Energy companies prepared to restart production in the Gulf of Mexico Thursday, even as the remnants of Hurricane Isaac continued to rumble across Louisiana, leaving floodwaters, downed trees and power outages in its soggy wake.
Along the coast, refinery crews also began to assess the damage in preparation for resuming operations.
Early reports indicated mostly minor damage, although Phillips 66 said one of its refineries near New Orleans sustained some flooding, as well as a loss of electrical power.
"Oil production offshore will return quickly," said Andrew Lipow, president of Lipow Oil Associates. He said refineries may take longer to return to service as workers cope with flooding and other problems.
Retail gasoline prices continued to rise as refineries reduced output. A gallon of regular averaged $3.83 nationally Thursday, up 2 cents from Wednesday, according to AAA. The average Houston pump price was up 3 cents to $3.65 a gallon. The average San Antonio pump price rose 2 cents to $3.66 a gallon.
Oil futures fell with the probable quick restoration of Gulf production. U.S. benchmark crude closed down 87 cents at $94.62 a barrel in New York Mercantile Exchange trading.
A number of production companies said they expect to be back in business in the next few days, even as soon as Friday.
That means gasoline prices will stop rising soon, said Fred Rozell, retail pricing director for the Oil Price Information Service.
"I think the worst is over," he said, estimating that prices would go up another 5 cents before beginning to drop.
He predicted that the national average for gasoline will fall below $3.50 within two months.
"I think you'll be paying a lot less at the end of September than you'll be paying at the beginning of September," he said.
BP said it would attempt fly-over surveys of key facilities in the Gulf as weather permits and then begin redeploying offshore personnel.
Other companies also began announcing plans to return to operations.
Chevron said it was sending workers to assess the effects at onshore and offshore facilities.
Shell said flight inspections over storm-affected assets began Thursday morning; workers will return to the Gulf on Friday if weather permits.
Ten Gulf Coast refineries with combined crude oil processing capacity of 2.4 million barrels a day were offline or running at reduced rates Wednesday, according to the Oil Price Information Service.
By Thursday, workers were beginning to assess the damage.
Preliminary assessments of Valero Energy Corp.'s Louisiana refineries at St. Charles and Meraux showed no major structural damage, spokesman Bill Day said, although there was some minor wind damage such as torn insulation.
Employees began returning to work Thursday, he said in an email, and the company will have a better idea within the next few days when the restart can begin.
The Phillips 66 Alliance Refinery in Belle Chasse, La., is without power and suffered some flooding, the company reported Thursday. It said workers were trying to prevent further flooding and to pump water from the flooded areas.
The company's refinery in Westlake, La., remains in operation.
Chevron said its Pascagoula, Miss., refinery continued to operate at a reduced rate, as a precaution while the ship channel and marine transportation return to normal.
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