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Hurricanes Katrina and Rita Hearings S. HRG. 109–279 HURRICANES KATRINA AND RITA HEARINGS BEFORE THE COMMITTEE ON ENERGY AND NATURAL RESOURCES UNITED STATES SENATE ONE HUNDRED NINTH CONGRESS FIRST SESSION TO RECEIVE AN UPDATE ON HURRICANES KATRINA AND RITA’S EFFECTS ON ENERGY INFRASTRUCTURE AND THE STATUS OF RECOVERY EF- FORTS IN THE GULF COAST REGION OCTOBER 6, 2005 OCTOBER 27, 2005 ( Printed for the use of the Committee on Energy and Natural Resources U.S. GOVERNMENT PRINTING OFFICE 26–082 PDF WASHINGTON : 2006 For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800 Fax: (202) 512–2250 Mail: Stop SSOP, Washington, DC 20402–0001 VerDate 0ct 09 2002 12:29 Feb 27, 2006 Jkt 109279 PO 26082 Frm 00001 Fmt 5011 Sfmt 5011 P:\DOCS\26082.TXT SENERGY2 PsN: PAULM COMMITTEE ON ENERGY AND NATURAL RESOURCES PETE V. DOMENICI, New Mexico, Chairman LARRY E. CRAIG, Idaho JEFF BINGAMAN, New Mexico CRAIG THOMAS, Wyoming DANIEL K. AKAKA, Hawaii LAMAR ALEXANDER, Tennessee BYRON L. DORGAN, North Dakota LISA MURKOWSKI, Alaska RON WYDEN, Oregon RICHARD M. BURR, North Carolina, TIM JOHNSON, South Dakota MEL MARTINEZ, Florida MARY L. LANDRIEU, Louisiana JAMES M. TALENT, Missouri DIANNE FEINSTEIN, California CONRAD BURNS, Montana MARIA CANTWELL, Washington GEORGE ALLEN, Virginia JON S. CORZINE, New Jersey GORDON SMITH, Oregon KEN SALAZAR, Colorado JIM BUNNING, Kentucky ALEX FLINT, Staff Director JUDITH K. PENSABENE, Chief Counsel BOB SIMON, Democratic Staff Director SAM FOWLER, Democratic Chief Counsel LISA EPIFANI, Counsel JENNIFER MICHAEL, Democratic Professional Staff Member DEBORAH ESTES, Democratic Counsel (II) VerDate 0ct 09 2002 12:29 Feb 27, 2006 Jkt 109279 PO 26082 Frm 00002 Fmt 5904 Sfmt 5904 P:\DOCS\26082.TXT SENERGY2 PsN: PAULM C O N T E N T S Hearings: October 6, 2005 ................................................................................................. 1 October 27, 2005 ............................................................................................... 83 STATEMENTS Page OCTOBER 6, 2005 Akaka, Hon. Daniel K., U.S. Senator from Hawaii .............................................. 6 Bingaman, Hon. Jeff, U.S. Senator from New Mexico .......................................... 5 Burns, Hon. Conrad, U.S. Senator from Montana ................................................ 7 Cavaney, Red, President and CEO, American Petroleum Institute .................... 8 Corzine, Hon. Jon S., U.S. Senator from New Jersey ........................................... 3 Curtis, Kevin S., Senior Vice President for Programs, National Environmental Trust ...................................................................................................................... 25 Domenici, Hon. Pete V., U.S. Senator from New Mexico ..................................... 1 Feinstein, Hon. Dianne, U.S. Senator from California ......................................... 4 He´bert, Curtis, Executive Vice President, External Affairs, Entergy, New Orleans, LA ........................................................................................................... 43 Helms, Christopher A., President, Pipeline Group, NiSource, Inc., on behalf of the Interstate Natural Gas Association of America, Merrillville, IN .......... 37 Liveris, Andrew, President and CEO, Dow Chemical Company, Midland, MI .. 30 Smith, Hon. Gordon, U.S. Senator from Oregon ................................................... 6 OCTOBER 27, 2005 Akaka, Hon. Daniel K., U.S. Senator from Hawaii .............................................. 114 Bingaman, Hon. Jeff, U.S. Senator from New Mexico .......................................... 88 Bodman, Samuel W., Secretary, Department of Energy ...................................... 99 Bunning, Hon. Jim, U.S. Senator from Kentucky ................................................. 84 Corzine, Hon. Jon S., U.S. Senator from New Jersey ........................................... 85 Craig, Hon. Larry E., U.S. Senator from Idaho .................................................... 103 Domenici, Hon. Pete V., U.S. Senator from New Mexico ..................................... 83 Norton, Gale A., Secretary, Department of the Interior ....................................... 88 Salazar, Hon. Ken, U.S. Senator from Colorado ................................................... 86 Talent, Hon. James M., U.S. Senator from Missouri ............................................ 87 APPENDIX Responses to additional questions .......................................................................... 131 (III) VerDate 0ct 09 2002 12:29 Feb 27, 2006 Jkt 109279 PO 26082 Frm 00003 Fmt 5904 Sfmt 5904 P:\DOCS\26082.TXT SENERGY2 PsN: PAULM VerDate 0ct 09 2002 12:29 Feb 27, 2006 Jkt 109279 PO 26082 Frm 00004 Fmt 5904 Sfmt 5904 P:\DOCS\26082.TXT SENERGY2 PsN: PAULM HURRICANES KATRINA AND RITA THURSDAY, OCTOBER 6, 2005 U.S. SENATE, COMMITTEE ON ENERGY AND NATURAL RESOURCES, Washington, DC. The committee met, pursuant to notice, at 10 a.m., in room SD– 366, Dirksen Senate Office Building, Hon. Pete V. Domenici, chair- man, presiding. OPENING STATEMENT OF HON. PETE V. DOMENICI, U.S. SENATOR FROM NEW MEXICO The CHAIRMAN. Let us get started. First, thank you, everyone, for coming, in particular the Senators who are here, and I assume there will be a few more. I would like to take a few moments to make a few observations and then yield to Senator Bingaman and to any of you Senators who would like to comment. Yesterday Senator Bingaman, Senator Akaka, and I returned from Baton Rouge. We went down there to see and hear and, first- hand, to review the hurricane Katrina and Rita damages to the en- ergy infrastructure and whatever else came to our attention that might be relevant to us either in this assignment or as Senators when we begin to address the problems that have come. We spent time at Exxon Mobil’s Baton Rouge refinery, the second largest in the country, with the capacity of 500,000 barrels a day. Although that refinery did not sustain major damage in the storms, its access to oil and its ability to move products was severely harmed. In addition to loss of electricity that set the refinery back, many times throughout the trip we heard about the need to ensure some kind of redundant and robust power grid if possible. We met with Colonial Pipeline, which is a 5,500-mile interstate pipeline, that originates in Houston and terminates in New York, and delivers millions of gallons of gasoline, home heating oil, and aviation fuel and other refined products over that distance and that geography of the United States. Right now Colonial is operating at about 70 percent of its normal mainline capacity from Houston. Lack of supply and lack of commercial power, due to both the storms, are major impediments to getting that pipeline back to 100 percent. We went to Dow’s St. Charles petrochemical complex and talked to them about the high cost of natural gas prices after we had dis- cussed the disaster and how they responded, which was really something to hear in terms of how they responded. But the inter- esting thing was a discussion with this industry which is so vital (1) VerDate 0ct 09 2002 12:29 Feb 27, 2006 Jkt 109279 PO 26082 Frm 00005 Fmt 6633 Sfmt 6633 P:\DOCS\26082.TXT SENERGY2 PsN: PAULM 2 to America because it is good jobs, it is products that they can com- pete in and technology that is American, that is modern and has great workers. With all of that, they are implicitly tied to the price of natural gas such that, for instance, every $1 increase of cost of natural gas for this plant means an additional $35 million in fuel costs per year. Senator Alexander, you have been working on this. Now, add it all up and they say how far it goes up could be the difference between whether they can stay there or not. It is rather fright- ening. Obviously, natural gas should be used there. No question. But will it? Maybe not. At each of these energy facilities, I believe we were universally impressed by the employees’ dedication and the company’s concern for the well-being of their employees and the extraordinary efforts and extraordinary competence that they put into preparing for the storm and afterwards. There is a great deal of work to be done and there is a great deal of courage and confidence that it can be done, which was rather surprising. I do not think it should have been because Americans generally are that way, but this was so devastating I wondered. Nonetheless it is there. The ‘‘can do,’’ ‘‘we will do,’’ the hope is there. Hurricanes Katrina and Rita did not just hit the gulf coast re- gion. Those natural disasters impacted our entire energy chain in all regions of the economy. As we prepare to help, we have to un- derstand it is not just helping the coastal regions. It is helping to maximize the positive impact of the great energy base that is there and the facilities that make it usable. We need to have realistic ex- pectations about how long we should expect high prices of natural gas and related products, and we need to prepare for the potential for shortages. I hate to say that. I hate to say both of those state- ments, but I think it is important to us that we get the facts out and that we attempt to produce facts that indicate what I just said is a reality. And I will repeat it. We need to have realistic expecta- tions about how long we should expect high prices and, I might add, ever-increasing prices, and we need to prepare for potential shortages. Earlier this week Secretary Norton said that
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