NEW ORLEANS -- A weakened Hurricane Gustav crashed Monday into the nearly deserted coast of Louisiana, making landfall west of New Orleans as a Category 2 storm, reported the Associated Press. City officials were optimistic the levees protecting the city would hold. Oil companies had wrapped up evacuations and shut down production Saturday as an intensifying Gustav churned toward the petroleum-rich waters of the Gulf of Mexico. Analysts said prolonged supply disruptions could cause a sudden price uptick for gasoline and other petroleum products.
The National Hurricane Center in Miami said [image-nocss] Gustav hit just before 10:00 a.m. Monday near the community of Cocodrie. Forecasters once feared the storm would arrive as a devastating Category 4 with much more powerful winds. The city's levee system has been only partially rebuilt since Hurricane Katrina struck three years ago. Wind-driven water was topping the Industrial Canal floodwall, but it had not breached as of Monday.
"We don't expect the loss of life, certainly, that we saw in Katrina," Federal Emergency Management Agency Deputy Director Harvey E. Johnson told AP. "But we are expecting a lot of homes to be damaged, a lot of infrastructure to be flooded, and damaged severely."
Tens of thousands were without power in New Orleans and other low-lying parishes, but nearly 2 million had evacuated the coast.
Katrina was a bigger storm when it made landfall in August 2005, and it made a direct hit on the Mississippi coast. Gustav skirted along Louisiana's shoreline at "a more gentle angle," said National Weather Service storm surge specialist Will Shaffer. Katrina knocked out the region's offshore energy infrastructure for several weeks and caused a spike in gasoline prices.
As of midday Saturday, slightly more than three-fourths of the Gulf's oil production and nearly 40% of its natural gas output had been shut down, according to AP, citing the U.S. Minerals Management Service, which oversees offshore activity.
Shell said it evacuatied more than 1,300 workers from 20 production platforms and other facilities by Saturday afternoon. BP also evacuated its workers Saturday. Shell said on Sunday production at the 236,000-bpd Norco refinery was shut and production reduced at the 285,000-bpd Port Arthur refinery on Sunday, said Reuters. The Motiva Port Arthur, Texas, refinery is operating at minimum production levels, according to a statement issued by the company. Motiva Enterprises cut staff at its 236,000 bpd-refinery in Norco, La., added Reuters.
On Sunday, Shell said the 235,000 barrel per day (bpd) Convent refinery was on standby, in which products continue to circulate through refinery units, but no production was being done. On Monday, Shell's statement did not explain why operations were shut at Convent, Reuters said.
Gasoline prices rose last week week for the first time in more than a month, and they continued upward Saturday. A gallon of regular gasoline jumped more than a penny overnight to a national average of $3.682, according to auto club AAA.
How long production remains halted depends on Gustav's path and timing. Frank Glaviano, a Shell vice president who oversees production, told AP the flow of oil or natural gas usually can resume rather quickly, as long as equipment is not damaged by the storm. "It usually takes a couple of days before we can start to get a significant amount of production back up," Glaviano said. "It can take several days for the subsea wells. Typically, about half of our production comes back rather quickly."
The U.S. Gulf Coast accounts for about 25% of domestic oil production and 15% of natural gas output, according to the MMS. The Gulf Coast also is home to nearly half the nation's refining capacity.
Gustav grew into a fearsome hurricane Saturday as it trekked toward the Gulf. Forecasters had said the storm could strike the U.S. Gulf Coast anywhere from the Florida Panhandle to Texas. Some models showed Gustav taking a path toward Louisiana and other Gulf states devastated by hurricanes Katrina and Rita three years ago. They knocked out the region's offshore energy infrastructure for several weeks and caused a spike in gasoline prices.
Shell said Saturday it was experiencing "extraordinary demand" for gasoline at some of its stations in south Louisiana as many residents evacuated. A few stations ran out of fuel, though Shell said it was trying to get them resupplied as quickly as possible.Valero Energy Corp., North America's largest refiner, said its Texas and Louisiana refineries were monitoring the storm closely but had made no decision as of Saturday morning to shut down operations or evacuate workers. Valero spokesperson Bill Day said the company had closed a handful of its gas stations in south Louisiana because of evacuation orders, "but we're also working with local authorities to provide fuel along evacuation routes."
ConocoPhillips said it was preparing its three Gulf Coast refineries—one in Texas, two in Louisiana—for potential high winds and water. "Appropriate planning is under way to allow for the safe shut down of refinery operations and the evacuation of refinery personnel as circumstances warrant," the company said.
Exxon Mobil Corp. also shut down its oil and gas operations by Saturday morning, Reuters said.
Knoxville, Tenn.-based Pilot Travel Centers LLC implemented a plan Saturday to make sure gasoline and diesel fuel remain available to its customers if Gustav disrupts its supply of fuel from the Gulf Coast, reported The Knoxville News Sentinel. Jolted by the chaos that Katrina inflicted on the supply chain in 2005, Pilot put together an emergency response plan to prevent a recurrence of a situation in which the company was within hours of seeing its fuel pumps throughout the East Tennessee region run dry.
"We have product pre-positioned in strategic areas so that we can access supply as soon as the terminals have opened," Pilot CEO Jimmy Haslam said in a prepared statement.
Also, Pilot Travel Centers in the path of the storm are being kept "topped off" with fuel so that "if stores are forced to evacuate, our tanks are full and ready to pump fuel as soon as the evacuation order is lifted," Haslam said.
As part of the Pilot emergency plan, hurricane supplies are shipped to its stores in the landfall area to help prepare them for the storm and make repairs afterward. Additional trucks are positioned to support increased fuel demand in affected areas and 17 additional truck drivers assigned to the coastal hurricane regions.
Pilot is also taking other measures, such as stocking up on ice, water and other supplies at its stores and extra inventory for its restaurants. Electrical generators are ready to be shipped to Pilot stores affected by Gustav once the storm moves out.
Some Mississippi stations reportedly ran out of gasoline on Friday, according to WAPT-TV, citing the state's petroleum association. Several stations in the Jackson area have had to place emergency orders to replace the fast-selling fuel, Gary Wilkerson with the Mississippi Petroleum Marketers & Convenience Store Operators Association told the news outlet. "A lot of people seem to be stocking up and putting extra gas in cans for generators," he said. "Because of the run on gas, most of our stores are selling more and running out quicker and have had to order more."
Drivers on Sunday were experiencing shortages in some areas of Louisiana, distributors told The Wall Street Journal. "We can't get all the fuel that we need," Jim Bickley, president of Cracker Barrel Convenience Stores, a Baton Rouge, La.-based gasoline retailer, told the newspaper. Shell said Saturday about 10% of its branded stations in New Orleans, Baton Rouge, Lafayette and Lake Charles ran out of fuel Saturday morning, according to the report.
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