Hurricane Isaias Threatens 2.7 Million Barrels per Day of Gulf Coast Refining as Plants Run at 95 Percent, Washington Rules Out a Diesel Export Ban After a 100 Million Barrel G7 Release, Project Star Brings 6.47 Gigawatts of Gas Generation and a 5 Gigawatt Data Center Campus to Encinal Texas, Venture Global Signs a 20 Year ConocoPhillips Deal as Galveston Approves a 240 Million Dollar LNG Fueling Plant, and Construction Unemployment Falls to 3.5 Percent

Hurricane Isaias Puts 14 Percent of U.S. Refining Capacity in the Path With Plants Running at 95 Percent

Isaias, the Atlantic season's first hurricane, approached the northern Gulf Coast with about 2.7 million barrels per day of refining capacity in or near its projected path, roughly 14 percent of U.S. capacity, according to Lipow Oil Associates as reported by CNN. As of midday October 8, about 1.3 million barrels per day of Gulf oil production, about 63 percent of the region's output, was shut in, along with about 57 percent of Gulf natural gas production. U.S. refineries were running at about 95 percent of capacity, gasoline inventories had fallen to their lowest seasonal level since 2012, distillate inventories were at their lowest early October level since tracking began in the early 1980s, and the Strategic Petroleum Reserve held about 283 million barrels, its lowest level since 1982.

Argus reported hurricane warnings from Ocean Springs Mississippi into the Florida Panhandle and tropical storm warnings west to the Jefferson and Plaquemines parish borders in Louisiana. As of Friday morning, ABC News reported Isaias as a high end Category 2 storm expected to make landfall Friday evening within about 40 miles of Pensacola, with storm surge of 5 to 7 feet from Dauphin Island and Gulf Shores into the Florida Panhandle.

Washington Rules Out a Diesel Export Ban After the G7 Agrees to Release 100 Million Barrels

On October 2 President Trump said the United States would not ban diesel exports, hours after G7 nations and partners agreed to release as much as 100 million barrels of emergency oil and diesel over the next four months, with an initial focus on diesel, reported Transport Topics. U.S. retail diesel averaged 6.37 dollars per gallon that day according to AAA. The G7 reaffirmed its commitment to refrain from energy export restrictions among members, and the administration was weighing broader sales of tax exempt dyed diesel. The Associated Press also reported the decision not to restrict exports despite pressure from some Republicans.

Project Star Brings 6.47 GW of Gas Generation and a 5 GW Data Center Campus to Encinal Texas

On September 30 the U.S. Department of Commerce and the Republic of Korea selected Related Companies and NextEra Energy Resources, in partnership with Lewis Energy Group, to develop Project Star, a 22.3 billion dollar energy infrastructure campus in Encinal, South Texas, with 6.47 gigawatts of natural gas generation, according to NextEra Energy. The generation will directly support a privately funded 5 gigawatt data center campus being developed by Related Digital on an adjacent site, with excess power delivered back to the grid. Lewis Energy Group will supply Texas natural gas and associated infrastructure. The release describes the project as consistent with Governor Abbott's directive that data centers bring their own generation to the ERCOT system, and the campus is to be developed in phases and jointly owned by Korea and the United States under the trade agreement structure.

Hyperscale power deals kept coming nationally. Aterio's October update, published via EIN Presswire, highlighted Amazon's planned 39 building Homer City Pennsylvania campus drawing about 3.7 GW from a 4.5 GW power plant, phased from 2030 through 2036. And Google and Constellation signed a 20 year agreement on October 6 to fund uprates at 11 nuclear units adding 890 MW to the PJM grid, reported Let's Data Science.

Venture Global Signs a 20 Year ConocoPhillips Deal as Galveston Approves a 240 Million Dollar LNG Fueling Plant

On October 1 Venture Global and ConocoPhillips announced a 20 year sales and purchase agreement under which ConocoPhillips will buy 1.0 million tons per year of LNG starting in 2030, according to Venture Global. The company has more than 100 million tons per year of capacity in production, construction, or development across Calcasieu Pass, Plaquemines LNG, and CP2 LNG in Louisiana. It follows the 22 year Cheniere and Petrobras agreement signed the prior week and keeps the long term contracting cycle moving for Gulf Coast expansion trains.

On October 8 the Port of Galveston's Wharves Board of Trustees unanimously approved a lease and development agreement with Power LNG Ventures for Project Seawolf, a planned 240 million dollar LNG production and marine fueling facility on about 30 acres of Pelican Island, reported The Galveston County Daily News. The initial phase calls for two liquefaction units producing 400,000 gallons of LNG per day and a 3 million gallon storage tank, expandable to 800,000 gallons per day and 6 million gallons of storage, serving cruise and cargo vessels in the Galveston, Houston, and Texas City ship channels. The lease runs 30 years with two 10 year renewals, and construction remains contingent on financing and permits. LNG Industry also noted the Americas LNG Summit runs October 13 to 15 in Lake Charles.

Construction Adds 11,000 Jobs in September as Industry Unemployment Falls to 3.5 Percent

Construction firms added 11,000 jobs in September to reach 8,364,000, and the industry unemployment rate fell to 3.5 percent, according to an AGC analysis reported by Mecklenburg Times. Nonresidential construction added 16,100 jobs in the month and 142,000 over the year, up 2.9 percent, with nonresidential specialty trade contractors adding 12,300 jobs in September and 84,700 over the year. Residential builders and subcontractors lost 4,900 jobs in September. Over the past year construction grew 1.3 percent, compared with 0.3 percent for total nonfarm payrolls.

The longer term supply picture remains tight. Stateline reported that worker shortages were the top cause of construction project delays in AGC's September survey, that more than half of craft workers were born outside the United States according to AGC chief economist Ken Simonson, and that the Alliance for America's Skilled Trades estimates the country will need 1.7 million new skilled trade workers every year through 2035, with training programs producing just over half that number and only half of enrollees finishing.

The Bottom Line

This week showed that the Gulf Coast energy system is running at full stretch. Isaias put about 14 percent of U.S. refining capacity at risk with plants at 95 percent and distillate inventories at record lows. Washington took a diesel export ban off the table after a 100 million barrel G7 release. Project Star set the template for Texas data centers with 6.47 GW of its own gas generation behind a 5 GW campus. Venture Global locked in another 20 year buyer, Galveston approved a 240 million dollar LNG fueling plant, and the construction unemployment rate fell to 3.5 percent.

Storm recovery, turnarounds, gas generation, LNG trains, and modular plants all draw on the same steel, the same shops, and the same craft. PSV Industries is built as the vertically integrated JV that executes scope of work across the Texas and Louisiana Gulf Coast: shop based structural steel fabrication, process modules, modular skid assembly, field installation and construction, shutdowns and turnarounds, and backlog relief, delivered by a craft workforce we own inside a single execution model. When the weather clears and the next FID lands, owners need a partner already mobilized. That is PSV.