Prolonged Shutdowns From Harvey Could Strand Shale Output
August 29, 2017
By Meenal Vamburkar
The mutual dependency of pipeline companies and refiners is being magnified as Tropical Storm Harvey takes its toll on the Gulf Coast, putting at risk the U.S. shale boom.
With a number of refineries in the region closed by the storm, pipelines have fewer places to deliver oil carried from prolific West Texas shale basins. When pipelines close, the refineries still open have less oil to process. Ultimately, producers may find their oil stranded with their route to the coast limited.
A few more days isn’t a problem, according to Libby Toudouze, a partner at Cushing Asset Management LP. But if the Gulf Coast closures continue into and past next week, it could spur a ripple effect across the industry, she said.
“If there’s no place for it to go, you can’t keep jamming more crude into the line,” Toudouze said in a telephone interview.
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