Executive Briefings

Harvey's Toll on Energy Industry Shows Vulnerability

For years, much of the nation's refinery capacity and chemical production have been concentrated along the swamps and narrow inlets of the Gulf of Mexico, risking devastation in a monster storm.

Harvey's Toll on Energy Industry Shows Vulnerability

The pounding being endured by coastal Texas will probably be the biggest test of that risk so far, and energy experts say it raises questions about the area's role as a hub for such crucial and environmentally sensitive industries.

“The hurricane did what terrorists could only dream of and take a third of U.S. refinery capacity off line for days on end,” said Michael E. Webber, deputy director of the Energy Institute at the University of Texas at Austin. “Over the long term, the energy sector will have to consider the costs of additional hardening of the infrastructure on the Gulf Coast versus moving to a different location like the Eastern Seaboard.”

The Texas and Louisiana coasts took on their vital role because they link vast oil and gas resources, both inland and offshore, with Caribbean and Atlantic shipping channels. But the damage from Harvey, which arrived with hurricane force, has exposed a downside: vulnerability to storms that experts say are becoming more extreme because of climate change.

The damage, detailed in state and federal regulatory filings, is wide ranging: escaping gasoline from a submerged roof at a Phillips 66 storage tank; a sinking tank roof at Exxon Mobil’s vast refinery in Baytown, which resulted in the release of hazardous gases including volatile organic compounds and benzene, above permitted levels; and a lightning strike that disrupted operations and led to toxic-gas releases at a Dow Chemical plant in Freeport.

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The pounding being endured by coastal Texas will probably be the biggest test of that risk so far, and energy experts say it raises questions about the area's role as a hub for such crucial and environmentally sensitive industries.

“The hurricane did what terrorists could only dream of and take a third of U.S. refinery capacity off line for days on end,” said Michael E. Webber, deputy director of the Energy Institute at the University of Texas at Austin. “Over the long term, the energy sector will have to consider the costs of additional hardening of the infrastructure on the Gulf Coast versus moving to a different location like the Eastern Seaboard.”

The Texas and Louisiana coasts took on their vital role because they link vast oil and gas resources, both inland and offshore, with Caribbean and Atlantic shipping channels. But the damage from Harvey, which arrived with hurricane force, has exposed a downside: vulnerability to storms that experts say are becoming more extreme because of climate change.

The damage, detailed in state and federal regulatory filings, is wide ranging: escaping gasoline from a submerged roof at a Phillips 66 storage tank; a sinking tank roof at Exxon Mobil’s vast refinery in Baytown, which resulted in the release of hazardous gases including volatile organic compounds and benzene, above permitted levels; and a lightning strike that disrupted operations and led to toxic-gas releases at a Dow Chemical plant in Freeport.

Read Full Article

Harvey's Toll on Energy Industry Shows Vulnerability