From Texas to Louisiana, the Gulf Coast region is home to the nationís highest concentration of refining and supply operations, a host of terminals, the origination points of the nationís largest pipeline systems and extensive fuels-marketing networks. It has also been landfall for some of historyís most destructive hurricanes.
Soon after Hurricane Gustav made a surprise inland assault on Baton Rouge, Louisiana, last September, Tom Moeller, ExxonMobil Director of Refining for the Americas, arrived in the city to survey the storm damage that had shut down operations at the company's second-largest US refinery. En route from the airport, he observed long lines of anxious motorists at the few service stations that had the fuel, electrical power and staffing to remain open for business. "Scenes like that illustrate the role our industry plays in supporting the everyday infrastructure of society," says Moeller. "It's why we needed to get back up and running quickly."
When hurricanes hit, restoring normal operations is a guiding principle throughout ExxonMobil's downstream business - from refining and supply, to pipeline and marine transportation, to fuels and lubes marketing. As storms approach, ExxonMobil's goal is to keep operations in the region going wherever it safely can. Where business is interrupted, company teams work quickly to restore product supply - or develop alternate, interim solutions. And they do it on a foundation of rigorous planning and preparation that has repeatedly kept ExxonMobil a step ahead of the industry in times of crisis.
Taking lessons learned from such storms as Gustav and Ike in 2008 and Katrina and Rita in 2005, the company's hurricane-response teams routinely conduct training and other emergency-response scenarios. They fine-tune day-to-day storm watch action plans and update employee tracking data to make sure workers are safe if they have to evacuate. Team members conduct simulation drills with internal and external partners, and plan where extra fuel might come from. And they provide information, guidance and support to industry associations, states, counties and municipalities regarding fuel-specification and other waivers that are considered when a storm is on its way.
"Our ability to supply fuel to a particular marketplace where and when it's needed improves dramatically if we can temporarily shift from delivering, for example, 12 formulations to delivering five or six," says Erskine Frison, Products Optimization Manager for the Americas.
"One of the core strengths that sets ExxonMobil apart from other companies during critical periods is the way we're organized," adds Greg Cunningham, US Supply Operations Manager. "We work with many groups within our company - production, transportation, refining, supply, marketing - on a daily basis within our integrated business team process. During a hurricane, we just take that process and accelerate it."
ExxonMobil operates four Gulf Coast-area refineries - in Baytown and Beaumont, Texas, and in Baton Rouge and Chalmette, Louisiana - accounting for nearly a quarter of the region's industrywide refining capacity of about 8 million barrels of crude oil a day. When a major hurricane is still seven days away from landfall, it is far too soon to predict which, if any, ExxonMobil refineries may be affected. Nevertheless, preemptive inspections and preparations occur to assure that facilities are well-prepared for severe weather conditions. As the landfall clock winds down, the hurricane's path may still be uncertain. "But once it hits, you can't hide," says Moeller. So, with about four days to go, the coastal refineries (Baytown, Beaumont and Chalmette) proceed either to shut down or to shift into what's called 'safe park', a reduced-output state that helps conserve crude oil and other key supplies that may soon be interrupted by the storm.
While refineries close to the coast are more exposed to the effects of severe weather, Baton Rouge, a hundred miles inland, is more protected and more likely to maintain operations. After a storm, Baton Rouge's continued output can become vital to the industry as a whole, providing emergency supplies to downstream pipelines and terminals to keep fuel moving to regions far away from impacted areas.
Helping communities and businesses
"For hurricanes, we expand our philosophy of keeping our own system adequately supplied to one of helping the overall industry get back to normal," says Cunningham. ExxonMobil refineries also help their surrounding communities during power outages, providing electricity from their cogeneration plants for use by area households and businesses.
The company's Supply organization identifies and buys additional volumes of fuel before it's clear that the company needs them to make up for the shortfalls that sometimes occur. Those sources might be from locations several days away, like New York. They may even be cargoes at sea - during Hurricanes Gustav and Ike the company diverted 14 waterborne cargoes from other geographic markets, including Europe and Asia, to fill gaps in supply while the Texas and Louisiana refineries were coming back up.
"From the downstream perspective, our biggest challenge is to keep fuel moving, not only to customers in the hurricane zones but to all the others who depend on refined products from the Gulf Coast," says Mark DiZio, Manager of Global Products Supply and Trading. "People in places like North Carolina sometimes wonder, 'If the hurricane struck Texas, why are we without gasoline?'" adds John Palaszczuk, Manager of US Product Trading. "The answer is often related to the length and complexity of the supply chain, variations in product specifications and industry infrastructure."
Minimizing those disruptions on a local, regional or national level is a top priority for ExxonMobil and its affiliates. For example, the company's marine affiliates play a vital role in maintaining the critical flow of energy by safely and efficiently moving or redirecting important cargoes to affected markets to help restore the flow of crude oil, feedstocks, refined products and chemicals.
ExxonMobil Pipeline Company (EMPCo) also plays a critical infrastructure role to minimize the impact of hurricanes on crude and refined products deliveries. Securing and coordinating the placement of portable generators at key pipeline and terminal facilities is but one example of EMPCo's efforts to restore power and resume operations quickly, safely and flawlessly.
Lubricants' customer focus
Similarly, the lube-oil blend plants on the Gulf Coast readied themselves for the hurricanes, idling operations, moving product inventories into the network and staging response teams in the area. Within days of each hurricane strike, delivery operations were restored, and the plants were operational, but raw material supplies were critically impacted. ExxonMobil's Lubricants & Petroleum Specialties Company relies on ExxonMobil refineries for basestocks and company chemical plants for much of its supply of polyalpha olefins used in the blending of high-quality lubes and other products.
"We built up significant product inventory in preparation for the hurricane," says Lynne Lachenmyer, operations vice president of Lubricants and Specialties. "Despite these efforts, the storm's impact was significant. We took quick mitigation steps to manage the disruption of our base-oil supply, ensuring supply to single-sourced customers and those providing emergency response. Unfortunately, customer allocations were required to manage supplies. Communication was key throughout this process. We were in regular contact with our customers, providing them with updates on our recovery plans."
Marketing's timely response
ExxonMobil has 81 company-owned stores in the Houston area and 275 distributor locations, which are Exxon or Mobil-branded stations owned and operated by others. All were closed as a result of Ike. Few were damaged in the storm but most needed emergency power to reopen. "We keep 100 large emergency generators staged in three cities within 200 miles of the Gulf Coast," says Mike Gore, retail store manager of one such company-owned location. "The generators are big enough to run all aspects of a retail site. Since all of our stores are designed to 'plug-and-play,' we deliver the generator, plug it in and run the site as if it were on grid power."
The generators are loaded on flatbed trucks and ready to roll well before a hurricane makes landfall. A generator can be powering any company-owned store within 24 hours. And after Ike, ExxonMobil was able to offer 20 of its extra generators to distributor locations until power from the grid was restored.
"Before the storm, we made sure that our key stores on evacuation routes had plenty of fuel and stayed open as long as possible," Gore says. "After the hurricane passed, we reopened those same stores quickly so that people could get back into affected areas. We had limited products, but we focused on the things people needed most: fuel, water, batteries and ice. And our retail employees were crucial to this effort, going above and beyond what was expected during the evacuation and recovery periods."
Each ExxonMobil store reopened only if members of Gore's team were certain they had what they call the three 'Ps' in place: People able to safely come back to work; Product to keep the location stocked with fuel; and Power supplied either by a generator or by the utility company.
More trucks and drivers
After Hurricane Ike, ExxonMobil opened stores in Houston days ahead of most other suppliers, so additional fuel trucks were brought in to meet the demand. "Our base operation in Houston is eight trucks with 25 drivers," says June Harper, North America Customer Service Manager. "To respond to Ike, we increased that to 14 trucks and 43 drivers. We brought in trucks from nearby cities and flew the drivers to Texas from across the country."
Normally, one truckload of gasoline - about 9000 gallons - lasts two or three days. Larger stores might take two truckloads a day, but when there are cars waiting in line, a load lasts barely four hours. For safety, extra drivers were used to make sure the trucks could keep running around the clock and that the drivers would get enough rest between shifts. In the aftermath of Gustav and Ike, the safety record across the entire retail organization was outstanding. Even with all of the extra drivers and more than 700 workers helping to reopen stores, there was not a single accident.
Focused response to hurricane fury
Although hurricane landfall, severity and impact are unpredictable, the ExxonMobil response is second to none. The focus is on taking care of the people, facilities, customers and communities in which it operates. "We plan, prepare and have strong processes in place across the downstream to deal with hurricanes," notes Denny Houston, who leads the downstream hurricane response organization. "We quickly and fully utilize our flexibility, experience and global collaboration to manage the response. The ExxonMobil response to Gustav and Ike is a great story for our shareholders, employees, customers and communities. We are all proud of what we accomplished as a team."
Coordination team ensures critical business continues
Well before Hurricane Ike made landfall, ExxonMobil activated its Regional Response Coordination Team (RRCT) to monitor the storm and take the necessary steps to ensure business continuity, ultimately deploying more than 400 essential personnel to the company's Pegasus Place facility in Dallas.
The purpose of the RRCT, which consists of representatives from all business and service lines - including information technology, facilities management, procurement, safety, health and environment, security, human resources and other support groups - is to provide cross-functional coordination during the recovery efforts and to assist in operating ExxonMobil's businesses as smoothly as possible while the affected infrastructure is returning to normal.
For example, the company's Global Real Estate and Facilities unit coordinated the inspection of more than 9000 Houston-area offices and workstations within five days of landfall, assessing damage and initiating repairs, and making sure facilities were safe for staff to return to work.
Information Technology assigned personnel to the Houston data center who worked in shifts around the clock during and after the storm to ensure ExxonMobil's critical processes were not interrupted. Facilities and IT also collaborated to provide close to 500 alternative work locations for employees in the early recovery phase.
The company's procurement group placed close to 1000 purchase orders to support the immediate recovery process, from portable generators to more than 10,000 bottles of water for employees, while utility and city services were unavailable. "Communication is key," says Andreas Goldschmid, of the RRCT leadership team. "To ensure business continuity, we coordinate not only with every ExxonMobil company, but with the weather service, government and emergency-response officials, employees and contractors to make sure we understand and manage the cross-functional needs of the corporation while getting activities safely back to normal."
Much more than a plan
Last year's hurricanes in the Gulf of Mexico left scars on the coast and affected chemical markets worldwide, but lessons learned from earlier storms helped ExxonMobil employees respond much faster this time around.
Call it a worst-case scenario. A major hurricane fills the Gulf of Mexico and lands on the most heavily industrialized stretch of the upper Texas coast. ExxonMobil's Houston offices lose power, and several of the company's manufacturing sites are damaged. Specialty products - some supporting global supply networks - are suddenly unavailable to customers in the Americas, Europe and Asia.
Although it's the kind of emergency that ExxonMobil employees plan and practice for each year, only similar experiences following the violent Gulf storms of 2005 could fully prepare them for the hurricanes of 2008. "We prepare for this, but it was difficult to anticipate the extent of the damage caused by Hurricane Ike," says Will Cirioli, ExxonMobil Chemical Company Regional Director, Americas, who also heads the company's Emergency Support Group (ESG). "One enhancement we made to our emergency-response plan after Hurricanes Katrina and Rita in 2005 was to add a regional response team that can quickly relocate our headquarters operations from Houston to Dallas. Hurricane Ike was the first time we had to put that plan in motion."
A measured response
The goal of ExxonMobil's hurricane-response plan is to secure facilities, protect the public, make sure employees are safe and continue serving customers. The response is measured, following plans that are made well in advance. "This is not a situation that you make up as you go," Cirioli explains. "We make our decisions long before there's a threat. When hurricanes do threaten, our response is pre-programmed, based on a series of triggers that are dictated by the storm."
ExxonMobil operates many oil and gas facilities, four large refineries, two lube-oil blending plants and nine major chemical manufacturing sites along the coast from Texas to Florida. Some facilities can be shut down in as little as 12 hours, but others take two or three days, so the moment a tropical storm or hurricane threatens the Gulf of Mexico, the ESG begins communicating with all the sites and monitoring the weather several times a day.
By Tuesday, September 9, there was enough certainty in the forecast that Cirioli moved Chemical's ESG to Dallas. Other Houston-based ExxonMobil companies did the same, joining forces with ExxonMobil's Regional Response Team, sharing office space that is kept ready year-round with all the computers, supplies and phone lines needed to run the global business.
As Ike grew in size and continued toward the Texas-Louisiana coast, it triggered the next stages of the emergency response plan. Generators, food, water, radios and all the other equipment needed during recovery were pre-positioned so they could be trucked in quickly once the storm passed. On Wednesday, plants started shutting down. By noon Friday, the ones nearest Houston were bracing for the worst.
Early Saturday morning, the center of Ike surged through Galveston Bay and up the Houston Ship Channel. By dawn, more than 90 percent of the region was without power. Historic Galveston and communities all along the coast sustained widespread damage.
The Beaumont Chemical Plant, on what's called the 'wet side' of the storm, was impacted with more than 11 feet of storm surge. "When people saw the damage here, they thought we would be down for years," says Dick Townsend, Beaumont Chemical Plant Manager. "By Saturday afternoon, we had a small group of workers inside, making sure there were no leaks or spills. Damage assessment crews moved in the following day."
Almost every part of the plant was damaged, and anything electrical that was lower than 10 feet from the ground was destroyed. "We had to replace approximately 5000 instruments, 2000 valves, 800 pumps, 700 motors, 650 junction boxes, 500 online
analyzers, 45 air conditioners and 25 switch-gear buildings," Townsend says. "We removed 13 million pounds of debris and used more than 300 generators for temporary power while we were doing all the work."
"The Beaumont Chemical Plant is a critical supplier of polyalpha olefins," says John Lyon, Synthetics vice president. "PAOs are the basestock that our customers use to blend high-quality lubricants for heavy machinery, such as the gearboxes of the giant wind turbines used to generate electricity. The plant also produces synthetic basestock used in Mobil 1."
A nonstop effort by the various emergency groups and regional response members in Dallas managed the recovery, held supply networks together and advised global customers on what to expect. The companies that blend and market synthetic lubricants routinely keep some amount of basestock in reserve, but would they have enough to last until the Beaumont plant was back on stream? "Given the inventory levels of some of our lubes manufacturing customers," Lyon says, "we began allocating our own inventory and working with them to develop options to maintain supplies to their customers."
As many as 2000 people worked in shifts around the clock to repair the Specialties units at the Beaumont Chemical Plant. "The storm hit in mid-September," Lyon recalls, "and by early December both the Synthetics and the Catalyst units at the chemical plant were back on line. We began increasing allocations, and by mid-January, we were back to 100 percent."
Once the Synthetics and Catalyst units were running again, they performed extremely reliably, and that helped increase inventories faster than anyone expected. "In most cases, we replaced damaged equipment with newer and more efficient technology," Townsend says. "Our goal was to come back strong, and we did. At least in terms of the electrical system, we have a brand new plant."
This article originally appeared in the Q2 2009 issue of The Lamp, published by ExxonMobil.