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Few companies are watching Gustav more closely than Royal Dutch Shell

Gulf Coast businesses say they’re prepared for new storms

Trucks haul shipping containers out of the Mississippi State Port at Gulfport on Thursday, August 28, 2008, in preparation for Hurricane Gustav. Containers from the port were turned into battering rams causing extensive damage during Hurricane Katrina, prompting port officials to devise an evacuation plan for the containers.
Trucks haul shipping containers out of the Mississippi State Port at Gulfport on Thursday, August 28, 2008, in preparation for Hurricane Gustav. Containers from the port were turned into battering rams causing extensive damage during Hurricane Katrina, prompting port officials to devise an evacuation plan for the containers.
Pharmacist Larry Krohn, second from right, said they have been busy filling prescriptions at Beach Pharmacy in Gulfport, Mississippi, for customers who are stocking up on medications in anticipation of the arrival of Hurricane Gustav, Thursday August 28, 2008.Mike Walls, right, and Randy Summers fill sand bags at the Harrison County Sheriff's Department work center in Gulfport, Mississippi, Thursday August 28, 2008, in preparation for Hurricane Gustav.

Three years after Hurricanes Katrina and Rita slammed the U.S. Gulf Coast in rapid succession, and with another potentially dangerous storm possibly arriving next week, businesses in the region say they are much better prepared this time.

The National Hurricane Center believes Hurricane Gustav, now south of Cuba, could make landfall in the U.S. by Tuesday, although where isn’t yet known. So from the Florida Panhandle to Houston’s industrial belt, Gustav preparations are under way.

“I think everyone has a hurricane preparedness plan that we might not have had previously,” said Orlando Ciramella, trade development director for the port of Port Arthur, on the Texas coast. “We’ve got a command center now that is hurricane proof that was being constructed when Rita hit, so we do now have a secured command center where some of your emergency responders can meet.”

One change that Ciramella said has taken place since the 2005 storms: Businesses are speeding shipments to get goods into the supply chain ahead of the storm, instead of holding them with plans to ship afterward. That means shortages that hit in the wake of Katrina and Rita are likely to be less noticeable should Gustav hit the Gulf Coast.

“Some of our customers are talking about having us work this weekend … to get product into the supply line to feed their customers,” Ciramella said. “One of the things learned from Rita is that we have more advanced planning, better communications, and people are taking these storms a lot more seriously than we did in the past.”

A hard lesson learned from Katrina and Rita is that the rest of the U.S. depends greatly on the Gulf Coast, both for its energy production and for the barges that travel the inland waterway system. Those barges carry Midwest corn and soybeans for export, as well as coal and chemicals.

“Trust me, as soon as they even mention we start looking at it. We watch everything down there and try to react as best we can each day,” said Larry Daily, president of Alter Barge, a barge operator in Bettendorf, Iowa.

Iowa corn growers are nervously watching the weather reports because their harvest is less than a month away, and a major hurricane on the Gulf Coast could repeat the problems caused by Katrina and Rita in 2005. Those storms damaged Gulf ports and clogged shipping channels, backing up barge traffic hundreds of miles along the Mississippi and Missouri rivers.

Corn is already being harvested closer to the Gulf in states such as Arkansas, Tennessee and Missouri, and growers could be forced to put their crops into storage should a major hurricane strike the Gulf Coast next week.

Few companies are watching Gustav more closely than Royal Dutch Shell. About 80 percent of Shell’s U.S. oil and natural-gas production comes from the Gulf of Mexico, where it’s the top oil producer. Shell’s average daily gross production is equivalent to 510,000 barrels of oil.

Shell evacuated about 400 nonessential workers from its offshore oil-production sites in the Gulf on Wednesday, expecting that Gustav would gain strength over the warm, deep waters of the Gulf of Mexico later in the week. Shell began shutdown procedures Thursday for some of its sub-sea drilling units in the deeper Gulf waters that take longer to secure ahead of storms.

“We are working toward a full evacuation of Shell-operated assets in the Gulf,” Shell said in a statement Thursday, adding that by the end of Thursday at least 700 people will have been evacuated from Gulf production. “We expect to evacuate the remaining 600 personnel on Friday and Saturday.”

The Gulf Coast contains the greatest cluster of oil refineries in the United States, mostly in Texas and Louisiana. Refiners are readying their emergency plans in case they have to drain massive tanks to prevent leakage during a major storm.

“The process is comparable to a trip-wire – if it takes a plant 36 hours to empty its tanks of inventory and fill them with water, and if the plant is in the storm arc 36.5 hours out, shutdown procedures are enacted,” said Bill Holbrook, a spokesman for the National Petrochemical & Refiners Association in Washington, D.C. He added that “these kinds of events are different just about every time, and new variables can arise from the uncertainties that come with each storm.”

Homeowners are also fretting about the coming storm. The good news: More homeowners across the Gulf region now have flood insurance than they did when Katrina and Rita struck within weeks of each other in 2005.

“We’re better prepared to handle a catastrophe from an insurance point of view,” said Mike Chaney, Mississippi’s insurance commissioner, who also is the state’s fire marshal.

The insurance industry is pre-positioning claims adjusters and the state is preparing to move deputy fire chiefs and rescue personnel to coastal regions or neighboring states, depending on where Gustav eventually comes ashore.

“There are just a whole lot of little parts to this situation that I am better prepared to handle,” Chaney said, cautioning that “you are never prepared for a catastrophic event, but we are better prepared.”

Still, there are likely to be plenty of insurance problems.The Federal Emergency Management Agency said that although the number of households with flood insurance has risen sharply in some Gulf Coast states, the percentage of structures within flood hazard areas with insurance has actually fallen in Texas and Alabama and only held steady in Mississippi. Louisiana stands alone as showing progress on this score.

In August 2005, there were nearly 44,000 federal flood policies issued in Mississippi. As of June, that number had grown to nearly 78,000. But at the end of September 2005, about 23 percent of homes in flood zones had flood insurance; as of early this week that percentage remained virtually unchanged.

In Alabama, about 31 percent of properties within flood zones had flood-insurance policies in September 2005, while less than 26 percent of them do as of this week, according to FEMA. Texas boasted 44.5 percent coverage in September 2005, a figure that fell sharply to 36.5 percent as of this week.

Only Louisiana, hardest hit in 2005, showed marked improvement with about 56 percent of structures within flood zones having flood insurance today compared with less than 49 percent in September 2005.

“People think that if they survived Katrina they can survive anything. Maybe. Maybe not,” said Margaret Cottrill, a FEMA spokeswoman in Atlanta.

On the Web:

The National Hurricane Center:

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