Ready, Come Hell or High Water


If were really lucky, the 2009 U.S. hurricane season will be a dud, but this industry hasnt taken any chances. Hurricane preparation is a year-round exercise.

In its August update, the National Oceanic and Atmospheric Administration said it expected a near- to below-normal Atlantic hurricane season this year. Scientists emphasized that the seasons quiet start does not guarantee quiet times ahead. The season, which began June 1,typically peaks from August through October.

Rob Sorge, Shell Lubricants North American lubricants supply chain planning manager, noted that raw materials coming into a plant are a key focus of Shells business continuity and supply security plan. Shell operates a blending plant in Galena Park in the Houston area.

Whether were talking base oils, additives or package components – whatever might be coming in – we really are very careful about maintaining our safety stock levels, especially during hurricane season, he emphasized. Sorge explained that safety stock is additional stock beyond whats necessary to meet typical demand.

One lesson learned from experiences with previous hurricanes is that its important to make sure youre not manufacturing certain products or SKUs at just one location. Give yourself some contingencies, Sorge said. We also maintain a safety stock of our finished goods, and were making sure those are stored not just in the red zone.We need to have alternatives outside of what we consider a hurricane zone.

Additives maker Chevron Oronite operates a plant in Belle Chase, La., south of New Orleans. There are things you do like ballast the tanks so if a plant floods, the tanks dont float away, explained Jim Gable, Chevron Oronites Americas regional manager. We have a very large number of tanks at this facility, so we take particular care with product and equipment. In this small community we want to be good neighbors to folks nearby, so we spend a lot of care thinking about minimizing any environmental impacts.

Third Coast Terminals in Pearland, Texas, has a terminaling business and also does contract manufacturing and packaging. We just try to make sure everybody keeps their tanks full, and that weve got enough product in, that the tanks arent going to move, in case we do get a big wind, noted Grif Carnes, Third Coast vice president.

Additives manufacturer Lubrizol operates apolyisobutylene plant in Deer Park, Texas, and also a plant in Pasadena. Spokeswoman Julie Young said the companys normal procedures have served it well during hurricane seasons. Lubrizol has made some minor adjustments based on last years experience during hurricane season.

In the aftermath of Hurricane Ike, we were delayed in our start-up due to the lack of nitrogen, she explained. Many of the nitrogen plants were unable to come up as a result of cooling tower damage. Because of this, we have added steps to our preparation check lists to reinforce or secure cooling tower shrouds and to lock cooling tower fans in position.

And, she added, While not an enhancement, our global supply chain increases inventory of key products during hurricane season as well.

Houston-based J.A.M. Specialty Products operates a bulk warehouse in Beaumont, Texas, and a marine facility for barges and tugs in Galveston. General Manager John Filak noted the importance of keeping product in the area and available during hurricane season.

After the hurricane, were right there, so the product needs to be there, Filak said. We deliver a lot of fuel, as well as lubricants, so were working not only with petrochemical plants but also with the hospitals, NASA, people like that that have to be operating. If they have generators running, we need to supply them with product.”

Anticipating power outages is a key aspect of hurricane season preparations. In August 2005 when Hurricane Katrina hit New Orleans, Chevron Oronite was forced to close its Belle Chasse, La., factory partly due to on-site damage, but more due to devastation to the areas power and transportation infrastructures.

Chevron Oronites Gable noted that its Oak Point plant in Belle Chase is a co-generated facility that is off the grid, meaning it generates its own power. That means its critical after a hurricane passes to quickly relocate back to the plant the workers responsible for getting natural gas wells up and running, along with turbine contractor employees. We have talked with outside contractors and natural gas suppliers, about how can we help them get their people in right after the storm passes, Gable told Lube Report.

Shell Lubricants Sorge noted that companies in Houston know from previous hurricane experiences that they may have to go without power for as long as two weeks. We have to plan for that, he said. Thats why having an alternative location, being able to work from home or even outside of that region, where there is power, is a very important part of a contingency plan.

Third Coast Terminals Carnes noted the company bought a big generator right after last years storm hit. We were up and running in about half a day, he stated. This year we just make sure we run it every month, and that it works.

J.A.M.s Filak saidhis company typically puts its hurricane preparation plan in place in May each year. We had a good plan in place prior to last year, we reviewed it after the hurricane and made very minimal changes, he told Lube Report.

One change involved generators, Filak noted, saying the biggest problem with renting generators was the requirement to rent them for at least six months at a time. After reviewing it, we felt it was more cost effective to purchase our own, but with a permanent installation, Filak said. The only thing weve changed is that while weve rented generators [in the past], now weve purchased and installed our own backup generators to be completely stand-alone as far as power.

Employee safety is top priority in hurricane season preparations, including the ability to contact employees after a storm passes.

What folks seldom think about is how you account for those people in the back end of the crisis – how do you make sure all of your employees made it through and their families made it through, Chevron Oronites Gable explained. So we have elaborate systems set up to collect contact information before the season. Then we have hotlines that employees are required to call after the storm passes to report their status, and report their family situation, so we can make sure everybodys OK.

According to Gable, preparations include having off-site evacuation locations set up, and contacting other Chevron facilities to ensure Oak Point plant employees can workat the companys other facilities in Houston, Atlanta,or Tulsa, Okla., as necessary.

Shell Lubricants Sorge also stressed the importance of maintaining a business continuity plan. Everything from communications to preparations to practicing and training, having alternative locations set up, ready to go in event something would hit in Houston, he continued. Thats our business continuity plan we look at every year, try to make better as we go from year to year.

Third Coast has a hurricane team that gets together starting each April to update where all its employees live and clarify what is new to the operation since the previous years hurricane season. We look through things, and assign out tasks and duties,said Grif Carnes.

Practice Makes Perfect
LyondellBassell operates a Houston base oil plant, which has 1,000 b/d of API Group II and 3,600 b/d of naphthenic capacity. Last year the company shut down the plant in advance of Hurricane Ike, which hit the Texas coast Sept. 13. We have plans in place to respond and react, and the capability to respond after an event, LyondellBassell public affairs director David Harpole told Lube Report. Its planning and preparing that differentiates good response versus not-as-good response.

Chevron Oronites Gable said hurricane preparation is a year-round exercise. It starts in the winter time with review of the previous hurricane season and what we learned, he stated. We start gearing up really in April and May, setting up all our logistics. In May we organize the team and officially delegate roles and responsibilities – whos responsible for what. So when June 1 comes around, to start hurricane season, were ready to go.

Shells Sorge also cites the importance of reviewing the previous years hurricane season.

Following the hurricane seasons, well do a look back and talk about what went well each time we do this, and where do we have opportunities for improvement, Sorge said. And then during January, February or March were having those look-back sessions and discussions. We land on our plan every year, I would say in about April, and we implement that plan because the hurricane season really starts June 1. Throughout the June through October time frame, our plan is in place, and were ready to roll if something happens, and then it cycles back again.

In 2005, following Hurricanes Katrina and Rita, ExxonMobil created a Regional Response Coordination Team to improve its ability to respond to significant events, including hurricanes, that impact multiple business units simultaneously.

ExxonMobil spokesman Kevin Allexon said the company conducts very broad and comprehensive hurricane preparations every year. We learned a lot of lessons after the 2005 season – lessons that really helped us to cope with last years hurricanes as well, Allexon said. The overarching theme is that we prepare, we drill, and we obviously pay very close attention to the weather so that we can make sure we can put into action all of our various plans.

Spokesman Jeffrey Neu noted that ExxonMobil Chemical works with many groups within the company – production, transportation, refining, supply, marketing – on a daily basis within an integrated team process. During a hurricane, we just take that process and accelerate it, he told Lube Report.

With about four days to go before a hurricane hits landfall, the coastal refineries proceed either to shut down or to shift into whats called safe park, a reduced-output state that helps conserve crude oil and other key supplies that may soon be interrupted by the storm.

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