A stretch of the Houston Ship Channel leading to more than 7% of U.S. refining capacity may reopen Wednesday after a collision released gasoline additive MTBE into the water, Bloomberg said March 10.

The four-mile section of the channel between Light 86 and the Fred Hartman Bridge will be off limits until it’s deemed safe, Coast Guard Capt. Brian Penoyer said Tuesday at a news conference in La Porte, Texas. The section was shut after a Venezuela-bound tanker spilled an unknown amount of MTBE.

The closing on one of the world’s busiest commercial waterways is being reassessed every 12 hours, Steven Nerheim, director of the Coast Guard’s Vessel Traffic Service for Houston-Galveston, said in a telephone interview. It would reopen Wednesday in the best case and be closed several days in the worst case, he said. Seventy-two vessels are waiting to enter and exit the area, according to the Coast Guard.

“Anything involving volatile cargoes in a population center makes timelines difficult to pin down,” Nerheim said.

That section of the channel leads to five refineries with 1.34 million barrels a day (MMbbl/d) of capacity and docks that can export 600 Mbbl/d of propane and other liquid petroleum gases. An extended shutdown may prevent tankers from delivering crude and force the plants to reduce production, limiting supply of fuels like diesel and gasoline.

‘It could be a kick-starter for higher product prices,’’ Carl Larry, director of oil and gas for Frost & Sullivan LP in Houston, said by phone. “If the refineries can’t get the crude they’re looking to get, we’ll probably see a shortage of production not just for domestic consumption but for exports.”

The shutdown is holding up 42 vessels waiting to enter the area and 30 to leave, U.S. Coast Guard Petty Officer Dustin Williams said by phone Tuesday from Houston. The affected refineries imported 700 Mbbl/d of crude and oil products in December, according to the Energy Information Administration.

Exxon Mobil Corp.’s (NYSE: XOM) Baytown refinery, the second-largest in the U.S., and plants run by Valero Energy Inc. (NYSE: VLO), Royal Dutch Shell Plc (NYSE: RDS-A, RDS-B), Petroleo Brasileiro SA (NYSE: PBR) and LyondellBasell Industries NV (NYSE: LYB) are inland of the shut waterway.

Enterprise Products Partners LP (NYSE: EPD) and Targa Resources Inc. (NYSE: TRGP) operate export docks on the channel for liquid petroleum gases such as propane and butane. The facilities can combine to ship out 600 Mbbl/d, according to Peter Fasullo, principal at Envantage Inc., an energy consulting firm in Houston.

Production of such fuels, which are byproducts of oil and natural gas processing, has surged during the shale boom. Exports of propane have increased from 124 Mbbl/d in 2011 to 422 Mbbl/d last year, according to EIA data.

Foggy weather along the channel last week delayed loadings, Fasullo said.

“If the channel stays closed, that’s going to have an impact on propane inventories going forward,” Fasullo said. “Most of the eggs are in that basket right there between Targa and Enterprise.”

Propane in Mont Belvieu, Texas, was valued at 49% the price of West Texas Intermediate crude Tuesday, down from 52% on Feb. 26, according to data compiled by Bloomberg.

The Carla Maersk, a 45,000-deadweight-ton tanker, was heading out of the channel for Amuay Bay in Venezuela when it collided with the MV Conti Peridot, a 57,000-deadweight-ton bulk carrier traveling into the channel, according to vessel tracking data compiled by Bloomberg.

The impact pierced the double-hulled Carla Maersk, which carried 216 Mbbl of MTBE. The vessel suffered a breach in two tanks each holding 15 Mbbl. An unknown amount poured into the water before the leak was stopped. The remaining product has been transferred from the tanks, Penoyer said.

“This is an enormously complex salvage operation,” Penoyer said.

On Tuesday, the Conti Peridot was allowed to move to a dock outside the crash zone, while the Carla Maersk remained anchored in the zone, according to VTS’ Nerheim.

MTBE, or methyl tertiary butyl ether, is an oxygenate added to gasoline to boost octane levels and to help fuel burn cleaner. While it’s been replaced by ethanol in the U.S. after it contaminated drinking water, other countries still use it. Its offensive odor and taste can render water undrinkable, while its health effects are unclear. U.S. production is shipped abroad, with Venezuela receiving the second-most in December behind Mexico.

The Coast Guard and National Transportation Safety Board are investigating. Nerheim said communications between the vessels, radar data, weather and the actions of the vessels’ pilots will be analyzed.

“There’s always a point in these things when you’re watching the playback it’s obvious they are going to collide,” Nerheim said. “But to do that in real time, it’s not always apparent until it is.”


Offshore