Houston is one hurricane away from an oil and gas disaster

E&E News

5 days ago

HOUSTON — The Gulf Coast — and its multibillion-dollar oil industry — is no stranger to hurricanes.
Hurricane Beryl last year caused widespread power outages that in some cases lasted almost two weeks. Hurricane Harvey in 2017 flooded Houston homes and buildings with nearly 50 inches of rain. And 2008's Hurricane Ike sent a storm surge though Galveston Bay that resulted in about $30 billion of damage.
But all those storms would pale in comparison to the major hurricane experts say will one day hit the nation's most critical oil refining and petrochemical processing hubs.
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A Category 3 hurricane hitting just south of Houston could send a two-story storm surge through the city, becoming what experts and local leaders say could be one of the most catastrophic events in history.
'The biggest problem is that we're talking about storms that are hard for people to imagine happening because we've not really seen it,' said Rice University professor Jim Blackburn. 'So we really don't have benchmarks, and it's like with a lot of climate-related things — everyone says that's just not possible, and then it happens. That's what the reality is. '
Houston and the Gulf Coast are home to 55 percent of the country's petroleum refining capacity, and Houston alone helps process about 2.53 million barrels a day of the country's oil. But this region is uniquely vulnerable to hurricanes and storm surge, which have become increasingly more common and damaging in recent years thanks, scientists say, to climate change and a warming Gulf.
The implications of a major hurricane wiping out part, or most, of one of the crucial energy-producing hubs along the Gulf Coast could have national and global ramifications. Even Hurricane Harvey, which shut down some refineries and petrochemical plants for a couple of weeks, was felt globally.
'Harvey really impacted production, and it impacted exports, which Latin America and Mexico and specifically in Brazil depend heavily upon the U.S. for [oil-derived] products,' said Debnil Chowdhury, vice president of North and Latin American refining and marketing at S&P Global. 'It affected pipeline movements from the Gulf Coast to the Northeast and the Midwest. It had significant impacts kind of throughout the country and price impacts as well.'
Meanwhile, decadeslong efforts to better protect the Houston ship channel and other infrastructure along the Texas Gulf Coast have been slow going.
A massive coastal protection plan that would include floodgates, levies and bolstered sand dunes has been studied and tweaked since 2008, when the Category 2 Hurricane Ike highlighted the vulnerability of infrastructure in Galveston Bay and the Houston Ship Channel.
Congress approved that plan in 2022 but didn't fully fund it. One of the plan's main linchpins — a system of massive floodgates known locally as the Ike Dike — has only attracted $500,000 in federal funding.
While the region waits for more federal funding, leaders worry about what could happen to the unprotected infrastructure in the Houston region as hurricane season gets underway this summer.
Officials with NOAA expect above-normal hurricane activity this season, which officially began Sunday. Meteorologists with NOAA estimated that about six to 10 storms will become hurricanes this hurricane season, with three to five of them becoming major hurricanes, or Category 3 and above.
'It's not if we get another hurricane — it's when we get another hurricane,' said Republican Rep. Randy Weber, whose district includes Galveston.
The worst-case scenario
The Houston metro region has already experienced the deadliest hurricane in U.S. history. In 1900, a Category 4 storm hit Galveston Island, killing an estimated 8,000 people and wiping out nearly all structures.
That storm hit decades before oil and gas infrastructure began to line the Texas coast.
Now, nine oil refineries stretch from Baytown on the northeastern portion of Galveston Bay to Texas City on the southwestern end. More than 7,000 manufacturing facilities are spread across the Houston metro region, according to the Greater Houston Partnership, and the region accounts for more than 44 percent of the nation's overall petrochemical manufacturing capacity.
Researchers and scientists at Rice University's Severe Storm Prediction, Education and Evacuation from Disasters — or SSPEED — Center have studied what could happen if a major hurricane were to hit the region and its massive petrochemical and energy complex.
In their worst-case scenario, a Category 4 or 5 storm would hit the Freeport area, which is located about 60 miles south of downtown Houston. That level of storm could create a 20-plus-foot storm surge, sending it up through Galveston Bay into the Houston Ship Channel, Blackburn said.
An estimated 2,000 tanks — storing everything from unrefined crude to petrochemicals — would be flooded with a 22- to 24-foot storm surge, according to modeling by Rice University researchers. The contents of the tanks would spill out into the gushing water and eventually be sucked out to sea by way of Galveston Bay.
Then there are the industrial containers.
'There's thousands of them, and those containers will float,' Blackburn said. 'And if those float and get floated on the incoming surge, they will become battering rams. Those will be breaking the sides of tanks; they will be potentially hitting chemical infrastructure.'
In short, it would mean unprecedented chemical releases into the air and water and mind-numbing damage to one of the country's largest energy and petrochemical hubs.
The death toll could be in the hundreds or thousands, depending on the evacuation orders and the ability to get people out ahead of the storm, Blackburn said. On top of that, widespread damage to refineries and petrochemical plants could take months or years to repair.
Some facilities may never reopen in that worst-case scenario. Phillips 66's Alliance Refinery in Belle Chasse, Louisiana, for example, permanently shut down after it was flooded with several feet of storm surge that breached the refinery's levee system in 2021's Hurricane Ida, a Category 4 storm.
The impacts of similar closures or even temporary outages in Houston would be felt far beyond Texas and the Gulf Coast.
National impacts
About 30 percent of all U.S. oil refining capacity went offline in the days before and after Hurricane Harvey came ashore near Corpus Christi in 2017, according to an S&P Global oil market briefing published at the time.
The hurricane parked over Houston for nearly a week. It took another several days for storm water to begin receding and for refiners and petrochemical plant operators to see the extent of the damage, said Patrick De Haan with fuel-price-tracking service GasBuddy. He said most refineries in the Houston region were down for about two or three weeks before picking back up production.
The average cost of a gallon of gasoline rose by about $0.50 to $0.75 nationally, De Haan said. But few, if any, refineries experienced substantial permanent damage.
'You had a month or a couple of weeks where prices spiked, and then it probably took another six to eight weeks of them declining' before they got back to their pre-storm levels, DeHaan said.
In a worst-case hurricane scenario, he said, the national average price for gasoline could rise by $0.50 to $1.00 a gallon if Houston's refining capacity dropped off.
How long that price spike would last would depend on how quickly refineries and other infrastructure could come back online.
The price shocks for products made from petrochemicals — everything from fertilizers to plastics to synthetic fibers and soaps and rubbers — could be more pronounced.
Chowdhury, with S&P Global, said the Houston region is the primary storage hub for all petrochemical feedstocks in the United States. Pricing for most of those chemicals, for example, is set at a storage hub in Mont Belvieu, located just northeast of the Houston Ship Channel, Chowdhury said.
Hurricane Harvey's impact on that sector was felt globally, Chowdhury said.
'The U.S. is the No. 1 exporter of propane and butane and naphtha as petrochemical feedstock as well. [Harvey] impacted India, because India actually imports butane from the Houston area for cooking. China, Japan [and] Korea import propane and butane for petrochemical stock, right? And India also imports ethane as well from the U.S Gulf Coast,' Chowdhury said.
Those impacts to the petrochemical and fossil fuel supply chains could be more pronounced if a storm were to hit now, Chowdhury said. That's because the industry has become more concentrated on the Gulf Coast as petrochemical plants and refineries in the Northeast and California shut down due to local pressure and state environmental regulations.
'You can argue that we're in a slightly worse spot now than in Harvey,' Chowdhury said, referencing industry consolidation in Houston and the Gulf Coast.
Funding lags
In 2022, Congress gave the Army Corps of Engineers and Texas the green light to build the Texas Coastal Project, the massive engineering effort that spans from the Louisiana border to Brownsville, Texas.
The Galveston Bay Storm Surge Barrier System is among the project's most ambitious aims. It includes the Ike Dike — a system of floodgates at the mouth of Galveston Bay — as well as surge gates at the end of the bay, 43 miles of beefed-up sand dunes, improvements to existing seawalls and an ecosystem restoration plan.
The system comes with an estimated price tag of about $34 billion — 65 percent of which is to come from federal sources and 35 percent of which is to come from the state or nonfederal sources.
But while the Texas Legislature has appropriated more than $1 billion toward the project, Congress has only handed over $500,000. The federal money went to the Army Corps to study and design beach breakwaters, which are permanent structures like large rocks or concrete that slow waves and protect the shoreline from erosion.
The House Appropriations Committee in 2023 denied a $100 million funding request made by Weber, the representative whose district includes Galveston. None of the already allocated state and federal funds can be used for construction until the project and the Army Corps receive a 'new start' designation and federal funds specifically earmarked for the project's construction.
That can happen in two different ways. Congress can specifically allocate funding through an appropriations bill for the project or give the Army Corps a lump sum for construction projects. In the latter case, the Trump administration would have to allocate some of the construction funds to the Galveston Bay Storm Surge Barrier System or the Texas Coastal Project.
Trump's fiscal 2026 budget request, which was published Friday, did not include any funding for those projects.
But some are hopeful the project could ultimately be funded in the fiscal 2027 budget, including Michel Bechtel, mayor of Morgan's Point in Galveston Bay. Bechtel is also chair of the state-created Gulf Coast Protection District, which serves as the required nonfederal partner for the Galveston Bay portion of the Texas Coastal Project.
'This entire summer, we're going be going up to Washington, D.C., to advocate for this project,' Bechtel said. 'We're going to be hitting appropriation staff on the Hill, energy and water folks, as well as the [Office of Management and Budget].'
He said the sell is simple: The regional and national implications of losing the manufacturing capacity are too much to risk.
'I think the manufacturing capacity, particularly in the oil and gas realm, and the national security implications that that are involved would be our best advocate,' Bechtel said. 'I mean, we manufacture 80 percent of the military grade jet fuel for the nation — 80 percent just in our region. We think that's going to be an important talking point.'
He said his office has been in contact with the Trump administration and that the president's pro-oil-industry stance and favoritism towards Texas could help the funding pitch.
But even if the program gets funding, it would still take 20 years for most of the projects to come to fruition, depending on how steady the flow of funding is throughout construction. The Army Corps said that projects would likely come online piecemeal, with some of the larger projects like the Ike Dike taking the longest to complete.
Last week, the SSPEED Center at Rice University also published a separate plan, called the Galveston Bay Park Plan, that would include a 25-foot barrier built within the Bay to protect against catastrophic storm surge, as well as more floodgates closer to the actual ship channel.
That plan would piggyback off of an already planned Houston port project that includes dredging large parts of this ship channel in Galveston Bay. Blackburn said officials could use the material that was dredged up to create the sea wall, and local governments and private partners could fund raise for floodgates that could be closed before an impending storm.
While both projects await funding, the Houston metro area and its energy and petrochemical complexes remain as unprotected as they were in Ike.
'I hope it doesn't take another catastrophe like Hurricane Harvey or Hurricane Ike to get people's attention, because, Lord forbid, we could go through some death and destruction,' Weber said.