Baton Rouge Refinery Outage Could Ease Gasoline Glut

(Bloomberg) -- A fire broke out overnight at Exxon Mobil Corp.’s Baton Rouge oil refinery in Louisiana, halting production at the fifth-biggest fuel-making plant in the U.S.

The outage at the massive complex -- which supplies fuel products across the southeast U.S. and all the way to New York Harbor -- means the refinery needs fewer barrels of crude oil, depressing a market already reeling from the coronavirus crisis in China. But it could help ease a gasoline glut in the Gulf Coast, where stockpiles hit a record in late January.

The blaze erupted in a natural gas line, affecting first one and then all of the facility’s crude distillation towers -- which heat and break down raw oil into products -- according to people familiar with operations. As a result, other units such as the catalytic cracker and the chemical plant had to cease operations.

The fire has been extinguished and there were no injuries, according to Exxon. Operations continue at the refinery and chemical plant, spokesman Jeremy Eikenberry said in email.

Industry consultant Genscape Inc. said in a report Wednesday that its monitors detected that all crude sections as well as a catalytic reformer at the plant are shut. The facility is located along the Mississippi River about 80 miles (129 kilometers) northwest of New Orleans and accounts for about 15% of the refining capacity in Louisiana.

The local WAFB TV station’s website showed images of the fire, and said local people reported their houses being shaken by the incident. There was no initial off-site impact to air quality, or an immediate call for an evacuation of the nearby area, WAFB said.

The complex’s chemical plant has shut, including its olefins unit -- which takes feedstocks such as naphtha, butane, propane and ethane from the oil refinery and converts them into ethylene and propylene that are used to make plastics. The facility can process more than 500,000 barrels of crude a day, according to data compiled by Bloomberg.

Gasoline in the Gulf Coast spot market rose 1.13 cent per gallon to a 8.13-cent discount to Nymex Rbob futures Wednesday morning.

Exxon is in the process of a massive expansion of the plastic-ingredient capacity on the chemical side of the Baton Rouge complex that’s scheduled to begin output next year. The combined refining and chemical operations account for one in every 10 jobs in southwest Louisiana region, according to the company.

U.S. refineries handled an average of about 16.5 million barrels a day of crude so far this year, Energy Information Administration data show.

--With assistance from Joe Carroll and Jeffrey Bair.

To contact the reporters on this story: Barbara Powell in Houston at bpowell4@bloomberg.net;Rachel Graham in London at rgraham13@bloomberg.net;Bill Lehane in London at blehane@bloomberg.net

To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net, Pratish Narayanan, Simon Casey

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