By Dr. Latha Ramchand, Dean, Bauer College of Business, University of Houston and Dr. Ramanan Krishnamoorti, Chief Energy Officer, University of Houston
The last week of August 2017 will remain etched in Houston’s memory for a long time to come. The week started with a total solar eclipse that captured the nation’s imagination. Then, Harvey made landfall on Aug. 25.
Dumping more than 51 inches of rain in some areas, Harvey gave new meaning to flooding. Damaging more than 148,000 single family homes, 163,000 apartments and more than 500,000 vehicles, Harvey also is responsible for 88 fatalities.
The storm’s impact on the energy supply chain was significant, too. Airports, roads and freight were affected, including about 10% of the nation’s trucking business. Harvey shut down 22% of nation’s refining capacity, 25% of oil production in the Gulf of Mexico and half of both the production of organic chemical and plastics resin and of natural gas in the Eagle Ford. Fuel shortages (perceived or real) hit Houston, Austin and Dallas.
So how did the industry deal with the disaster? We interviewed key decision-makers from a dozen companies to find out what they had learned from the past and what should be changed before future storms. And we asked their thoughts on remaining and growing their organizations along the Gulf Coast, a geographic region prone to severe weather.
This wasn’t the industry’s first test, although past emergency management plans mostly addressed hurricane-force winds and storm surge. Massive rain and inland flooding on the scale witnessed during Harvey was unprecedented. In addition to facilities and operations, approximately 10% of industry personnel were impacted, as was access to offices, and industrial sites. In short mobility was curtailed for 7 days for over six million people. Harvey was unique.
After Superstorm Sandy, the Department of Energy (DOE) requested the National Petroleum Council (NPC) to study emergency preparedness, which led to a series of recommendations. These revolved around coordinating industry efforts with those of federal, state and local agencies to make sure emergency management plans reflect energy system interdependencies in responding to regional and national disruption.
The American Petroleum Institute has protocols for members to use during emergencies while maintaining compliance with antitrust laws that limit information-sharing across companies. During emergencies, the electric power utilities operate under rules set by the Federal Energy Regulatory Commission and in the state of Texas by ERCOT, which operates most of the state’s electric grid. In addition, in Texas the Fuel Team, a state level coordinating council, brings together industry and the public sector to help coordinate relief efforts, including the ports, Federal Emergency Management Agency, the Department of Public Safety, Department of Transportation, health care and local emergency management officials.
While the framework for disaster planning was in place, Harvey tested its effectiveness.