Originally appeared in Breakbulk Magazine - Issue 5, 2017
Port Houston and other key entities of the Texas energy industry and supply chain are proving that preparedness and collaboration are essential to recovery from even the worst of disasters. While long-term impacts remain difficult to gauge, a storm named Harvey already is being called the most devastating U.S. natural catastrophe after inundating the nation’s fourth-most-populous city and No. 1 American foreign tonnage port with more than 50 inches of rain – a typical year’s worth – in just four late August days.
Despite the record flooding and displacement of as many as 1 million people, the deadly storm caused little if any damage to infrastructure at Port Houston and other major maritime gateways of the Lone Star State, with most operations resuming within a week or so of Hurricane Harvey’s initial U.S. mainland landfall.
Coming ashore just north of Corpus Christi on Aug. 26, Harvey subsequently, as a stalled tropical storm, caused unprecedented flooding in and around Houston and eastward toward additional Texas energy and petrochemical centers near the Louisiana line.
Port Houston Ready
“It all starts with having a good plan and being prepared,” Roger Guenther, Port Houston’s executive director, said in a Sept. 14 interview with Breakbulk. “Not just at Port Houston but throughout our industry, we have people who are committed and always ready to react and respond.”
Although the port, along with the 150 industries not owned by the port that line the Houston Ship Channel, was readied to take a direct hurricane hit, it did not, and Port Houston facilities received “minimal impact,” according to Guenther.
He said an admirable job was done in terms of the top priority of ensuring safety and welfare of people working in and around the port, although about 100 of Port Houston’s 600-plus employees suffered flooded homes and other direct impacts of varying degrees. Many of those victims have received loans and other assistance from a longstanding port fund to which employees had donated sick leave and vacation time money.
Port Houston Chairwoman Janiece Longoria put it this way: “Our quick return to serving ship channel industry and Port Houston customers was made possible by the extraordinary teamwork of many stakeholders, including our own Port Houston staff, stevedores, the trucking community, ocean carriers, Houston Pilots, tugs, line handlers, vessel agents, the U.S. Coast Guard, Port Coordination Team, Customs and Border Protection and many others in the maritime industry who pulled together 24/7 since the storm to make this happen for the good of our region. On behalf of Port Houston, thank you all for your extraordinary dedication and help.”
Ship Channel Impeded
Guenther said the biggest impact to the port was largely unseen, as water runoff from Buffalo Bayou and other watersheds generated substantial current and created debris impediments, precluding ship activity along much of the 52-mile-long Houston Ship Channel.
In an announcement that some Port Houston terminals would reopen for business Sept. 1, a week after Harvey made initial landfall, Guenther said, “We are restarting this economic engine again to power the region, state and nation.”
International Longshoremen’s Association gangs toiled at Houston terminals throughout the weekend, including on Labor Day – traditionally an off day for union workers. Industry brethren from throughout the nation pitching in included the Georgia Ports Authority, which sent four containers filled with relief supplies. “While the port is back up and running – and that’s a good thing because the people need to work, the longshoremen need to work, the truckers need to work, and it’s critical to our community and our nation to try to return to normal – we don’t want to lose sight of personal recovery,” Guenther said. “It’s going to be lengthy for people to get their houses together. It’s a long process. We don’t ever want to forget that the recovery effort for our employees and all people in our community is going to take awhile.”
Harvey led to temporary closures of more than a dozen Texas refineries, as well as numerous related facilities, including most U.S. polyethylene resin production capacity. More than two weeks after Harvey’s initial landfall, about half of that resin-making capacity remained at reduced operating rates or was still entirely out of service. That left manufacturers of a wide range of consumer and industrial products dependent upon such materials facing supply shortages.
A Sept. 13 report from BBVA Research USA said Harvey led to the shutting down, at least temporarily, of 19 percent of oil production and 18 percent of natural gas production in the Gulf of Mexico, with the storm impacting energy industry hubs from Corpus Christi to Houston to the Beaumont-Port Arthur area.
AccuWeather estimated Harvey’s economic toll at about US$190 billion, representing a full 1 percent of U.S. gross domestic product, with other preliminary approximations ranging from US$70 billion to US$200 billion. The higher estimates would make Harvey the costliest natural disaster in U.S. history in dollar terms, in addition to it causing more than 80 confirmed deaths.
A Sept. 15 report from the U.S. Federal Reserve said the nation’s industrial production fell 0.9 percent in August – its biggest month-over-month drop in more than eight years – and attributed more than 80 percent of the decline to storm impacts that “temporarily curtailed drilling, servicing and extraction activity for oil and natural gas.”
The most serious incident at a petrochemical facility was reported at the plant of industrial chemical manufacturer Arkema in Crosby, about 30 miles northeast of Houston, where an explosion occurred as Harvey-caused power outages shut off cooling systems relied upon to keep toxic chemicals stable. The U.S. Environmental Protection Agency has launched an inquiry.
Less than a week after Harvey devastated the Houston area, the Texas Department of Transportation reported that more than 90 percent of roads that had been closed due to flooding had reopened. But trucking rates spiked as the price of diesel experienced its biggest one-week increase in six and a half years.
Rail operations of BNSF, Union Pacific and Kansas City Southern took a hit as well, with significant reroutings and delays, although some trains and facilities were being operated at normal levels within seven to 10 days of Harvey’s initial landfall.
As navigation channels began to reopen to ship traffic, shoaling due to silt and debris limited drafts of vessels able to get to some Texas ports, such as that of Beaumont, where ExxonMobil shifted to supplying a refinery via pipelines as opposed to tankers. At nearby Port Arthur, Motiva’s refinery, the nation’s largest, saw all units shut down for nearly two weeks due to floodwaters and lack of adequate crude supply.
A Sept. 14 report from the U.S. Army Corps of Engineers had this to say about the Port of Beaumont: “Every day the fourth-largest port in America – in terms of tonnage handled – is shuttered, millions of dollars are lost in economic value to the region and the nation. According to estimates from Sabine-Neches Navigation District officials, the Port of Beaumont, a major exporter of the nation’s petroleum products, has lost more than US$1 billion in revenue over a 14-day period since Hurricane Harvey hit the area.”
Col. Lars Zetterstrom, commander of the Corps of Engineers’ Galveston District, added: “We’ve never seen this amount of active survey vessels or dredgers working in the Texas navigation channels at one time.”
Coast Guard Engaged
U.S. Coast Guard activities – in addition to rescuing more than 11,000 Texans and more than 1,300 pets – have included restoration of navigational aids along ship channels throughout Texas so that vessels could safely pass at all hours of day and night. Efforts to completely clear channels and restore full navigability are anticipated to take months.
According to Coast Guard reports, more than 20,000 barrels of oil and other chemicals plus more than 25 million cubic feet of natural gas were spilled at Texas sites in Harvey’s wake. That included nearly 11,000 barrels of unleaded gasoline from a Magellan Midstream Partners facility along the Houston Ship Channel.
Meanwhile, Cheniere Energy’s Sabine Pass LNG terminal, on the Louisiana side of the Sabine River Navigational Channel, immediately across from Texas, continued production operations throughout the storm.
Cheniere also reported that early assessments by the Houston-based energy company and its engineering, procurement and construction partner, Bechtel Corp., of the Corpus Christi building site for a US$20 billion liquefaction and export facility “showed only minor cosmetic impacts” at what is the largest single privately financed construction project ever in the U.S.
Like hundreds of industry entities, Cheniere has made a significant donation to relief efforts – US$1 million to the American Red Cross in Cheniere’s case. The Bechtel Group Foundation announced a $500,000 bestowal to the Red Cross and a campaign to match donations to relief efforts made by colleagues throughout the world. Indeed, the companies engaged in the generous outpouring of support – from financial contributions to provision of free services and countless volunteer hours – are far too plentiful to enumerate.