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The nation’s oil and gas hub along the Gulf Coast is slowly coming back to life in the aftermath of Hurricane Isaac.

Offshore oil platforms are beginning to ramp up production as crews are returning. Refineries are beginning to restart units as power is restored and floodwaters are cleared out.

While a substantial amount of oil and gas production remains off line, production is coming back as expected. No major damage to oil platforms or refineries have been reported, and no further storm-related spikes in energy prices are expected.

The Bureau of Safety and Environmental Enforcement said Monday that 800,000 barrels per day of oil production remained offline, 58 percent of Gulf of Mexico production. About 100,000 barrels per day of production was restored between Sunday and Monday.

At the height of the storm 1.3 million barrels per day of oil production was suspended. The U.S. consumes an average of 19 million barrels of petroleum every day.

Companies have been quickly returning workers to platforms. About 12 percent of the region’s platforms were still without staff. Nearly all of the Gulf’s offshore platforms and rigs were evacuated last week.

Nine refineries in the path of Isaac are restarting or operating at reduced rates, according to the Energy Department. One refinery has returned to full operation and one, the Belle Chasse, La., refinery operated by Phillips 66, is still shut down because it is still without power.

The company said Sunday most of the floodwater had been cleared from the refinery and most refinery personnel had returned to work to prepare the plant for re-start when power was restored. On Monday, the company said there was no update to the refinery’s status.

The national average price of gasoline rose 11 cents last week as Isaac threatened the Gulf Coast and then swept ashore with high winds and flooding rains. But by Friday the price had leveled off to just under $3.83 per gallon. Monday, the average price declined — barely — by 0.2 cents, to $3.827 per gallon, according to the Oil Price Information Service, AAA and Wright Express.

That’s the highest ever price for gasoline for Labor Day, though it is 11 cents below this year’s high of $3.94 per gallon, set April 6.

Analysts say that gasoline prices should drift lower in the coming weeks as Gulf coast refineries ramp back up, the summer driving season ends and refiners switch to cheaper winter blends of gasoline.

Refineries in the path of the storm shut down or began operating at lower rates to protect their operations, depriving the market of millions of gallons of gasoline and sending prices higher. Refiners consume enormous amounts of electricity and they generate steam to cook crude oil into gasoline, diesel and jet fuel. If the process is interrupted suddenly by a loss in power or steam, fluids can get trapped in equipment and re-starting the refinery can take many weeks. Instead, operators often choose to slow or shut refineries before a storm hits so they can restart as soon as power is restored.

Onshore pipelines, ports and terminals have re-opened, though some are still operating with restrictions, the Energy Department said. Some sections of Shell’s offshore pipeline network have restarted, and others are expected to restart in the next few days.

Several natural gas pipelines remain shut, along with natural gas processing plants that depend on gas from the pipelines. The Energy Department reported that most operators anticipate gas flows resuming over the next few days.

 

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The company planning a 141-mile pipeline from Norco to Mississippi hopes to begin work in Lake Pontchartrain — the first stage of the year-long construction process — in the coming weeks. The underground 16-inch pipeline, which will carry gasoline and diesel, will run from the Valero St. Charles Refinery to Collins, Miss., where it will tie into other distribution pipelines. Valero and Kinder Morgan Energy Partners have formed a company called Parkway Pipeline to build and operate the pipeline.

Company spokesman Allen Fore said the project has received the needed permits from state agencies, but is awaiting a permit from the Army Corps of Engineers before it can begin construction. He said he understood the corps permit could be granted as early as next week.

“We’d like to begin by Aug. 13,” Fore said of the construction along the bottom of Lake Pontchartrain. But that date may be optimistic: The corps likely won’t rule on the permit for another four to six weeks, corps spokesman Ken Holder said.

“There had to be an environmental assessment,” Holder said of the agency’s vetting of the permit application.

In the lake, a jetting process will be used to create a trench and the pipeline will be placed in the trench. The pipeline will be a minimum four feet beneath the lake bottom. Workers will be housed on barges and will work 12-hour shifts. There will be no work at night, Fore said.

Fore said the company expects the work in Lake Pontchartrain to take two to three months.

The pipeline will begin at Valero and follow the guide levee along the Bonnet Carre Spillway into the lake, where it will follow an existing pipeline corridor that essentially runs from the southwest side of the lake diagonally toward the northeast side of the lake, running beneath the Lake Pontchartrain Causeway several miles from the north end of the bridge.

Causeway General Manager Carlton Dufrechou has not expressed significant concerns regarding the pipeline. And John Lopez, executive director of the Lake Pontchartrain Basin Foundation, said the company has been responsive to concerns voiced by his agency.

Lopez said he was pleased the pipeline would follow the spillway guide levee in St. Charles Parish rather than go through the environmentally sensitive Labranche Wetlands and that he has spoken with pipeline officials about building shutoff “redundancies” and developing an effective response plan in the event of leaks or spills.

“We did learn from BP,” Lopez said, referring to the malfunctioning blowout preventer that allowed millions of gallons of crude to flow into the Gulf of Mexico for 87 days after a massive oil well explosion in 2010.

Lopez said the lake is also a habitat for Gulf sturgeon and manatees, both protected species. A permit the state Department of Natural Resources issued to the pipeline company also notes that it runs through potential habitat for the endangered red-cockaded woodpecker.

Lopez said the refined gasoline and diesel flowing through the pipeline – it will have an initial capacity of 110,000 barrels per day – is actually more toxic to the lake than crude, but that it would evaporate more quickly in the event of a leak or spill.

Nonetheless, he said, “We think there is an acceptable level of risk here.”

The $220 million pipeline will emerge from Lake Pontchartrain near Fontainebleau State Park, and head north through St. Tammany and Washington parishes and Walthall, Marion, Jefferson Davis and Covington counties in Mississippi.

The permit from the state Department of Natural Resources says the company’s required mitigation for impacts to marsh habitat will be determined after one full growing season; that it must purchase 1.8 acres of cypress swamp habitat from the Timberton Wetlands Mitigation Bank to offset the 1.21 acres of bottomland hardwoods habitat that will be lost in construction; and that it must pay the state Office of Coastal Management $800 for the loss of 0.02 acres of fresh marsh habitat.

 

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Representatives of a company that wants to build an underground pipeline from Norco to Mississippi that would cross Lake Pontchartrain and cut through St. Tammany Parish met with the Mandeville City Council on Thursday hoping to ease any concerns of city residents. The proposed $220 million Parkway Pipeline project would lay a 16-inch line to carry gasoline and diesel from the Valero St. Charles Refinery 141 miles to Collins, Miss., where it would tie into other distribution pipelines, said Allen Fore, a spokesman for Kinder Morgan Energy Partners, which proposed building the pipeline.

The council and Mandeville Mayor Donald Villere asked company representatives to make the presentation after concerns arose among some Mandeville residents earlier this year after they saw news reports about the project.

But Fore and other company officials on hand were forced to field few questions from residents, whose concerns appeared to be minimal. Two questions came from the audience: one asking about wetlands impact and mitigation, and the other about how the pipeline would affect archeological sites in southern St. Tammany Parish.

Fore told the council that although the pipeline will skirt the far eastern edge of the city near Fontainebleau State Park and Pelican Park, it will travel only 0.3 miles through the city limits, affecting a single property owner.

“We just touch a little piece” of the city limits, he said.

Fore and other company officials said the project would affect around nine or 10 acres of wetlands in St. Tammany Parish. They said they do not yet know what the federal government will require to mitigate that impact.

Company officials also said the project will not disrupt any archeological sites.

The pipeline will run 39.21 miles through St. Tammany Parish and will generate about $2 million in parish property taxes in the first year of its operation, Fore said. It will have an initial capacity of 110,000 barrels per day, with the ability to expand to 220,000 barrels per day.

From Valero, which will be a partner in the project, the pipeline will roughly follow the guide levee in the Bonnet Carre Spillway and run along an existing pipeline corridor under Lake Pontchartrain. The pipe will be a minimum of four feet beneath the lake bottom.

Neither Carlton Dufrechou, general manager of the Lake Pontchartrain Causeway, nor John Lopez, executive director of the Lake Pontchartrain Basin Foundation, who attended the meeting at Mandeville City Hall, voiced any significant environmental concerns about the pipeline.

Fore said the company is still working on state and federal permits but hopes to begin construction in July.

 

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From gasoline to bubblegum, Louisiana’s oil refineries play a critical role in the products we use daily, but new documents show some of these refineries are putting millions at risk.

From New Orleans to Baton Rouge and down the Texas coast, refineries aren’t getting any younger and experts say the more they age, the more likely it is for a disaster.

“I could feel it through my eyes, through my nose, it was so intense.” James Jamison was working at an oil refinery in Philadelphia when he says he was exposed to hydrofluoric acid or “HF.”

“It was like a heatwave that came over me,” Jamison said.

HF is a chemical used in processing crude oil at more than 50 refineries around the country.

In Louisiana, nearly two-million people live within range of the state’s five refineries using this chemical.

Newly released oil industry documents say a worst-case scenario could be devastating; the closest HF plant to us here in Acadiana is in Port Allen and studies show HF can be fatal within two miles of its release.

And if the release isn’t contained, it could cause illness as far as five miles.

If this scenario were to happen in Port Allen, the affected area would encompass the entire Baton Rouge Metro-area.

However, Richard Metcalf with Louisiana Mid-Continent Oil and Gas Association says HF refining is much safer than some techniques used in the past like Sulphuric acid.

HF is also highly regulated by the EPA and while the “worst-case scenario” could happen, there are a number of safety precautions in place to minimize it.

However, there are safer processes available.

Some, using the same chemical but in a less toxic form.

The problem is, it could cost refineries upwards to a $100-million dollars to retrofit their plant.

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Environmentalists push job creation as safety initiative at refineries

The labyrinth of tubing, flashing lights and smokestacks at the

ExxonMobil Chalmette Refining facility represents an opportunity for

economic development for Anne Rolfes.

While it seems an unlikely stance for the founding director of the

Louisiana Bucket Brigade, a nonprofit aimed at reducing pollution

affecting communities near refineries, Rolfes says the Chalmette

facility and 16 others in the state represent an opportunity to merge

environmental goals of groups such as hers with industry objectives.

The Bucket Brigade this month released a report on more than 2,500

upset reports refineries submitted to the Louisiana Department of

Environmental Quality between 2005 and 2009. Upset reports are oil

refineries’ letters to the LDEQ describing facility disturbances where

emissions may have been released.

The group is calling on the industry to hire more trained full-time

workers and install updated emissions reduction technology to decrease

incident rates and emissions at refineries.

Industry met the criticism with concern that the analysis inflated

refinery incident rates, but some companies have attended meetings

with the Bucket Brigade to discuss its ideas.

Rolfes said the recommendations point toward jobs and business for

Louisiana, but refineries as a whole need to lend an ear.

“We actually think that industry could discover that they could be

more productive and more profitable,” Rolfes said.

Others say the effort could fit into larger efforts to position the

New Orleans region as a hub for sustainable business. While the focus

has been on attracting green industries, they say another part of the

equation is sitting down with regulators and industries already here

to grow jobs based on sustainable ideas.

Curry Smith, a Greater New Orleans Inc. spokesman, said the

organization is “looking at intersections of the environment and the

(regional) economy” to determine how sustainable jobs and industry

could be developed through its Green N.O. initiative.

Smith said that could mean helping encourage sustainable initiatives

among industries not traditionally considered green, such as oil and

gas.

But he said GNO Inc. and other economic development bodies can’t jump

into the conversation until there is a better understanding of the

role sustainability plays in the local economy.

One idea both sides of the refinery debate seem to agree on is the

adoption of flare gas recovery systems, which capture chemicals

released at refineries instead of burning them.

Environmental advocates like the idea because it nearly eliminates

emissions from seeping into the air from the flare. The benefit for

oil companies willing to invest in the systems is keeping and reusing

valuable chemical product.

Rolfes added

that design and construction of the systems creates work for hundreds

of contractors and exposes the local economy to newer technology.

“Industry doesn’t deny that it’s a benefit,” said Richard Metcalf,

director of environmental affairs at the Louisiana Mid-Continent Oil

and Gas Association, but the upfront cost is a barrier to adoption.

However, tighter regulation on emissions in states such as California

has made the cost worthwhile, he said.

Metcalf said the industry is willing to sit down and discuss economic

development options for quicker adoption and points to a handful of

Louisiana refineries that have already started the process.

Bob Kent, vice president of refining at Citgo Petroleum, said the

company installed recovery systems on two of more than 10 flares at

its Lake Charles refinery after weighing the multimillion dollar cost

against long-term savings and factoring in the likelihood of Louisiana

developing stricter emissions regulation in the future.

“We said, ‘Rather than wait until there’s a law that forces us to do

this, we should start doing this sooner,’” Kent said.

The decision process was the same when Marathon Petroleum installed a

vent gas recovery system during the $3.9 billion expansion of its

refinery in Garyville, spokesman Robert Calmus said.

“We are considering and looking at the rest of our operations and how

to push out those controls,” Calmus said, adding that Marathon has

participated in discussions with the Bucket Brigade.

Environmental groups and refinery workers say emissions control and

safety can be as simple as designing programs that encourage companies

to hire more skilled workers. In its analysis of LDEQ upset reports,

the Bucket Brigade traced about 30 percent of problems to piping or

tubing and equipment failure.

An emphasis on cost savings has consolidated jobs at refineries, which

means maintenance is prioritized and sometimes put off, causing

accidents, said John Link, a staff representative for United

Steelworkers in Louisiana. The union partnered with the Bucket Brigade

for its December report.

Link said more skilled hires would prevent those decisions from having

to be made.

“More people in our community working in those plants is good for the

community, the tax base and the reliability of the facilities,” he

said.

The union points to positive initiatives such as the Incumbent Worker

Training Program, a state program that pays for training of hired

workers. Partially funded apprenticeships and high school vocational

programs might encourage more skilled hires, Link said.

Metcalf with the Oil and Gas Association said refineries size their

staff to the work that needs to be done and hiring contractors gives

them flexibility. He added that maintenance decisions are a complex

formula of cost and risk.

For Rolfes, breaking the cost-driven mentality is the Bucket Brigade’s

largest obstacle.

“The incentives given to the refinery management are all about

quarterly profits and production,” Rolfes said. “They’re thinking

three months down the line … what we’re saying is take the long view

here.”

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The accident record should be considered as a warning of future disasters in light of the BP Deepwater Horizon disaster, said Anne Rolfes, founder of the New Orleans-based Bucket Brigade.

“What we’re finding in refineries’ own data is that they’re having 10 accidents a week,” she said. “That’s a big red flag to us. We don’t want to have another situation like BP, where we have to stand up and say, ‘We told you so.’”

Doing a better job of addressing the causes of those accidents, by instituting better planning for serious weather events and better maintenance programs for aging piping and equipment, could result in major investments in Louisiana by the refineries’ parent companies that would also add jobs, they say.

Rolfes said the report, “Common Ground II: Why Cooperation to Reduce Accidents at Louisiana Refineries is Needed Now,” is the second in an attempt to counter what she said has been a “knee-jerk response from government and industry that any source of attention to this problem will be bad for the economy.”

Chris John, executive director of the Louisiana Mid-Continent Oil and Gas Association, which represents many of the refinery companies, did not respond to a request for a comment on the report. Instead, he cited his organization’s refusal to meet with federal Environmental Protection Agency, Bucket Brigade and other environmental groups following release of the organization’s first Common Ground report in February because that report contained numerous errors, and because of concerns about ongoing litigation against individual refineries and potential anti-trust litigation against the industry.

In his letter to EPA officials, John pointed out that the industry was under great pressure from the federal government and state governments to get its refineries running after hurricanes, when many of the releases occurred.

Officials with the state Department of Environmental Quality raised questions about some of the numbers in the report, and defended the accident responses of both the department and the refineries.

For instance, companies are required to routinely update reports to the state that outline what might be a worst-case accident, said Kermit Wittenburg, technical advisor for the department’s air permitting program.

“They have to come up with scenarios and look for engineering techniques in order to minimize or eliminate as many as possible,” he said. “The regulations also say that, hey, if something happens, you need to go back and rethink your plans and set up different situations and methodologies, based on your experience.”

chalmette_refining.jpgView full sizeMatthew Hinton, The Times-Picayune archiveChalmette Refining was photographed Sept. 6.

The accident rate of 10 a week was based on information reported to the state Department of Environmental Quality from 2005 to 2009 by the refineries. ExxonMobil’s behemoth refinery in Baton Rouge reported 569 accidents for the five years, the most in the state and representing more than two accidents a week. Ranking second was the company’s Chalmette Refining Co. in St. Bernard Parish, with 419 accidents. A Citgo Corp. refinery in Lake Charles tallied 386 accidents, ranking it third.

The report concluded, however, that refinery accident data is being underreported, and surmised that the number of accidents is likely far higher than shown in the report.

The ExxonMobil Baton Rouge refinery, Chalmette Refining and the Citgo refinery also ranked first, second and third, respectively, in failing to list the cause of their accidents in their reports to state officials.

“In explaining the cause of an accident, the most common response given by Louisiana refineries was ‘No Information Given.’ Such imprecise reporting is not only evidence of a poorly run refinery, but also inhibits understanding of the cause and potential solutions of accidents,” the report said.

The second-biggest cause of accidents was equipment failures, followed by failures of piping or tubing.

The report cited Chalmette Refining as an example, with 11 percent of its accidents and its emissions into the air resulting from problems with piping or tubing.

“In 2009, the Occupational Safety and Health Administration cited Chalmette Refining for ignoring nine safety recommendations on piping,” the report said. “The OSHA investigators found that problems with pipes ‘were still not resolved six years later.’”

Following the death of Chalmette Refining employee Gregory Starkey on Oct. 6, the company reported that the pipe Starkey was working on had been temporarily clamped for two weeks: “Gas line … started leaking sour gas to the atmosphere through a previously installed clamp.”

The report blamed part of the problem on deferred maintenance and industry cost-cutting that has resulted in the layoff of older, more experienced workers.

The hiring of new, younger workers also has resulted in a workforce not willing to press management by taking “stop work” measures — where any employee believing there’s an unsafe condition can call for a plant shutdown — for fear of losing their jobs, said United Steelworkers staff representative John Link Jr.

“Just saying you have stop-work authority and actually having people that will step up and risk losing their job to stop that work, that’s something else,” he said.

Many of the accidents result in the rerouting of toxic and flammable material to flares, which burn it off, either during the accident itself or while restarting operations.

The report recommended that the industry implement changes that would minimize the amount of material shunted to flares by capturing and recycling gases. It said such practices already have been adopted in California’s Bay Area Quality Management District in San Francisco, by Lion Oil Co.’s El Dorado, Ark., refinery, and by Dow Chemical Co. in Freeport, Texas.

It also recommended a variety of measures to reduce weather-related accidents, including building backup power systems and revised guidelines on when and how to shut down facilities prior to hurricanes.

One of the biggest weather-related chemical releases occurred when Hurricane Gustav hit the ExxonMobil refinery in Baton Rouge, said Mariko Toyoji, a Bucket Brigade research assistant.

“They couldn’t decide whether to shut down or not, and that’s understandable, but they decided not to and a cooling tower blew down and almost 600,000 pounds of sulphur dioxide (was released),” Toyoji said. “Understandably, it’s a complicated situation because it’s a storm. But there’s no evidence that after that problem, they then went back and analyzed what we can do better.”

A spokesman for ExxonMobil said he was unable to address the report, but defended the company’s record.

“While I won’t speak directly about this report, I can say that ExxonMobil’s goal is to drive injuries, illnesses and operational incidents with environmental impact to zero,” said William Hinson, public affairs manager for Chalmette Refining.

“We take our compliance responsibilities seriously and we routinely report emissions to the EPA and the Louisiana Department of Environmental Quality, as appropriate, in a consistent and timely manner and comply with all laws, regulations and permits,” he said.

The report also recommended upgrading emergency response measures to assure that neighbors adjacent to the plants are provided with the same information as first-responders.

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