Bloomberg News

Isaac to Test Power System Upgrades After Katrina’s Blackouts

August 28, 2012

Isaac to Test Power System Upgrades After Katrina’s Blackouts

Waves from the Santa Rosa Sound crash over the Navarre Beach causeway in Navarre, Fla., on Aug. 28, 2012 as Isaac approaches the Gulf Coast. Photographer: Nick Tomecek/Northwest Florida Daily News/AP Photo

Hurricane Isaac is poised to provide the biggest test of power grid fortifications made in the wake of Hurricane Katrina to prevent storms from crippling pipelines, refineries and other critical U.S. energy facilities.

Phillips 66 (PSX:US) and Colonial Pipeline Co. are prepared to lean on upgraded emergency power generators if the lights flicker out. They’re among energy companies that have reassessed power supplies to avoid the disruptions caused when Hurricanes Katrina and Gustav slammed into the heart of the Gulf Coast energy industry near New Orleans in 2005 and 2008, respectively.

Refineries and pipelines were vulnerable to the storms because they were dependent on the electrical grid to run their plants and pump stations.

“These energy resources are all interconnected,” said Daniel Aldrich, a Purdue University professor who studies disaster recovery efforts. “The risk is of what we call a cascading failure.”

Energy and power companies including Entergy Corp. (ETR:US) and Southern Co. (SO:US) raced to complete preparations ahead of Hurricane Isaac’s expected landfall late today. Entergy, Louisiana’s largest utility-owner, was bracing for the slow-moving storm to bring a foot (30.5 centimeters) of rain and sustained winds near 75 miles per hour (120.7 kilometers per hour) that could last 30 hours or more.

Emergency Workers

Entergy requested 3,750 emergency utility workers from neighboring states to help respond to inevitable blackouts, said Mike Burns, a spokesman. The New Orleans-based company today began shutting down its 1,250-megawatt Waterford 3 nuclear reactor located 25 miles west of New Orleans.

“We have spent a significant amount of money improving the system since Katrina,” Charles Rice, president and chief executive officer of Entergy New Orleans, said at a press conference today. “The system is in about as good of shape as it could be. However, when you have winds of 50, 60, 70 miles an hour, I don’t care how storm-hardened the system is, there will be outages.”

Hurricanes Katrina and Gustav each disrupted oil and gas supplies throughout the U.S., sending prices skyrocketing. After Katrina blacked out New Orleans and much of southern Louisiana Aug. 29, 2005, gasoline prices spiked 17.4 percent between Aug. 30 and Sept. 5, according to Bloomberg data. Natural gas reached a record high of $15.378 per million British thermal units in the months after the storm.

Strategic Reserve

The U.S. tapped its Strategic Petroleum Reserve after Katrina halted 91% of production in the Gulf of Mexico and knocked out eight refineries due to flooding or power loss. Five more refineries in states as far north as Illinois and Ohio ran at reduced rates because of the loss of crude supply.

Prolonged blackouts delayed the restoration of refineries, pipelines, gas processors and other energy facilities that depended on the grid for power, according to a 2009 Energy Department report that studied the storms’ impact.

Millions of people were left in the dark as the storms knocked down thousands of miles of power lines and forced hundreds of substations and two nuclear plants to shut, the report said. On its worst day, Hurricane Katrina left an estimated 2.7 million customers to stew without power or air conditioning across four states, and Gustav cut power to about 1.3 million.

More Durable

Today, a total of about 6,000 workers were stationed outside Hurricane Isaac’s “cone of impact” to help with power recovery efforts, Eric Skrmetta, a commissioner with the Louisiana Public Service Commission, said in a phone interview. Transmission towers that were knocked down by Hurricane Gustav, causing widespread power loss, have been replaced with more durable structures, Skrmetta said.

“I don’t think we are going to have as much tower damage as we had with other storms,” he said. “We are going to have downed power lines, caused by falling debris, and more distribution lines down than transmission lines.”

Restoration may be delayed with Isaac because of the slow pace of the storm, which is moving northwest at 8 miles per hour, according to the National Hurricane Center.

“The challenge will be patience,” Skrmetta said.

Katrina knocked out power to five of Colonial Pipeline Co.’s 60 pump stations in 2005, crippling the company’s ability to deliver refined fuels to East Coast markets. Colonial now has eight truck-mounted generators stationed in Mississippi, each with enough power to run about 1,600 homes. The company can have the generators onsite within 24 hours to restore operations, Steve Baker, a spokesman for Alpharetta, George-based Colonial, said in an e-mail.

Expanding Backups

Phillips 66, the biggest U.S. refiner by market capitalization, added 4,000 kilowatts of backup power at its Alliance refinery in Belle Chase, Louisiana, after the storms blacked out the plant in 2005.

Phillips also built a mile-long wall to prevent flooding at the 247,000-barrel-a-day Alliance plant and has installed a pump station to drain any water, Rich Johnson, a spokesman, wrote in an e-mail.

With a newer, stronger power infrastructure following Katrina and Gustav, the main vulnerability may be in maintaining communications between the utility companies and local, state and federal officials including the Federal Emergency Management Agency, said Barry Scanlon, president of Witt Associates, a Washington-based disaster-management consultant. Improvements have been made in that area, as well, he said.

“We’ve got, from top and bottom, a much more prepared Louisiana, and frankly a better FEMA,” Scanlon said.

To contact the reporters on this story: Julie Johnsson in Chicago at jjohnsson@bloomberg.net; Mike Lee in Dallas at mlee326@bloomberg.net; Mark Chediak in San Francisco at mchediak@bloomberg.net

To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net


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Companies Mentioned

  • PSX
    (Phillips 66)
    • $82.92 USD
    • 0.31
    • 0.37%
  • ETR
    (Entergy Corp)
    • $75.32 USD
    • -1.03
    • -1.37%
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