Storm will put energy industry's changes to the test Energy industry's changes put to test

After building platforms up and reinforcing rigs, companies await Gustav's verdict

As Hurricane Gustav spun through the heart of the nation's offshore energy industry Sunday, oil and gas operators braced for the biggest test yet of improvements made in the wake of Katrina and Rita three years ago.

Energy companies at every step in the long supply chain that delivers fuel and power to millions of Americans said they learned the harsh lessons and addressed vulnerabilities exposed by past storms.

Gustav sliced through a region dense with production platforms on its way to Louisiana, although the 115-mph winds it packed Sunday afternoon were a far cry from the 150-mph winds it hit Cuba with Saturday.

Once onshore today, the threat becomes heavy winds and rain that could knock out power to critical energy infrastructure, including refineries and pipelines that carry gasoline far and wide. Port Fourchon, home to the vital Louisiana Offshore Oil Port and many vessels that could be called upon to make repairs at sea, also was in the path.

But energy companies said they are better prepared now to withstand a major storm than they were in 2005.

"The kind of damage we saw in those storms were a first for many in the industry," said Steve Baker, spokesman for Colonial Pipeline, which runs from Houston to New York. "It's put us in a much better position today."

Overnight commodities trading in Asia showed some traders were not convinced, but trading later today in Europe showed more faith.

At midday in Europe, light, sweet crude for October delivery was down 77 cents to $114.69 a barrel in electronic trading on the New York Mercantile Exchange. Earlier in the session, it reached a high of $118.25 before retreating..

The contract slipped 13 cents on Friday to settle at $115.46 a barrel. U.S. trading was closed today for Labor Day.

After hurricanes Ivan in 2004 and Katrina and Rita in 2005 destroyed or severely damaged more than 190 production platforms in the Gulf, oil companies made sweeping changes in traditional platform and drilling rig design, as well as in hurricane forecasting.

Katrina ripped the drilling rig from its clamps on Shell's Mars platform about 130 miles south of New Orleans and slammed the 1,000-ton structure back on the deck. Last year the repaired rig was returned to the platform with stronger, better clamps.

"The clamps that secure the rig to the platform could not stand up to Katrina. They've not just been made stronger, it's a completely different design," said Frank Glaviano, vice president of Shell Production Americas.

Other improvements included additional mooring lines for floating drilling rigs, many of which came loose in 2005, damaging seabed pipelines with dragging anchors. Decks of most fixed platforms near the coastline also have been raised to withstand higher waves, and standards are tighter for securing equipment.

Workers cleared

Several new installations will get their first encounter with a major storm, including the Anadarko-operated Independence Hub, which cranked up more than a year ago and produces 1 billion cubic feet of natural gas per day, or 2 percent of U.S. gas production. Other new facilities include a pair from Chevron that just shipped out in recent months.

They were built "in consideration of the kind of storm Katrina was," Chevron spokesman Mickey Driver said Sunday.

By Sunday, oil and gas companies with offshore facilities in the Gulf including Shell, Chevron, BP, Exxon Mobil and Anadarko Petroleum, had cleared workers from their installations and finished shutting in production by closing valves beneath the seafloor to stop the flow and ensure no leaks.

"It's a business where you have to start early even when you don't know what a storm's going to do," Glaviano said.

Houston-based Transocean and other offshore drilling contractors also evacuated workers and halted operations at moored rigs while moving other rigs and drillships out of Gustav's path after disconnecting them from seafloor operations.

Nearly all of the Gulf's crude oil production and more than 82 percent of its natural gas production had been halted, a government report said Sunday.

Once Gustav comes ashore, companies will fly over their structures to assess damage and ascertain whether they can land helicopters on the helipads. Glaviano said once officials ensure power and communications aboard installations are working, they can start returning employees to platforms.

Refiners get ready

Onshore energy companies were enacting emergency response plans they said had also been improved since 2005. The Gulf Coast is home to 42 percent of the nation's refining capacity, and several companies had shut down or were shutting down plants in anticipation of Gustav's arrival.

Energy information provider Platts reported shutdowns that equated to about 2.4 million barrels of U.S. crude refining capacity, or approximately 15 percent.

Valero has multiple cellular phone services at its plants as a safeguard in the event a provider goes down. The San Antonio-based firm, with refineries in Texas and Louisiana, also has identified workers at other facilities to help bring storm-damaged plants back online and has replaced poles with stronger and deeper-set ones, spokesman Bill Day said.

ConocoPhillips, the nation's second-largest refiner, strengthened buildings at its Alliance refinery in Belle Chasse, La., which was damaged in 2005. On Sunday, the company was shutting down its Alliance and Lake Charles, La., facilities.

Exxon Mobil was shutting down its Chalmette, La., refinery, as was Marathon Oil for its Garyville, La., plant.

Shell has two base camps to accommodate displaced plant workers, and the company also is keeping giant terminals supplied so it can direct more fuel to regions where residents are evacuating, company spokesman Stan Mays said.

The biggest difference from the company's pre-2005 storm planning and now?

"It wasn't as proactive, let's put it that way," Mays said.

The Associated Press contributed to this story.

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