The worst flooding across the U.S. Midwest in four years has shut some oil pipelines and terminals near St. Louis, potentially swelling a glut of crude and extending this year’s price slide, Bloomberg reports.
Five miles of the Mississippi River and 50 miles of the Illinois River have been shut, according to the U.S. Coast Guard website. The flooding is the worst since May 2011, when rising water on the Mississippi and its tributaries threatened refinery and chemical operations and disrupted shipping.
So far, the biggest shutdown is Enbridge Inc.’s Ozark oil pipeline, which was booked to carry about 200,000 barrels a day this month to Wood River, Illinois, from Cushing, Oklahoma. The outage of the section under the Mississippi River may further add to stockpiles at Cushing that reached a record high last week.
“The closure of the Ozark pipeline will just add to the stocks at Cushing,” says Amrita Sen, chief oil economist at Energy Aspects Ltd. in London.
Meanwhile, Spectra Energy Corp. has shut the 145,000 barrel-a-day Platte oil pipeline between Wyoming and Illinois as a precaution because of the river’s condition. Kinder Morgan Inc. has also shut its Cahokia terminal in Sauget, Illinois, and its Cora terminal in Rockwood, Illinois, and Exxon Mobil Corp. is shutting a fuel terminal on the Mississippi River at Memphis.
The floodwaters may eventually reach Louisiana, where 10 refineries located in the Baton Rouge and New Orleans areas have a combined capacity of about 2.5 million barrels, or 13% of the nation’s capacity, says Andy Lipow, president of Lipow Oil Associates in Houston.
“They could see the effects there in several weeks,” Lipow says. “Sometimes, a refinery isn’t flooded, but the ability to move product out or move crude in is impacted and you can’t leave workers in a flood situation.”
