VANCOUVER (miningweekly.com) – While the effects of Hurricane Harvey are still progressing downstream in the US oil and gas supply chain, progressing towards consumers, Hurricane Irma is threatening the US with another potential blow, with parts of the country already seeing a disruption of energy and chemical product supplies.

Market intelligence firm IHS Markit estimates that eight of the 20 refineries affected by Harvey are now operating at close to ‘normal’ rates, with most of the other 12 beginning restart procedures or actively ramping up production.

Including the refineries that are partially operational, IHS Markit estimates that about 2.9-million barrels a day of distillation capacity (16% of the US total) was offline as of Thursday.

Houston’s significant outbound product pipelines have, however, been reactivated and operations have mainly returned to normal at the region’s ports, IHS reported in its latest ‘Hurricane Harvey Overview’.

As a result, spot prices continue to slowly decline. However, the ongoing disruption continues to affect the industry at the wholesale and retail level.

US gasoline prices are calming across the futures and physical markets, with values down about 3% to 6% from post-Harvey highs. Gulf Coast gasoline provided an exception to this national trend on Thursday, but increases there were largely tied to scheduling deadlines.

Historical precedent suggests that most of the post-Harvey gasoline price appreciation will give way to attrition in an active fourth quarter. Meanwhile, Hurricane Irma has interrupted typical waterborne transportation in Atlantic Seaboard shipping lanes, though IHS believes the storm appears to be more of a threat to demand, rather than supply.

Meanwhile, major Gulf Coast ports have re-opened, though on an individual basis there may be Coast Guard-mandated restrictions that are still being enforced, especially regarding vessel draft, as water and debris empty into Gulf Coast ports. Beaumont, Texas is understood to still be closed to vessel traffic, while awaiting safe conditions to return.

Meanwhile, the US Energy Information Agency quantified the impact of Hurricane Harvey on US oil operations, showing a 3.3-million barrel-a-day drop in refinery crude consumption, a 750 000 bbl/d weekly drop in crude production, an 800 000 bbl/d drop in imported crude, and a sharp drop in crude exports.

Commercial crude inventories rose by 4.5-million barrels as a result. Hurricane Irma is not expected to threaten the Gulf Coast, although it has already damaged a storage facility in the Caribbean, with other terminals, especially in the Bahamas, still in its path.

IHS said liquid natural gas (LNG) exports through the Sabine Pass terminal have returned, rebounding to more than 1.1-billion cubic feet a day (bcf/d) on Thursday, as ships began loading. Over the next week deliveries should approach 2 bcf/d.

Despite this rebound in exports, IHS noted that overall demand declined by a slight 0.2 bcf/d, as cooler weather took hold in the eastern and southern US. Hurricane Irma unfortunately remains a threat to a significant percentage of Florida’s 4.1 bcf/d September end-use market (about 6.6% of the expected US total of 61.9 bcf/d).

According to IHS Markit Point Logic Data, US gas plant supply of natural gas liquids (NGLs) is back to pre-Harvey levels. NGL production from refineries has been slower to return than gas plant production, while most export capacity is back online.

Chemical production units that were affected by Hurricane Harvey are also slowly restarting, with about 50% of ethylene and 40% of propylene remaining offline. Producers are expected to bring at least 50% of the shutdown capacity back online by the end of next week.