’s petrochemical hub was hit in the right spot, market intelligence firm S&P Global Platts said. As of Tuesday, chemical makers in southeast Texas and Louisiana, including Motiva, BASF SE, Ineos Ltd. and Total, had already cut 20%, according to IHS Markit.
Workers at BASF’s plants in Beaumont and Port Arthur, Texas, rushed to move equipment indoors and tie down scaffolding, trash cans and anything else that can be thrown by hurricane-force winds, said Chris Witte, a senior vice president. Both facilities were closing in advance of Hurricane Laura’s arrival.
“Many of us have been through it several times, unfortunately,” Mr. Witte said.
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Meanwhile, companies had shut down some 84% of oil production in the Gulf of Mexico as of midday Tuesday, according to the Bureau of Safety and Environmental Enforcement, amounting to about 1.6 million barrels a day or roughly 15% of U.S. oil output.
The approaching storm has also shut much of the nation’s exports of shale gas. In the Gulf Coast, home to 89% of U.S. liquefied natural gas capacity, exporters Cheniere Energy Inc. and Cameron LNG in southwest Louisiana had suspended operations, with Freeport LNG in South Texas likely to follow, IHS said.
The Port of Houston wound down activity Tuesday, saying it expected terminals to remain closed Wednesday and likely Thursday.
Potential closures stretched to Galveston Bay, where Marathon Petroleum Corp. told regulators Tuesday it was considering shutting down the nation’s second-largest refinery. The company declined to comment on whether it was proceeding with the closure.
More on the Hurricane
Hurricanes often drive up prices at the pump, but analysts said they thought Hurricane Laura’s impacts on the gasoline market would be relatively muted despite the rash of refinery closures. The U.S. has plenty of fuel on hand because the coronavirus pandemic has reduced demand.
Regular gasoline prices in the U.S. increased modestly Wednesday, averaging around $2.21 a gallon, up from $2.19 a gallon a day earlier, according to AAA. U.S. benchmark oil prices settled Tuesday around $43 a barrel.
Likewise in petrochemicals, an oversupply has suppressed prices after several new facilities came online in recent years, so companies would benefit from a drop in inventories, said Carlos Barrasa, an IHS analyst.
“These chemical operators decided to take their medicine early,” Mr. Barrasa said.
—Dan Molinski contributed to this article.
Write to Rebecca Elliott at rebecca.elliott@wsj.com and Collin Eaton at collin.eaton@wsj.com
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