Barge firm Kirby warns of increasing flooding along Mississippi as industry worries continue
By Ben DuBose
Online Editor
US chemical shipper and barge firm Kirby said on Thursday that high water and flooding issues on the Mississippi River may have a greater-than-anticipated earnings impact, adding to logistics concerns for petrochemical and refining companies as rising waters move downstream.
Kirby estimated the earnings impact may be greater than $.07 per share, which was the upper bound of the $.02 to $.07/share estimate it released on April 27. However, the inland barge firm said it would be unable to further quantify the impact until the situation further evolves.
The announcement from Kirby comes amid mounting concerns for regional producers. In Memphis, Tennessee, the river crested on Tuesday at 47.87 feet – well above flood stage and just below the 1937 record of 48.7 feet.
News agency Bloomberg reported that Valero was forced to reduce operations at its 180,000 bpd Memphis refinery to between 80% and 85% of capacity due to the flooding.
The flooding limited movement of products in and out of the plant by barge, in addition to limiting pipeline shipments of ethanol, Bloomberg said.
Valero officials did not immediately respond to a request for comment. The Memphis refinery sends gasoline and diesel out by pipeline, barge, truck and rail, according to reports.
Moreover, even more significant industry woes could come by the weekend. Louisiana Gov. Bobby Jindal said that all indications from the US Army Corps of Engineers are that the Morganza Spillway will be opened as soon as Saturday.
That spillway has only been opened once before, in 1973.
If that happens, Alon USA Energy’s 80,000 bpd Krotz Springs refinery will likely have to be shut, Jindal said.
Alon officials said they were building an extra levee to supplement levees on the refinery’s north and east sides.
The Krotz Springs refinery is located on the west bank of the Atchafalaya River, to which water from the Mississippi would be routed if the Morganza Spillway is opened.
US officials are already using the Bonnet Carre Spillway in Louisiana.
The Baton Rouge-New Orleans area in Louisiana is home to 11 refineries, according to reports, with a combined capacity of about 900,000 bpd.
That would represent about 10% of overall US gasoline supply.
ExxonMobil’s refinery in Baton Rouge is the second-largest in the US with 504,500 bpd of capacity. Berths at Exxon’s docks in Baton Rouge were already flooding on Wednesday, according to news agency Reuters.
That could make it difficult to dock tankers in coming days, Reuters reported.
However, ExxonMobil officials said the refinery was continuing to operate normally.
The Mississippi River is already above flood stage in much of Louisiana, and is not expected to crest in the Baton Rouge area until May 23.
Following the crests, it could still take up to two weeks for the river to fall below flood stage, reports said.
The flooding is a result of the convergence of the swollen Mississippi and Ohio rivers in Cairo, Illinois.
Upstream, nearly 20% of barge terminals on the Ohio River monitored by the US Coast Guard remained closed on Thursday, according to reports.
Kirby CEO Joe Pyne said he anticipated the Ohio River to return to normal navigation in mid-to-late May, and the lower Mississippi to return to normal navigation by the end of May or early June.
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