Hurricane Harvey, which until this morning a Tropical Storm, is now set to be the first hurricane to strike the Texas coast since 2008. According to the NHS, which issued a hurricane warning from Port Mansfield to Matagorda, TX including Corpus Christi, Harvey is "rapidly intensifying", and is forecast to be a "major hurricane."
The hurricane, whose top winds reached 85 miles per hour at 1pm on Thursday, up from 45 mph earlier, is forecast to become a Category 3 storm with 125 mph winds by Friday as it nears Texas coast. The NHS has urged that 'preparations along the middle Texas, coast should be rushed to completion today."
Harvey is currently located 335 miles southeast of Corpus Christi, Texas, moving north-northwest at 10 mph, and is expected to make landfall in Texas at 1AM on Saturday.
According to the Weather Prediction Center, more than 20 inches (51 centimeters) of rain from Corpus Christi to Houston is expected over the next week while some models forecast as much as 40 inches (1 meter) of rain through next Tuesday in southeast past of Texas.
New European model drops the HAMMER. 40" rain through next Tuesday in parts of SE TX. #Harvey pic.twitter.com/NOhoSlUJc8
— Ed Vallee ???? (@EdValleeWx) August 24, 2017
A storm surge of up to 12 feet expected near the Padre Island National Seashore to Sargent. Storm surge accounts for close to half of all hurricane deaths.
“Preparations to protect life and property should be completed by tonight,” Robbie Berg, a hurricane specialist at the center, wrote in an analysis. “Life-threatening flooding is expected across much of the Texas coast from heavy rainfall.”
In advance of landfall, FEMA is sending staff and food and water supplies to the region.
"The primary impacts will be from widespread and potentially catastrophic flooding, with total rainfall amounts over the next week exceeding a foot in a large area from Corpus Christi to the Louisiana coast and then up to 100 miles inland from there,” said Weather Channel chief meteorologist, Todd Crawford. "Many locations in those areas may exceed two feet. Clearly Houston is at risk for historic rainfall amounts over the next week."
Among the key concerns as Harvey barrels down toward Texas, is the massive oil E&P and refining infrastructure in its projected path as shown in the Bloomberg map below.
As a result, the Bureau of Safety and Environmental Enforcement (BSEE) said in a statement that 9.56%, or 167.2kbpd of Gulf of Mexico oil production has been shut in preparation. Houston pilots have shut the Houston ship channel for inbound sailings as of 12:30pm local time. Corpus Christi ship pilots have also suspended some boardings. All foreign ships, except for one, are leaving the port to steer clear of the storm.
“It is definitely going to be an issue for the ship channels in the Gulf,” said Shunondo Basu, a meteorologist and natural gas analyst at Bloomberg New Energy Finance.
Oil refiners in the Gulf Coast, home to as much as half of the nation’s refining capacity, began to shutter operations. Below is a list of the key operations that have already been shuttered, courtesy of Bloomberg:
Refineries:
- Flint Hills Corpus Christi East, West Plants, capacity 293k b/d
- Magellan Corpus Christi, Texas, splitter, capacity 50k b/d
- Citgo Corpus has begun shutting operations ahead of Hurricane Harvey, capacity 163k b/d
Ports, Terminals, Pipelines:
- Mansfield sees Corpus Christi fuel terminals closing Friday
- Corpus Christi ship pilots suspend incoming boardings
- NuStar prepares to shut Corpus Christi, Texas, oil terminal
- Tennessee Gas: Force Majeure at S. Texas Stations 1, 9 Aug. 25
- Mexico’s Cayo Arcas, Dos Bocas ports reopen after bad weather
- Kinder Morgan Inc.’s Tennessee gas pipeline declared force majeure for stations in south Texas
- All major Ports have already been shut to large vessels Wednesday because of Harvey
Platforms:
- Anadarko shuts four Gulf platforms before Harvey, evacuates staff
- Noble Corp. evacuates Paul Romano rig in Gulf ahead of Harvey, and moved staff to shore
- Shell shuts, evacuates Perdido platform ahead of Harvey
- Exxon shut Galveston 209 and Hadrian South crude and nat gas platforms; Cutting Gulf Hoover Platform Rates Ahead of Harvey,
According to Bloomberg, Policyholder-owned State Farm Mutual Automobile Insurance has the largest share in the market for home coverage in Texas with 19.6% market share as of 2016; Allstate has the second highest exposure, with 10.9% market share. Also exposed is Farmers Insurance and United Services Automobile Association, according to data compiled by A.M. Best Co. According to Sandler O’Neill analyst Paul Newsome the following insurers will be impacted should the hurricane make landfall: Allstate, Travelers, Chubb, Progressive, Hartford, AIG, United Insurance, MetLife, AmTrust, QBE, Argo, and State National. Sandler said that "typically, only hurricanes that are category 2 and above can have a material financial impact on big public insurers."
The immediate impact on commodity prices is unclear: while oil supplies could be disrupted, natural gas demand could fall, Matt Rogers, president of the Commodity Weather Group told Bloomberg. When hurricane Ike hit Texas in 2008, power outages cut electricity demand, reducing the need for gas and depressing prices.
And while the impact on oil prices has so far been muted, with WTI settling at $47.43/bbl, down almost a dollar on the day, Gasoline RBOB crack spreads surged as much as ~12% as many refiners are expected to be closed for the coming days. At the same time, October gasoline futures climbed as much as 1.9% to $1.5575/gal. According to Citi, the heavy rainfall forecast on Texas Gulf Coast could translate into lost refining volumes of over 2MM bbls, as 4.9MM bpd of Texas refining capacity is located in the highest precipitation zone