Major refineries are shutting down in the wake of Harvey flooding

Key Points
  • Royal Dutch Shell said on Sunday that it was shutting down its Deer Park Refinery, with a capacity of 340,000 barrels per day.
  • CNBC can also confirm that Exxon Mobil's Baytown, Texas, plant (560,000 b/d) is shut down.
  • Overall, expect more than 1 million barrels per day offline just from the Houston/Galveston area.
  • The BSEE says that almost 22 percent of current oil production from the Gulf of Mexico has been shut-in.
Some U.S. refineries might be off for weeks, or months after Harvey: Analyst

Oil refineries are shutting down in the wake of rainfall and flooding from Hurricane Harvey.

The damage could mean a loss of more than 1 million barrels per day in refining capacity just in the Houston and Galveston, Texas, areas — that's not including hundreds of thousands of more barrels in the Corpus Christi, Texas, area.

Shell has shut down its massive Deer Park refinery in southeastern Houston, among the largest in the United States with a crude oil capacity of 340,000 barrels per day.

The company said in a statement obtained by CNBC, "On Sunday, August 27, 2017, we made the decision to initiate a controlled shut down of the Deer Park, Texas, refinery and chemical plant as a result of heavy rainfall and associated nearby flooding from Hurricane Harvey. Only essential personnel will stay on site through the end of the week."

Also on Sunday, Petrobras said it would shut down its Pasadena, Texas, refinery, with a capacity of 110,000 barrels per day, thanks to "severe weather," according to Dow Jones.

Exxon Mobil has also shut down its massive plant in Baytown, Texas, on the Houston Ship Channel, with a capacity of more than 560,000 barrels per day, CNBC has confirmed. The Ship Channel is the busiest in America and remains closed by the storm.

Traders and oil industry news services also say that the Phillips 66 Sweeny Texas Refinery (260,000 b/d) is shutting down, and that output at Marathon's Galveston Bay refinery (460,000 b/d) and the Access Industries plant in Houston (260,000 b/d) are slowed because of the closed ship channel.

The Magellan pipeline company has announced it's shutting down its crude oil and refined product pipeline in Houston, which means remaining refineries there might be shutting down as well.

Refineries in Corpus Christi owned by Flint Hills, Valero and Citgo, totaling more than 700,000 barrels per day, had also been slated for controlled shutdowns according to an Oil Express news alert.

Even if the damage near the refineries is controlled quickly, widespread damage throughout the area will make it hard for refinery workers to get to work — the Shell plant, for instance, has more than 3,000 workers and contractors.

On Monday, Cheniere Energy said its Corpus Christi construction site saw only a minor impact from Harvey. The company said early assessments of the site by Cheniere and EPC partner Bechtel showed only "minor cosmetic impacts."

Cheniere said it is currently working to contact all employees to ensure they are safe and to assess their needs.

The storm is affecting production as well. The Bureau of Safety and Environmental Enforcement said Sunday that almost 22 percent of current oil production in the Gulf of Mexico has been "shut-in," based on reports from operators. That's about 378,000 barrels per day, out of a total of 1.75 million in the region.

Mexico will be significantly affected as a large buyer of gasoline refined in the area, as tanker traffic in and out of Texas has basically stopped.

Harvey, now a tropical storm hovering over the Houston area, could set a Texas rainfall record with more than 50 inches of rainfall, said the National Weather Service.

— Additional reporting by CNBC's Brian Sullivan.