Coast Guard Plans to Allow Test Run Through Houston Ship Channel

Mar 25, 2014 1:11 pm ET

March 25 (Bloomberg) -- Authorities including the U.S. Coast Guard plan to allow a cruise ship to move through the Houston Ship Channel today as they work to reopen the waterway after a March 22 spill, a spokesman for the group said.

The ship will be evaluated after passage to see how much oil collects on it, Danny Perez, a spokesman for the Joint Information Center responding to the spill, said in a telephone interview today. Yesterday the Coast Guard said it was trying to establish a lane of uncontaminated water before allowing passage. The 4,000-barrel spill of bunker fuel caused by a collision forced the closing of the channel, home to 11 percent of U.S. refining capacity.

“Best-case scenario is we would reopen today,” said Greg Beuerman, another spokesman for the Joint Information Center. “The situation is constantly being reassessed. It’s an hour-by- hour thing.”

The channel is closed from just north of Texas City down to its entrance, at Bolivar. The Coast Guard allowed limited barge traffic within the channel, and the ferry between Galveston Island and Bolivar Peninsula resumed service from 7 a.m. to 7 p.m. today with Coast Guard permission. The Galveston Daily News reported that water appeared clean on the ferry lane.

The spill of 4,000 barrels of bunker fuel has caused at least one refiner to reduce rates. The fuel, which is floating in the water and reaching the shorelines, has killed some birds and threatened other wildlife.

Exxon Baytown

Exxon Mobil Corp. reduced rates at its 560,500-barrel-a-day refinery in Baytown, Texas, because of the closing and anticipates a second reduction midweek.

“We are working with the Port of Houston and U.S. Coast Guard to facilitate safe delivery of crude shipments as soon as possible,” Todd Spitler, a spokesman for Exxon in Fairfax, Virginia, said in an e-mail today.

Representatives for Valero Energy Corp., Marathon Petroleum Corp. and Royal Dutch Shell Plc, which own all or part of refineries on the 52-mile (84-kilometer) shipping lane, have declined to discuss operations at those plants. The combined capacity of refineries dependent on the ship channel is 2.1 million barrels a day, said Andy Lipow, president of Lipow Oil Associates LLC in Houston.

“It is becoming critical and more so for the products as storage fills up, which results in refiners cutting rates,” Lipow said by telephone.

The spill occurred when a barge being towed by the vessel Miss Susan was struck at 12:35 p.m. local time March 22 by the 585-foot bulk carrier Summer Wind, causing one of the barge’s six tanks to leak fuel oil, the Coast Guard said. The fuel from the remaining five tanks has been removed and the vessel will be moved to a local shipyard.

Six Collisions

There were six collisions in the channel last year, Coast Guard data show. Incidents closed the waterway for 26 hours in 2013, compared with 5.5 hours in 2012 and 157.2 hours in 2011. An average day on the channel in 2013 saw 38 tankers, 22 freighters, one cruise ship, 345 tows, six public vessels, 297 ferries, 25 other transits and 75 ships in port.

The damage to bird habitats appears to be contained to the immediate vicinity of the spill, Audubon Texas said in an e- mailed statement yesterday. The group is the state program of the National Audubon Society. Hundreds of thousands of birds are arriving in Galveston Bay at this time of year for spring migration.

The leaking vessel was identified as Kirby Barge 27706, according to the Port of Houston Authority. Kirby Inland Marine LP, the company that owns the Miss Susan and the barge, declined to comment when reached by phone yesterday. The Summer Wind, a Liberian flag vessel owned by Sea Galaxy Marine SA, was operated by Cleopatra Shipping Agency Ltd., Beuerman said.

Skimming, Recovery

There were about 27 vessels working to skim and recover the oil, aided by containment booms stretching for more than 71,000 feet, the Coast Guard said.

The estimated economic impact of closing the channel is $330 million a day, according to the port authority.

“This is like a hurricane or a tropical storm,” Peter Fasullo, a principal at Houston-based energy consultant EnVantage Inc., said by telephone. “The ship channel could be shut for several days or even a week.”

In 2013, an average of 2.15 million barrels a day of products including gasoline and diesel were exported from the Gulf Coast, and 3.76 million barrels of day of crude were imported, according to the Energy Information Administration.

--With assistance from Bradley Olson, Dan Murtaugh and Harry R. Weber in Houston, Isaac Arnsdorf in New York and Anthony DiPaola in Dubai.