Laura Batters Lake Charles, Spares Gulf Coast Refiners

As predicted, Hurricane Laura moved rapidly north into Arkansas after slamming into the mouth of the Sabine River at the Texas/Louisiana border early Thursday. The storm battered the coast with 150 mph winds and a massive storm surge, but its rapid advance limited the amounts of flooding rains it dropped on coastal areas.

The Lake Charles area in Louisiana, home to an array of refining/chemicals and liquefied natural gas (LNG) export facilities, had sustained the most major damage in the region from Houston to Baton Rouge, which is home to about 25% of the nation’s oil refining capacity. A fire at a chemical plant in nearby Westlake, LA burned throughout Thursday and Friday, causing Governor John Bel Edwards to advise citizens in Sulphur, Moss Bluff and Westlake to shelter in place. Because the fire was related to a chlorine leak at the plant, owned by Biolab, citizens were also advised to turn off their air conditioning. The fire was brought under control on Saturday.

Also sustaining significant damage in Lake Charles were billionaire Tilman Fertitta’s Golden Nugget Casino, and the neighboring L’auberge du Lac, both of which sustained window damage and lost parts of their roofs. The riverboat casino attached to the Isle of Capri Hotel near downtown Lake Charles came unmoored and was lodged beneath the Interstate Bridge. The storm also did significant damage to the city’s port facilities that will likely takes weeks to repair.

The Lake Charles area is the nation’s largest hub for LNG exports, home to Cheniere Energy’s Sabine Pass facility, Sempra Energy
SRE
’s Cameron LNG and a site under construction by Venture Global LNG. As of Sunday morning, none had reported any significant damage from the storm, although Venture Global said its site did sustain some minor damage.

President Donald Trump visited Lake Charles on Saturday, and was informed that the storm had killed at least 14 area residents and caused an estimated $12 billion in damage there. Even with all of that, Louisiana Governor John Bel Edwards noted that Laura had caused less damage than expected, in part due to its rapid trajectory through his state, and also thanks to the fact that its storm surge was dramatically lower than had been predicted.

Alarmists had predicted that Laura’s massive size and 150 mph winds would create an “unsurvivable” storm surge of 15 to 20 feet in communities along the Gulf Coast. As is so often the case in these situations, the actual observations were far lease severe than the projections. In this case, the surge ranged from 5’ at Sabine Pass to about 11’ in Louisiana’s Vermillion Bay. Sparsely populated Amerada pass measured a surge of 14’ at the far eastern edge of the storm. But even with the lower-than-expected surge, thousands of homes were impacted.

For the oil and gas industry, this combination of factors limited any impacts on facilities and disruptions in supply chains. Most of the refineries and LNG facilities that had been temporarily shut-down in advance of Laura’s landfall came quickly back online with only minor storm-caused issues to deal with.

The lack of major disruptions will be a net positive for consumers. AAA reported on Thursday that gasoline prices nationally had risen by 5 cents early in the week as Laura approached. By comparison, prices at the pump in 2017 surged by 30-40 cents per gallon when Hurricane Harvey, with its massive flooding rains, put about 25% of the nation’s refining capacity offline for the better part of a month.

Laura was a nasty storm that caused billions in damages and a tragic loss of life. But it wasn’t Harvey, and the Gulf Coast refiners and gasoline consumers can now breathe a sigh of relief.