Flood waters set sights on Louisiana oil refineries
New Orleans, Louisiana (AFP) May 10, 2011
Record flooding along the Mississippi River threatens to inundate at least two Louisiana refineries and hundreds of oil and gas wells, officials warned Tuesday.
"This is a very serious flood," Louisiana Governor Bobby Jindal told reporters.
"We haven't seen this kind of flooding since 1927."
Army engineers plan to open a major spillway by Saturday in order to divert water away from New Orleans and ease pressure on the Mississippi as it approaches the Gulf of Mexico.
Floodwaters as deep as 20 feet will inundate areas west of the river which house about 24,000 people and 13,000 structures. Jindal urged residents to begin evacuations now.
The state's fuel team has identified two refineries, over 1,750 oil and gas wells and 135 operators in the affected areas.
"Safety is a top concern on these structures as the Spillway is opened," Jindal's office said in a press release.
Oil prices pushed slightly higher on concerns that US supplies would be hit by the flooding.
"Flooding in the lower Mississippi valley, where 11 refineries process up to 2.5 million barrels a day, is causing problems for the US oil and oil product markets," analyst Nic Brown of Natixis said in a note.
"Some refineries may need to be closed temporarily, while the transportation of both crude and oil products may also be impacted."
JP Morgan noted that while "the situation still remains uncertain, refineries, terminals, and other oil infrastructure are expected to take proactive measures to ensure safety, potentially reducing runs or shutting facilities if necessary."
The governor did not specify which refineries were at risk, but one is thought to be the Krotz Springs Refinery of Alon USA, a subsidiary of Israel's ALON Israel Oil Co. Ltd., which sits near the Atchafalaya River, a major tributary of the Mississippi.
An Alon spokesperson was not immediately available for comment.
"We're already seeing the threat priced in somewhat," Phil Flynn, an oil analyst at PFGBest Research in Chicago, told AFP.
"But if we get into a situation where these refineries are shut down for weeks, this could be very serious."
The worst floods to hit the central United States in more than 70 years have swallowed up homes, farms and roads in Illinois, Missouri, Kentucky, Tennessee and Mississippi.
Heavy rains last month filled rivers and creeks already swollen from the melting of a thick winter snow pack, which are now backing up because the Mississippi is so swollen.
The Mississippi River has swelled to six times its normal width and was three miles (4.8 kilometers) wide when it crested Monday in Memphis, where it is typically half a mile wide.
Portions of the river have also been closed to shipping.
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