KROTZ SPRINGS, Louisiana (Reuters) - The opening of a key spillway to relieve flooding along the Mississippi River could create logistical headaches for big Gulf Coast refiners, but will likely spare the lion's share of the area's refining capacity from flooding danger.
The U.S. Army Corps of Engineers on Saturday opened the Morganza Spillway to channel water away from the Mississippi River and into the Atchafalaya River basin.
That will take the floodwaters toward homes, farms, a wildlife refuge and a small oil refinery but avoid inundating New Orleans and Louisiana's capital Baton Rouge.
The opening of the Morganza Spillway on Saturday will inevitably impact Alon USA Energy's 80,000 barrel-per-day refinery in Krotz Springs, which expects to be surrounded by water within 14 days. Refinery workers scrambled over the weekend to bolster levees around the nearby Atchafalaya River.
The spillway's opening brings relief to the eight large refineries that are nestled along the Mississippi River between Baton Rouge and Meraux, Louisiana, which collectively process 12 percent of U.S. refined products.
"That's really what you're trying to do -- save all those refineries," said Jeffrey Goetz, managing director of Poten & Partners.
Rather than the prospect of swamped refineries and months of ceased operations as was seen during hurricanes Katrina and Rita in 2005, Louisiana's refineries face the tricky logistical task of moving barges filled with gasoline and other refined products along the swollen Mississippi River.
"Assuming the levees hold, this risk of flooding is low," said Andrew Lipow, president of Lipow Oil Associates LLC in Houston. "The reality is we really have a logistics and distribution issue." But all bets are off if swelling river levels burst through the levees that protect New Orleans and other cities, he said.
Exxon Mobil's 504,500 barrel per day refinery in Baton Rouge, the nation's second-largest, expects to remain in operation but its Mississippi River dock was shut due to high water, a plant spokesman said.
High waters along the Mississippi River will complicate an already tricky task of shuttling barges and ships filled with refined products, especially if the Coast Guard is forced to shut portions of the key transportation route due to high water.
U.S. Coast Guard officials have said they might have to halt shipping on the river if it rises above 18 feet at New Orleans.
"Opening the spillway maintains the flood stage in New Orleans at 17 feet, which allows tankers to continue delivering crude to the refineries so they can continue processing crude and turning it into products," Lipow said.
(Additional reporting by Erwin Seba in Houston; Editing by Chris Baltimore and Richard Chang)
Source: Reuters US Online Report Domestic News
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