US chem execs review lessons learned from Harvey

Source: ICIS News


HOUSTON (ICIS)--Executives at the major chemical companies with plants along the US Gulf Coast shared the lessons learned during Hurricane Harvey, explaining how they prepared for the storm and what they will do for the next one.

The panellists made their comments on Monday during a forum held by the American Chemistry Council (ACC) and the Texas Chemical Council.

Hurricane Harvey was different from previous storms because much of the damage was because of water and flooding. In past hurricanes, wind caused much of the damage and disruption.

Harvey also interrupted chemical operations for a much larger part of the Gulf Coast, and those disruptions persisted longer than previous storms.

Once hurricane preparations started, the top priority for Covestro was the safety of its employees, said Jerry MacCleary, CEO of Covestro LLC, the company's North American business. Without them, Covestro cannot shut down, restart or operate its plants.

The next priorities were neighbours, first-responders, regulators, customers and shareholders, in that order, MacCleary said.

The key to keeping so many different groups informed about Covestro was having a structured system already in place, he said. Covestro had a liaison officer who acted as a gatekeeper to ensure that what the company was telling the public was done clearly and consistently. Social media proved to be effective and efficient.

Dow Chemical started daily communication between corporate and plant leadership five days before the hurricane made landfall, said Jim Fitterling, chief operating officer.

During hurricane calls, LyondellBasell CEO Bob Patel said one of his biggest challenges was resisting the urge to get involved. It was important to let the discussions proceed naturally and allow the company's leadership to lead.

"You can imagine as the CEO, you want to weigh in on every decision," Patel said. "But on the other hand, that's why you have leaders. You have to let the experts lead and do what's right."

Patel still listened in on every call, he said. This allowed him to be informed on how the company was responding to Harvey. He then relayed that information to the board.

Since Patel listened in on the call, his management did not have to give him separate briefings, he said. Instead, they could focus on Harvey.

Ken Reid, senior vice president of engineering and maintenance for BASF, said the company relied on its other plants in North America to help its Gulf Coast plants deal with the storm.

Teams of BASF employees at other sites bought hardware supplies, creating a warehouse that its storm-affected workers could use to get materials and repair their homes.

For BASF and the other companies, it was critical to provide their employees with as much help as possible so they would not have to worry about repairing flood-damaged homes or replacing their automobiles.

Dow's corporate office oversaw the provisioning of shelter, food and water so that local management could focus on issues specific to their sites, Fitterling said.

The duration of Harvey tested the limits across the board, from food needed for workers and contractors to diesel supplies, Fitterling said. Not only did the storm last longer than previous hurricanes, the flooding it caused further delayed recovery efforts.

One of the difficult decisions companies have to make during such storms was whether to shut down plants or to keep them running.

Patel compared shutting and restarting a petrochemical plant to landing and taking-off an airplane. Both are most vulnerable to accidents during those two processes.

As a result, chemical companies have to be especially deliberate before deciding to shut down a plant, Patel said.

In such cases, Patel stressed again that he allowed  the leadership of the plants to decide whether the company should shut  down a particular plant.

They have the best in-depth knowledge of the plants and the outside circumstances affecting their operations, he said.

If companies do decide to shut down a plant, they do it as safely as possible and then they move on, Patel said. "You don't make second decisions."

Because of the potential dangers of shutting down and restarting plants, it is sometimes safer to keep operations running through a storm, Fitterling said. Dow did this for some of its plants. For this to work, having enough rail cars was critical to keeping these operations running.

For the company's Seadrift operations, there was never a question about keeping it running, he said. "Shutting it down was the safe thing to do."

In addition to safety, companies also have to consider the degree of integration among plants before making a decision to shut down operations, he said. If enough plants are shut down, that could also shut down the gas-supply system.

Different companies often have operations at the same site, so their plans also have to be considered before shutting down, Fitterling said.

"You have to look at a lot of things, not just your own plants," Fitterling said.

Patel said, "It is not always obvious that shutting down is the safest thing to do."

Companies began applying the lessons learned from Harvey almost immediately. Shortly after Harvey, Hurricane Irma hit Puerto Rico and Florida.

BASF had operations there, so Harvey had already sharpened the company's readiness to deal with the storm, Reid said.

Further out, Patel stressed the need for more further improvements to the region's infrastructure, be it dredging the Houston Ship Channel or building the coastal spine, which would protect the region from storm surges from future hurricanes.

Rail infrastructure also needs to be bolstered, Patel said.

Fitterling said a lot of disruptions were caused by flooding to pump systems and generators, so those will be targeted to prepare for the next storm.

Drones could become more useful for future storms, Fitterling said. Dow used one to find the best route to access its Seabrook site, where many roads leading to the complex were flooded. "The drone helped us figure out how we could get to the plant."

Harvey stressed how important smaller ancillary services are for the operations of plants, Patel said. LyondellBasell now has a better inventory of these small but critical services, which should allow the company to restart operations even sooner after a storm.

Plant disruptions along the Gulf Coast can have wide-ranging effects because it is the petrochemical hub off the US, and many companies have at least one major complex in the region.

Dow Chemical has six sites in Texas and two in Louisiana, Fitterling said. In all, a third of its global footprint is in those two  states.

Moreover, about 30% of the output from those Dow's sites is exported, Fitterling said.

As a result, disruptions in Texas and Louisiana can affect the world.

For Covestro, its operations in Baytown, Texas, is the company's largest manufacturing site in North America and makes up one of the company's three global sites.

For BASF, Texas is home to 10 of its sites.

Despite the Gulf Coast's vulnerability to hurricanes, this is more than offset by the region's access to low-cost feedstock, a talented and trained workforce and proximity to rail, roads  and the largest ports in the US, allowing companies to export product around the world, the executives said.

"At LyondellBasell, we invest with confidence in the Gulf Coast," Patel said.

Fitterling added that proximity to other chemical companies is another strength, giving plants the ability to shift feedstock back and forth.

MacCleary said another strength for the region is the collaborative nature between the industry, the regulators, the government and the community.

Cultura/REX/Shutterstock Photo by Cultura/REX/Shutterstock

(recasts clarifying Dow's operations)