Construction Trends

Flood Impact Lessons Vital for Next Construction Wave

Posted September 8, 2017 by Silvia Zurita in Business, Business Valuation, Commercial, Construction, Construction News, Downstream, Energy, Engineering, Financial, Infrastructure, Midstream, Oil, Petrochemical, Pipeline, Suppliers, Transportation, Valuation

Second wave construction, engineering and planning will begin earnestly in 2017, and learnings on areas such as storage, raw materials, supply chain and safety from the challenges caused by Hurricane Harvey should spur strategic decisions, analysts told Petrochemical Update.

Allocations, force majeures, evacuations, explosions and fires at Texas chemical plants inundated by Hurricane Harvey’s floodwaters should be a wake-up call to the industry about improving safety and supply chain management, Ramanan Krishnamoorti, Chief Energy Officer at the University of Houston said.

The U.S. Coast Guard flew over The Port of Beaumont, ExxonMobil and the Jefferson Rail Port along the Neches River on September 1 to assess if harmful products were released into the area. Photo: U.S. Coast Guard Charly Hengen.

 

“The industry must consider how to look at multiple barriers of defense when putting high capex manufacturing dollars in a hurricane and flooding prone environment,” Krishnamoorti said.
Krishnamoorti said these barriers include using information technology, rethinking the supply chain, improving front and back end engineering and improving storage options.

The American Chemistry Council (ACC) estimates there are 310 first wave projects currently under construction or planned and $185 billion in potential capital investment as of mid-year 2017, up from the 97 projects and $72 billion in March 2013. Additional second wave announcements have recently been announced as well.

 

Impact

According to the Federal Emergency Management Administration (FEMA), the storm, which tore through Texas and Louisiana on August 25th is responsible for the worst flooding in U.S. history, and is the costliest natural disaster in U.S. history.

Early estimates put the damage at $190 billion, more than Hurricane Katrina in 2005 and Hurricane Sandy in 2012 combined, according to AccuWeather.

As Texas and Louisiana work quickly to restart chemical plants, repair critical logistics and recover from the damage caused by Hurricane Harvey, the challenges are just beginning in terms of supply chain, allocations, and even safety issues.

“The industry does a remarkable job shutting down production and restarting when necessary, but it must go beyond that. It needs to put multiple layers of protection down,” Krishnamoorti said.

“The industry must do more than just protect the plants, but also protect the neighborhoods and really focus on safety, he added. “There has to be a realistic assessment of worst case scenarios and appropriate planning for the same.”

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