Flood impact lessons vital for next construction wave
Second wave construction, engineering and planning will begin earnestly in 2017, and learnings on areas such as storage, raw materials, supply chain and safety from the challenges caused by Hurricane Harvey should spur strategic decisions, analysts told Petrochemical Update.
Allocations, force majeures, evacuations, explosions and fires at Texas chemical plants inundated by Hurricane Harvey’s floodwaters should be a wake-up call to the industry about improving safety and supply chain management, Ramanan Krishnamoorti, Chief Energy Officer at the University of Houston said.
“The industry must consider how to look at multiple barriers of defense when putting high capex manufacturing dollars in a hurricane and flooding prone environment,” Krishnamoorti said.
Krishnamoorti said these barriers include using information technology, rethinking the supply chain, improving front and back end engineering and improving storage options.
The American Chemistry Council (ACC) estimates there are 310 first wave projects currently under construction or planned and $185 billion in potential capital investment as of mid-year 2017, up from the 97 projects and $72 billion in March 2013. Additional second wave announcements have recently been announced as well.
Image: American Chemistry Council
According to the Federal Emergency Management Administration (FEMA), the storm, which tore through Texas and Louisiana on August 25th is responsible for the worst flooding in U.S. history, and is the costliest natural disaster in U.S. history.
Early estimates put the damage at $190 billion, more than Hurricane Katrina in 2005 and Hurricane Sandy in 2012 combined, according to AccuWeather.
As Texas and Louisiana work quickly to restart chemical plants, repair critical logistics and recover from the damage caused by Hurricane Harvey, the challenges are just beginning in terms of supply chain, allocations, and even safety issues.
“The industry does a remarkable job shutting down production and restarting when necessary, but it must go beyond that. It needs to put multiple layers of protection down,” Krishnamoorti said.
“The industry must do more than just protect the plants, but also protect the neighborhoods and really focus on safety, he added. "There has to be a realistic assessment of worst case scenarios and appropriate planning for the same.”
“These storms can create colossal damage to the plants and the neighborhoods that surround them. Many of the people living in these neighborhoods work at the plants.”
The disaster at Texas Arkema is an example of this, Krishnamoorti added. “They wanted to protect the product, but have lost more than product now.”
A 1.5-mile evacuation was necessary around the Arkema liquid organic peroxides plant in Crosby, Texas following fires and explosions after refrigeration systems at the plant failed to function following flooding.
The plant produces liquid organic peroxides which, if not refrigerated, can decompose and catch fire. Flooding caused by Hurricane Harvey impeded the cooling of the chemicals, in spite of mobilizing mobile refrigeration units.
The flooded Arkema plant in Crosby, Texas. Image: Arkema
“We must consider how to use engineering and best practices to solve both product and raw material challenges to avoid disasters and problems,” Krishnamoorti said.
The petrochemical industry has worked hard to modernize the refining and chemical infrastructure and emergency plans in recent years, especially as new construction and expansions have accelerated because of low cost natural gas liquid (NGL) feedstock.
Chemical facilities are designed and built with major storms in mind, the American Chemistry Council (ACC) said in a statement.
Specific construction elements can include reinforced manufacturing equipment that helps improve the overall structural integrity of a facility in accordance with industrial building standards for hurricanes. Dikes and levees are incorporated to reduce the risk of chemical releases.
“These plants are steel piping systems on massive concrete foundations, designed to withstand heavy storm surge. In storm surge, the plants might be at risk if water rises above the concrete foundation, reaching electrical motors. It might take a couple of weeks to change them out after the storm,” said Bill Gilmer, director of the University of Houston’s Institute for Regional Forecasting said.
If Harvey had come up the Houston Ship Channel or a storm surge of salt water had happened, it would be a different situation now. The Harvey attack on Texas is mostly freshwater flooding, not salt water, Krishnamoorti said.
The Mississippi River refineries that were down for six or eight months after Hurricane Katrina saw storm surge that reached their control rooms, requiring a rewiring of the plant’s electrical systems.
Harvey never generated this kind of surge in Houston, nor any threat of serious damage to these plants. The Ship Channel should restart slowly but normally, Gilmer explained.
Multiple barriers still needed
“The problem here will be the restart of complex continuous-processing systems, compounded by the fact that many Houston chemical plants are suppliers for one another,” Gilmer said.
In a research note on August 25 before the flooding hit Houston and Southeast Texas, Kevin McCarthy of Vertical Research Partners wrote, “By way of background, petrochemical plants are engineered to withstand hurricane force winds, so direct wind damage to plants is more the exception than the rule. In our experience, the primary risk tends to be potential for flooding, and Harvey appears quite dangerous.”
“The prospect of this level of water has high potential to wreak havoc with utilities, rails, ports, barge access and the ability of personnel to access sites across southern Texas,” McCarthy continued.
Houston Hobby airport under water after Hurricane Harvey floods. Image: Andi Vaughn
The chemical plants in Texas went through all the right steps to shut down, according to Krishnamoorti.
“Almost everywhere the problem is with storage. It is a less glamorous thing to consider, but it must be included in capex plans.”
Manufacturing has recovered quickly after major storms including Hurricanes Ike and Rita, now owners need to focus on front and back end engineering as second wave construction plans are laid, Krishnamoorti said.
“The industry can use data analytics to modernize and plan the supply chain better. We should strategize how to add additional barriers to protect and ensure our products and communities,” Krishnamoorti said.
By Heather Doyle