NEW YORK, Nov 27 (Reuters) – At four p.m. on Oct. 29, as heavy winds battered the East Coast ahead of Superstorm Sandy’s landfall, the Coast Guard’s regional command middle on Staten Island lost energy and its hulking backup generators hummed into action.
Commander Linda Sturgis, who oversees emergency prevention on the Port of latest York, was buzzed by means of two thick safety doors into the Port’s hive-like vessel visitors middle, the maritime equivalent of an air traffic management tower. The Port had been bracing for Sandy for days, and a few hours earlier, its Captain had halted all commercial vessel visitors, an emergency lockdown generally known as Situation Zulu.
Shipping delays during storms are widespread. What few individuals may foresee was how Sandy’s 16-hour assault on a serious oil hub would consequence in the worst regional gas provide collapse in decades, delaying disaster relief, triggering panic-shopping for, and elevating questions about energy security within the country’s most densely populated area.
The storm’s destructive powers were bad sufficient – knocking out equipment and power at oil terminals and other energy infrastructure, while disrupting shipping for days because of debris in the harbor. However a collection of selections over current years had additionally made the area much more vulnerable. The shuttering of regional oil refineries, choices by firms to keep fuel low stocks because holding further provide has grow to be expensive or unprofitable, a latest authorities downsizing of emergency reserves, and the heavy reliance of gasoline terminals on a vulnerable electric grid all played into the availability squeeze.
As Sandy approached, Sturgis and her employees had been in a unique place to observe it hammer the harbor. On dozens of blinking screens that monitor marine vessels by satellite, they verified that oil tankers, barges, container ships and recreational boats have been hunkered down. Then, round 8 p.m. on Monday October 29, Sturgis’s sense of alarm started to rise with the tide.
Since the September 11, 2001 terror assaults on New York, surveillance of the 1,300 or so vessels that transit the new York Harbor every day has been beefed up. Live feeds from army cameras in secret places allowed Sturgis to watch Sandy elevate sea levels by as a lot as 14 toes. That, she knew, would submerge low-mendacity zones, with scary implications for residents. But Sturgis, who also holds a enterprise degree in provide chain administration, acknowledged another menace too.
“After i saw that surge, I knew it would affect oil supplies,” she says. “The general public in all probability would not notice how vital the harbor is. It is the epicenter of fuel distribution for the entire Northeast.”
Sandy’s dying toll stands at 132; thousands have been left homeless; economic harm estimates high $50 billion, and greater than eight million homes and businesses lost energy, some for weeks. But in some respects, it is Sandy’s impression on oil supplies that posed the most important and most unexpected problem to resuming day-to-day actions, including in areas solely frivolously broken.
Specialists worry the scenario might become extra frequent, in part attributable to local weather change and an absence of flood protection, but in addition due to oil market adjustments that have eliminated supply safeguards. Some fear that coverage-makers are doing little to address the threats.
“What actually happened with oil supplies here hasn’t been mentioned sufficient,” stated Malcolm Bowman, oceanographer and storm surge knowledgeable at State College of latest York at Stony Brook.
As the heart of the East Coast fuel market, the harbor covers an area of 125 sq. miles in New York and New Jersey and takes in round 1.5 million barrels a day of oil from the U.S. and overseas. From tanks that hold as much as seventy five million barrels, harbor services ship gas back out – by barge, tanker, pipe, truck and rail – to customers from New Jersey to Maine. The region of 60 million, which consumes 6 p.c of the world’s oil, relies in part on harbor provides.
THE DAY AFTER
Panic buying depleted stocks at fuel pumps even earlier than Sandy hit. MasterCard Inc. knowledge exhibits the quantity of fuel gross sales within the mid-Atlantic region within the pre-storm weekend topped common ranges by 65 percent. And that was at a time when two-thirds of Northeast refining capability was already shut and pipelines had been idled in preparation for Sandy, that means less gasoline was flowing in the area.
Shoppers have been right to be fearful. Around 8 a.m. on Tuesday, October 30, the Coast Guard held the primary of many put up-storm conference calls with shippers, fuel terminal operators, and other harbor stakeholders. Stories from the sphere have been sobering.
Sturgis stated Phillips 66, operator of the 238,000 barrel per day Bayway refinery in Linden, New Jersey, reported that a 13-foot surge of corrosive saltwater had inundated components of the plant. Its energy was out, and the plant – identified amongst oil traders as “the gasoline machine” as a result of it produces sufficient gasoline to fulfill half of latest Jersey’s demand – had no timeline for restarting.
Another low-mendacity Harbor refinery, Hess Corp’s 70,000 barrel-per-day plant in Port Reading, New Jersey, was also incapacitated by power outages. Alongside the coast, two dozen major gasoline terminals have been inoperable. Tanks at the terminals store and blend oil to ship around the region.
Some confronted urgent issues. At the Motiva gasoline terminal in Sewaren, New Jersey, partially owned by Shell , two storm-broken tanks have been leaking diesel – almost 380,000 gallons in complete – into the Arthur Kill waterway. Phillips and Kinder Morgan, reported smaller spills.
Underground pipes like Colonial Pipeline, which usually delivers 800,000 barrels per day to the harbor from Houston, were not broken but remained shut for days after terminals lost energy.
The Coast Guard advised shippers that harbor channels had been still too hazardous to navigate. Buoys were blown out of place, and debris posed threats to tankers and barges.
“We had to clear debris and chart the bottom,” mentioned Gordon Loebl, Captain of the Port. “With out doing that, tankers may run aground and create a major oil spill.”
The navigational ban additionally sidelined some 100 petroleum barges that normally transit the harbor. A number of the flat-hulled workhorses, which also carry gas up the East Coast, attain the length of two football fields and carry as much as one hundred,000 barrels of fuel – 120 occasions more than any fuel truck.
RACE TO Recuperate
Following the storm, oil employees have been ready to spring into action, and the Coast Guard, with assist from Military engineers and non-public pilot vessels, raced to re-open the port. However many operators found there was no fast repair to the harbor’s broader issues.
“It was really bad,” said Scott Hellmann, a petroleum barge dispatcher for Harley Marine, whose work trailer in Brooklyn’s Navy Yard was destroyed. “For about every week, barges just stopped.” Gasoline terminals couldn’t receive them.
A lot of Linden, New Jersey, a metropolis of 41,000 thirteen miles southwest of Manhattan, was severed from the Northeast gasoline supply chain. Perched beside the exhausting-hit Arthur Kill, Linden is the harbor’s pipeline crossroads and a staging level for oil shipments. Storm surges left boats piled up alongside the city’s essential industrial street.
Terminals in the realm retailer bulk deliveries from tankers, refineries and pipelines and ship them out to 4,000 filling stations in the area. Power wasn’t restored to many Linden fuel terminals till Nov. 11. 5 terminals remained utterly shut as of Monday, authorities data reveals.
Searching for Gasoline
Three days after Sandy, more than 70 p.c of filling stations in New York and New Jersey had no fuel for sale, in line with Travel group AAA. As temperatures dropped to near freezing, the provision of heating oil was also strained.
“Idle harbor terminals were a foremost bottleneck,” said AAA’s Michael Green. “Many had fuel, but it was stuck in storage.”
1000’s of gasoline truckers were pressured to improvise. One nationwide shipper, Mansfield Logistics, diverted trucks for tons of of miles in each path, bringing fuel from as far as North Carolina to northeastern clients, some situated just some miles from the harbor’s tanks.
The crunch was worsened as a result of many regional filling stations lacked generators and couldn’t dispense gasoline.
TOO LITTLE, TOO LATE
Authorities officials tried several fixes. The Environmental Safety Company eased clean fuel standards, permitting emergency autos and generators to run on dirtier gasoline oil, and federal officials authorized Jones Act waivers to lure fuel cargoes on overseas-flagged tankers normally barred from transiting between U.S. ports. BP Plc diverted a Liberian-flagged ship to the harbor, however only a few different cargoes arrived shortly.
Finally, New Jersey imposed gas rationing based mostly on license plate numbers. New York Metropolis following suit six days later.
“In New York the rationing was too little, too late,” said Columbia College Enterprise Faculty Professor Awi Federgruen, an skilled on provide chains. “Panic shopping for took over and folks had no religion that provides would come back soon. The storm uncovered big faults in the supply chain.”
DEFENSES DOWN Earlier than SANDY
Most delivery lanes and amenities around the harbor at the moment are operating usually, and power has been restored to millions. The Bayway refinery is restarting, commerce sources said.
But Sandy’s gas provide collapse has left a policy conundrum for officials, now more conscious of the region’s vulnerability.
New York Governor Andrew Cuomo and New York Metropolis Mayor Michael Bloomberg have said they consider climate change is increasing the frequency and power of storms in the realm.
Cuomo has said he will request federal funding for brand spanking new emergency fuel reserves and to build a “good” energy grid that would restore power shortly after future storms, at a value of $30 billion.
Bowman, the oceanographer, proposes surge barriers. Retractable panels he calls “saloon doors” may shut during storms. But the system could value $20 billion.
Long before Sandy, cracks had begun to appear within the harbor’s power security. At the same time as oil and fuel drilling booms in U.S. shale formations, the East Coast has grown less capable of supplying its own fuel.
Citing poor profit margins, oil corporations shuttered three northeastern refineries over the past two years, eliminating 24 p.c of regional capability. That increases reliance on provide from tankers and Colonial’s pipeline.
Oil corporations’ penchant for just-in-time fuel deliveries raises additional supply issues. East Coast gasoline inventories were already close to report seasonal lows earlier than the storm, authorities knowledge reveals.
Traders that handle gasoline in the harbor’s wholesale market have little incentive to keep a surplus in tanks. Oil costs in the $one hundred-a-barrel vary imply it costs thousands and thousands to retailer further provides. And since financial malaise has been decreasing East Coast gas demand, oil corporations are much less desperate to compete for market share, storing fewer barrels.
Also discouraging surpluses is a market condition often called backwardation, the place gasoline provides for spot delivery fetch a premium to these committed for delivery later on. That prompts firms to maintain just enough supply to take care of versatile operations in regular instances.
As Sandy approached, East Coast tank farms held sufficient gasoline to meet regular demand for 22 days, 12 % below a 5-12 months common degree.
The U.S. authorities has its own emergency fuel stocks, but federal price range cuts led to a 50 p.c reduction within the Northeast heating oil reserves this yr to only 1 million barrels, sufficient to meet East Coast demand for only some days.
And over the past decade, several fuel terminals received rid of their diesel generators and related to the regional electric grid instead, rising their vulnerability, in accordance with Captain Andrew McGovern of the Sandy Hook Pilots, who help direct vessels by means of the harbor.
LESSON FROM TEXAS, ROTTERDAM
After two hurricanes hit the new York region in less than two years, the area might look south for power safety ideas. When Hurricane Ike hit Texas in 2008, energy firms and emergency responders near a refining hub had been prepared, after storms Katrina and Rita in 2005 had hammered the vitality business.
As Ike approached, state governments and oil companies stationed gasoline storage tanks and pumping trucks along evacuation routes. Utilities gave precedence to restoring energy to refineries, fuel terminals and gas stations, after tending to hospitals and relief centers. Some oil firms took the precaution of putting in barriers or levees round their operations. Others readied meals and housing for their personnel to bring plants back quickly.
“Energy and other people, these are the 2 key things after a storm. To get the infrastructure going again, get energy restored and get individuals to run it,” mentioned Bruce Bullock of the Maguire Power Institute at Southern Methodist University in Dallas.
Japan, the place final 12 months’s tsunami triggered a nuclear meltdown and a gasoline squeeze, is spending $2.4 billion to boost vitality safety, together with increasing emergency oil reserves.
In Rotterdam, Europe’s top oil port, energy infrastructure is located a minimum of 10 to 20 toes above sea degree for safety. Gasoline terminals have back-up generators, and a 450 million euro floating barrier may be closed when waters rise.