Filed Under:Risk Management, Weather Risk

Harvey could become first hurricane to strike Texas since 2008

The current track calls for the storm to land in southeastern Texas and then turn toward Houston. (Photo: Screenshot from The Weather Channel video)
The current track calls for the storm to land in southeastern Texas and then turn toward Houston. (Photo: Screenshot from The Weather Channel video)

Updated 4:50 p.m. ET

(Bloomberg) -- Harvey, which could strengthen into the first hurricane to strike Texas since 2008 this week, forced workers to be evacuated from Gulf of Mexico platforms, sent cotton rallying and has airlines preparing for flight disruptions.

Related: 9 practical steps for hurricane preparation

Currently a tropical depression, Harvey was 470 miles (756 kilometers) southeast of Port Mansfield, Texas, with top winds of 35 miles per hour, the  U.S. National Hurricane Centerr said in its latest advisory. It could develop into a hurricane just before landfall.

“It could intensify right up to landfall on Friday,” said Jeff Masters, co-founder of Weather Underground in Ann Arbor, Michigan. “I expect a Category 1 hurricane at landfall, but I cannot rule out a Category 2.”

Refineries in path of heavy rainfall

The Gulf Coast from Corpus Christi, Texas, to Lake Charles, Louisiana, is home to nearly 30 refineries — making up about 7 million barrels a day of refining capacity — and is in the path of heavy rainfall expected to start as early as Friday. Flooding poses risks to operations, while torrential rains can shut units and cause supply disruptions.

Fuel supplies in the region may be tightened further by other, unrelated refinery outages. Phillips 66 began a plantwide shutdown of its Lake Charles, Louisiana, refinery late Tuesday after its power supplier warned of a high potential for electrical failure, according to a company statement. Houston wholesale conventional gasoline rose 1.9 percent to $1.5926 a gallon Wednesday, data compiled by Bloomberg show.

Reduction of crude oil imports

“Biggest impact of this storm will be a significant reduction of crude oil imports into the Texas Gulf Coast, resulting in refineries cutting crude rates,” Andy Lipow, president of Lipow Oil Associates in Houston, said by email. “There will also be a significant impact on petroleum product exports impacting supplies into Mexico.”

Related: A millennial's guide to surviving a hurricane

Ike in 2008 was the last hurricane to hit Texas, said Dennis Feltgen, spokesman for the National Hurricane Center. Ike struck as a Category 2 storm on the five-step Saffir Simpson scale.

Exxon Mobil Corp. said it’s cutting output at its Hoover production platform in the Gulf of Mexico ahead of the storm. The company’s also working on plans to evacuate staff in stages from offshore facilities that will be in the path of the storm, Suann Guthrie, a spokeswoman, said by email.

Anadarko Petroleum Corp. said Tuesday it’s removing nonessential staff from some production platforms in the Gulf of Mexico in response to weather conditions. Cheniere Energy Inc. “activated” the severe weather team at its Sabine Pass LNG export terminal in Louisiana, Eben Burnham-Snyder, a spokesman, said by email. “At this time no production impacts expected.”

Heavy rains for parts of Texas & Louisiana

Along the coastline, seas could rise 4 to 6 feet above ground level and from 10 to 15 inches of rain will probably fall across parts of Texas into Louisiana, the hurricane center said. Some areas could get as much as 20 inches of rain.

“It is going to be a wet one,” Masters said. “It is not going to move fast after landfall and that is going to cause big trouble” from flooding rains.

The current track calls for the storm to land in southeastern Texas and then turn toward Houston. Masters said at least one computer-forecast model shows the storm heading back into the Gulf of Mexico early next week before coming ashore in Texas again.

Making preparations

Both Oncor Electric Delivery Co. and CenterPoint Energy Inc. said they expect Harvey to make landfall Friday and are making preparations. American Electric Power Co. is making arrangements to bring in outside repair crews if they’re needed, Larry Jones, spokesman, said in a phone interview Wednesday.

Cotton rallied on speculation the storm will threaten U.S. crops. On ICE Futures U.S. in New York, cotton for December delivery climbed 1.6% to settle at 68.89 cents a pound after earlier reaching the highest since Aug. 10.

Related: 4 ways to prevent business interruption from a natural disaster

“Some concern is developing” regarding the storm impact and the heavy rains expected in Texas, Louis Rose, director of research and analytics at Rose Commodity Group in Memphis, Tennessee, says by email.

Mansfield Oil Co., a Georgia-based fuel distributor, said it raised its storm conditions to a red alert. “Heavy rainfall is expected in this region, which could impact refinery operations and trucking logistics in the region,” the company said by email.

Rebooking flights

American Airlines Group Inc. is allowing people traveling through Houston and nine other cities on certain dates to rebook their flights without a fee because of the storm. United Continental Holdings Inc. is offering the same in eight cities, while Delta Air Lines Inc. is offering a similar waiver for Houston flights.

Related: What if Hurricane Andrew happened today?

Copyright 2017 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.


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