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Severe Flooding in Midwest
January 1, 2016

The worst flooding across the U.S. Midwest in four years is disrupting everything from oil to agriculture, forcing pipelines, terminals and grain elevators to close and killing off thousands of pigs.  Fifty miles (80 kilometers) of the Illinois River have been closed, according to the U.S. Coast Guard, as well as 81 miles of the Mississippi River in two segments.

The flooding is the worst since May 2011, when rising water on the Mississippi and its tributaries deluged cities, slowed barge traffic and threatened refinery and chemical operations. The current situation increases stockpiles of crude oil and may extend this year’s price slide.  Hog producers in southern Illinois are calling other farmers, hoping to find extra barn space to relocate their pigs, said Jennifer Tirey, executive director of the Illinois Pork Producers Association. Processors are sending additional trucks out to retrieve market-ready pigs, she said. In one case, an overflowing creek took out electricity and made roads impassable, causing 2,000 pigs to drown.

‘So Much Rain’
“There was no way to get the pigs out,” Tirey said. “Honestly, it was just an act of God. That creek had so much rain.”  So far, the biggest oil shutdown involves Enbridge Inc.’s Ozark pipeline, which was booked to carry about 200,000 barrels a day this month to Wood River, Illinois, from Cushing, Oklahoma. The outage of the section under the Mississippi River may further add to stockpiles at Cushing that reached a record high last week.  “The closure of the Ozark pipeline will just add to the stocks at Cushing,” said Amrita Sen, chief oil economist at Energy Aspects Ltd. in London.

Spectra Energy Corp. shut the 145,000 barrel-a-day Platte oil pipeline between Guernsey, Wyoming, and Wood River as a precaution because of the river’s condition, the company said in an e-mailed statement.  St. Louis received 5.91 inches of rain (15 centimeters) from Dec. 26 to Dec. 28, according to AccuWeather data. By Wednesday, Ameren Missouri was ferrying employees to and from its Sioux Energy Center north of St. Louis. The coal-fired power plant is still operational and workers will continue to travel by boat until the floodwaters recede, the company said in a statement.

Closed Terminals
Kinder Morgan Inc. shut its Cahokia terminal in Sauget, Illinois, and its Cora terminal in Rockwood, Illinois, company spokesman Richard Wheatley said by e-mail. Cahokia handles chemicals, coal, cement and metals while Cora handles coal and petcoke, according to the company’s website. Kinder Morgan declared a force majeure, which protects it from liability for contracts that go unfulfilled for reasons beyond its control.

Exxon Mobil Corp. is shutting a fuel terminal on the Mississippi River at Memphis “in anticipation of severe weather,” spokesman Todd Spitler said in an e-mail Wednesday.

Barge operators shipping grain took advantage of early forecasts for the heavy rain and flooding to transport loads before Christmas to ports in New Orleans, where there’s “adequate inventory,” said Wes Traina, logistics manager for Zen-Noh Grain Corp. in Convent, Louisiana. Still, high water may continue to slow shipping and loading throughout January, he added.

‘Fast Currents’
“The biggest concern from the high waters and fast currents will be from barges hitting a bridge and breaking apart,” Traina said by phone. “It’s inevitable that accidents will occur.”  The southern Illinois co-op Gateway FS Inc. has closed three of its grain elevators. Employees are working extended hours to accommodate the large number of farmers hauling in grain from on-farm bins that could be compromised by flooding, said general manager Carl Tebbe.

“We’re just hopeful the water doesn’t quite get as high as what they’re saying,” Tebbe said. “Everyone has done a lot of work.”  Delek U.S. Holdings Inc., which has a products terminal in Memphis, declined to comment, according to spokesman Matt Barkett. Steve Lee, a spokesman for Valero Energy Corp., which has a 180,000 barrel-a-day refinery in Memphis that reduced operations during the 2011 floods, said he was unable to respond immediately about plans to deal with the current flooding threat.

The floodwaters may eventually reach Louisiana, which has 10 refineries in the Baton Rouge-New Orleans area with an combined capacity of about 2.5 million barrels, or 13 percent of the nation’s capacity, said Andy Lipow, president of Lipow Oil Associates in Houston.  “They could see the effects there in several weeks,” Lipow said. “Sometimes, a refinery isn’t flooded, but the ability to move product out or move crude in is impacted and you can’t leave workers in a flood situation.”

By: Bloomberg News
Source: Agweb.com


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