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The Honolulu Advertiser
Posted on: Thursday, September 22, 2005

Texas refineries shutting down

By DAVID KOENIG
Associated Press

Steve Edwards, of Beaumont, Texas, fished yesterday in the Sabine Neches Ship Channel in Sabine Pass, Texas, as shrimp boats and other vessels headed inland ahead of Hurricane Rita.

JENNIFER REYNOLDS | Beaumont (Texas) Enterprise

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Oil companies began closing Texas refineries yesterday, threatening the supply of gasoline to the nation's pumps as Hurricane Rita grew more violent and took aim at a stretch of the Gulf Coast that holds one-fourth of the nation's oil-refining capacity.

Experts say the refineries, nestled in a 300-mile swath from the Louisiana border to Corpus Christi, would recover within a couple days from a glancing blow. But if Rita swamps Houston as Hurricane Katrina did to a three-state area along the Gulf of Mexico last month, they warn, the storm will take more dollars from motorists' wallets and add to the problems of the nation's airlines.

BP PLC began closing its massive Texas City refinery yesterday. Marathon Oil Corp. and Shell Oil did the same at their refineries near Houston.

"It was a split decision between taking a risk and playing that waiting game. ... Once we made the decision, everybody felt good," said David McKinney, a Shell spokesman.

Meanwhile in the Gulf of Mexico, Rita began to take a toll on oil production, which hadn't yet fully recovered from last month's Hurricane Katrina.

Combined, the damage from Katrina and the precautionary evacuations ahead of Rita have slashed normal Gulf oil production of 1.5 million barrels a day by 73 percent, the U.S. Minerals Management Service said yesterday.

Since Katrina evacuations began Aug. 26, the storms have cut more than 27 million barrels of oil production, or 5 percent of the Gulf's annual production, the agency said. Natural gas production was 47 percent below normal yesterday.

Oil and gasoline prices could spike again if Rita causes additional disruptions in supply, market analysts say.