The head of the Houston Pilots announced that the Houston Ship Channel — a key waterway for oil shipments — has finally been opened for inbound ship traffic.
The U.S. Coast Guard first allowed the outbound traffic to help clear out space for inbound ships. The traffic movement was, however, permitted only during daylight hours. The traffic, which was stopped at 6 p.m. CDT on Tuesday, will resume at 7 a.m. CDT today.
Analysts noted that as the abundant inventories in the region offer a cushion to refiners, the delay in resuming operations at the channel would impact the supply of crude oil to over one-tenth of the nation's refining capacity.
The temporary shutdown of the channel resulted in a queue of over 80 vessels struggling to move into or out of the Gulf of Mexico. The shipping delay also forced several oil majors to cut production. ExxonMobil Corporation (XOM - Analyst Report) cut production at its largest 560,500 barrels per day (bpd) Baytown, TX refinery.
Marathon Petroleum Corporation (MPC - Analyst Report) did not reveal its plans for the 451,000 bpd Galveston Bay refinery and 80,000 bpd Texas City refinery. Royal Dutch Shell plc’s (RDS.A - Analyst Report) joint venture, Deer Park refinery, with a capacity of 327,000 bpd is assessing supply impacts and has made contingency plans to offset them.
A collision between a Kirby Inland Marine oil barge and a cargo ship forced the closure of the channel, in which 4000 barrels or 168,000 gallons (636,000 litres) of residual fuel oil spilled. The channel facilitates oil barges and cargo ships to travel from the Gulf Coast to refiners and terminals further inland.
On an average, 60 to 80 large vessels, including tankers, freighters, containers and cruise ships, along with 300 to 400 tugs and barges move through the channel. The Kirby Inland Marine barge, which partly submerged after the collision, was vacated of all remaining fuel oil and refloated by Monday.
At the time of the accident, a total of 70 vessels were collecting heavy fuel oil from the bay. Per the Coast Guard, some of the oil, pushed by north winds into the Gulf of Mexico, has been washing ashore. Around 10 birds were confirmed dead from the oil spill and another 18 oil-covered birds were captured for cleaning.
ExxonMobil carries a Zacks Rank #3 (Hold). Another Zacks Ranked #1 (Strong Buy) stock in the oil and gas sector Valero Energy Corporation (VLO - Analyst Report) appears rewarding for the short term.