We did have some hot weather in the producing regions which slowed production but CITI Bank reported that a problem caused a forced gas withdrawal from Chevron’s salt dome storage field in Napoleonville, LA, could add a total of 3 to 4 bcf of gas supply to market in the coming days, affecting the short term balance. A sinkhole discovered at the storage field led the storage operator to ask customers for a reduction in inventories to 40% of their contracted mount. At a withdrawal rate of 0.4-bcf/d, the draw should be completed in just over a week, assuming no other problems are found. That should bring the market back down.
California gas woes and steps to help correct the problems are happening now both long and short term. Bloomberg News reports, "Phillips 66 delayed work on a unit at the Rodeo refinery in California to take advantage of a gasoline-price surge after a fire at Chevron Corp.’s Richmond plant," a person with direct knowledge of the schedule said. The 76,000-barrel-a-day Rodeo refinery put off maintenance for at least a month at hydrocracking Unit 246, which makes gasoline and jet fuel, said the person, who asked not to be identified because the information isn’t public. Spot gasoline in San Francisco climbed as much as 41 cents a gallon after the Aug. 6 fire at Chevron’s 240,000-barrel-a-day Richmond plant. Chevron shut the refinery’s crude unit after the fire and is making transportation fuels at a reduced capacity, the company said in a statement distributed yesterday at a briefing outside the refinery. It’s impossible to tell how long the crude unit will be out of service, Mark Ayers, chief of emergency services at the plant, said yesterday at the briefing. Phillips 66 had planned to begin the six-week turnaround at Rodeo at the end of this month, the person said. Bloomberg reports that Alon USA Energy Inc. is in “advanced discussions” to transport light crude oil by rail from the Midwest to the Bakersfield refinery in Central California as early as the third quarter of 2013. “This will provide additional crude oil flexibility for our California refining system to allow us to take advantage of changing crude oil markets,” Chief Executive Officer Paul Eisman said during the company’s second-quarter earnings call. “The location of Bakersfield refinery is uniquely suited as a rail hub to receive Midcontinent crudes.” Eisman said a rail line already runs through the Bakersfield refinery, Alon has storage tanks and land for the project and access to third-party pipelines. Alon expects to submit an environmental permit application within several days. Alon could use third-party pipelines to transport the Midcontinent crude from Bakersfield to its refinery in Paramount, California, Eisman said. The refiner would be able to bring in crude from anywhere in the Midcontinent although it will likely begin with Bakken crude from North Dakota, he said.