US EPA issues RVP waiver for gasoline in Louisiana, Mississippi following Ida

Source: By Jeff Mower, S&P Global • Posted: Tuesday, August 31, 2021

The US Environmental Protection Agency has issued a temporary waiver to federal RVP requirements for gasoline in Louisiana and Mississippi to address fuel supply shortages caused by Hurricane Ida.

“Under this temporary waiver, regulated parties may produce, sell and distribute winter gasoline in Louisiana and Mississippi with a Reid vapor pressure of no more than 11.5 psi after the addition of ethanol,” the EPA said in a letter to Louisiana and Mississippi Governors late Aug. 30. “This waiver is effective immediately and will continue through September 15, 2021.”

Ida made landfall in Louisiana over the weekend, and has been downgraded to a Tropical Depression.

Roughly 2.2 million b/d of Louisiana refining capacity was offline as of Aug. 30 as a result of the storm, according to estimates from S&P Global Platts Analytics, reflecting about 75% of the state’s capacity.

“Widespread power outages, refinery shutdowns and flooding caused by the hurricane are preventing the distribution of adequate supplies of compliant gasoline in your states,” the EPA said. “The fuel supply shortages caused by Ida can be reduced by waiving the requirements to sell low volatility gasoline.”

Louisiana’s two largest refineries — ExxonMobil’s 520,000 b/d Baton Rouge plant and Marathon’s 578,000 b/d Garyville refinery — were shut down.

ExxonMobil said its Baton Rouge plant did not sustain any significant damage and would begin to return to service once the company confirms it has access to feedstocks and third-party utilities.

Marathon said Aug. 30 it was assessing a timeline to resume operations at Garyville.

On the west side of the Mississippi, Entergy’s power outage map showed the two Norco refineries shut ahead of Ida — Shell’s 230,611 b/d plant and Valero’s 215,000 b/d plant — have access to power.

The disruptions caused by Ida caused US Gulf Coast spot refined products price differentials to climb Aug. 30. For instance, S&P Global Platts assessed CBOB (A2) differential at NYMEX October RBOB futures plus 4.25 cents/gal, increasing 75 points/gal from the prior close. This marked the highest USGC CBOB has been since Sept. 12, 2017, when it was assessed at prompt-month futures plus 7.50 cents/gal.

NYMEX RBOB gasoline futures had also rallied, as Colonial Pipeline — the primary fuel artery from Houston to the South and East Coast — closed ahead of Ida.

However, Colonial said it would restart late Aug. 30 following a damage assessment.

The New York-delivered RBOB futures contract was trading about 3.47 cents lower at $2.278/gal early Aug. 31, after settling up 3.85 cents the prior evening.