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Royal Dutch Shell Plc .com: Louisiana still in shock from hurricane as start of storm season raises new fears

From The Financial Times
By Sheila McNulty

Published: June 26 2006 03:00 | Last updated: June 26 2006 03:00

On Highway 23, a Chevron sign beckons motorists. Under the sign, a steady trickle of drivers fill up at a dilapidated pump that Jody Guilbeau brought from Alabama. His four pumps – and the rest of his station – were washed away in Hurricane Katrina last year.

Nearby, Mr Guilbeau has set up a metal shed, with vending machines, an ice chest and a cooler of beer. Packages of pecan pies, pain relievers and cigarettes line the shelves.

“We’ve sold a lot of beer out of here,” Mr Guilbeau said. “We’re selling way more fuel than we ever did, as we’re the only game in town.” At the rear, he is building a convenience store and restaurant while he awaits the delivery of new pumps.

For even as another hurricane season begins in Louisiana, most people in this hardest-hit area have yet to recover from the last. There are no other petrol stations, convenience stores or restaurants for miles.

This is oil country, and many who work in the nearby refineries, rigs and platforms lost their homes in last August’s hurricane and have yet to rebuild. Even the oil industry has had a hard time getting back to normal and it has the financial incentive to do so.

At Chevron’s Empire Terminal, several of the enormous storage tanks still are undergoing repairs from Katrina, which hit the surrounding peninsula with great 12ft storm surges on both sides.

“It showed no mercy,” said Kevin Gaudet, the terminal’s team leader.

One tank is lying in a crush of metal. Another is having its roof replaced, and a third getting a new floor. It is hard to fathom water damaging such enormous infrastructure – the biggest tanks hold 225,000 barrels of oil which, if measured as petrol, would be enough to fill 472,500 vehicles with 20 gallons each.

Yet the wreckage is so severe Mr Gaudet estimates it will not be completely repaired until November – and only if another hurricane does not hit. The terminal is only running at 80 per cent capacity, illustrating that many producers ran out of time before the bad weather returned.

“At this stage, they realise they can’t completely assess, repair or upgrade everything on time,” said Eugene Kim, senior analyst at Wood Mackenzie, the energy research consultancy.

While some are rushing to raise equipment and use extra rig clamps, others are focusing on the possible aftermath of another massive storm.

Shell, for example, has pre-wired facilities for satellite phones and back-up generators, while issuing employees a card with toll-free numbers for post-hurricane assistance.

Others have reserved helicopters and repair supplies from contractors.

“They don’t want to be caught off guard this time around,” Mr Kim said. Repairing the terminal, which handles 20 per cent of oil production in the Gulf of Mexico, has been a priority for Chevron. But it initially had to bring in supplies by barge because roads were impassable. It still houses workers on barges because their neighbourhoods were swept away.

“It just uprooted everybody in that little town,” said Allen Ennis, a senior pipeline operator, who once lived 10 minutes away.

At 59, he could not withstand another Katrina and abandoned the area his family had lived in for five generations for a home three hours drive away: “I still want to be there. My heart is there.”

He still works there – 12-hour shifts for seven days at a time. When he is working, Mr Ennis sleeps on a barge equipped with bunk beds, a dining facility and a TV room.

In August, Chevron will give up the barge and Mr Ennis will put a cheap mobile home on his nearby property for use during his working week.

Few are rebuilding their homes. Many left the area, and some are living in government-issue mobile homes

. All around is debris: a toddler’s car hangs from a tree branch; crushed and rusting chassis line the highway; and boats sit where people’s homes once stood.

Power was only restored about a month ago, and is so unreliable Chevron still uses generators.

The terminal runs manually, versus electronically pre-hurricane. Its office is undergoing repairs, and the tanks are being painted to stop rusting from the salt water.

Chevron has yet to replace its fence, so cows from a neighbouring pasture roam in the facility.

Just clearing the grounds was an undertaking, as evidenced by the mounds of crushed pick-up trucks, piping and cable piled nearby.

Further south, Chevron’s Venice Shore Base, a key jumping-off point for the Gulf, is quiet.

There is no sign of the 600 people who used to leave from here on boats and helicopters servicing offshore facilities.

“It is completely shut down,” said Max Ragan, marine transportation superintendent.

Chevron must repair the buildings that suffered extensive water damage. And it will send divers to inspect slips for debris, with hopes of reopening by November. The crane for which Chevron has been on a waiting list should arrive right on time.

Beyond the eventual revival of the oil business, many do not expect the area to ever fully recover.

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