The Rusting of the Chemical Corridor

Hurricanes Katrina and Rita were only the most recent in a long series of damaging blows to the Louisiana petrochemical industry. The lower Mississippi River region once offered an alluring prospect to the oil and chemical companies: ready access to raw materials, deepwater transport capabilities, cheap fuels, a mild climate, and a favorable political situation. But the allure has diminished with rising fuel costs, depletion of natural resources, increased regulation, the growth of a strong environmental justice movement, and, of course, damaging storms. Especially in very recent years, the relationship between the petrochemical industrial complex and the environment of the Gulf—not only the physical environment but the economic, social, and political environment as well—has changed fundamentally.

A little over a century ago, the discovery of the Jennings field, near Lafayette, began a frenzy of oil exploration and extraction in Louisiana. Although early production centered on the rich oil fields in the northern part of the state, by the 1930s the industry had advanced well into the coastal zone, and by the 1940s many small rigs clustered off the marshy coastline. Louisiana’s huge reserves lured major refiners. The construction of Standard Oil’s Baton Rouge refinery in 1908 signaled the beginning of development in the lower Mississippi River chemical corridor; its flood-proof site, on high terraces near the head of navigation for ocean-going ships, offered ready access to crude oil and natural gas, ample water for industrial processes, and a giant sink for wastes, in addition to the favorable winter climate.{1} Other refiners and chemical manufacturers quickly followed Standard Oil's lead, and there was an accelerated program of federal investment during World War II. By 1947 there were 177 refineries and chemical plants in Louisiana, and their numbers continued to grow: 211 in 1962, 284 in 1981, 320 in 2002. Along the lower Mississippi River, the number of oil-refining and chemical-processing plants rose from 126 in 1962 to 196 in 2002. A landscape once dominated by sugarcane fields had been thoroughly transformed.

But geography and geology alone don’t account for the nature of that transformation. Government had a role as well. In addition to wartime federal investment, state tax policy came in to play. Tax exemptions for plant construction and expansion spurred the continual development of petrochemical facilities.{2} The Louisiana Stream Control Commission issued waste discharge permits with few questions asked during the 1950s and 1960s, particularly along the Mississippi, where the commission turned down only one application between 1958 and 1966.{3} And maintenance of the massive levee system by the U.S. Army Corps of Engineers provided an indirect subsidy to refiners and processors that located facilities in the Mississippi floodplain.{4}

While employment in the refining industry has declined since the 1960s, growth in chemical manufacturing has so far more than offset those losses: the number of Louisianans working in the petrochemical industry rose from slightly more than thirty thousand in 1962 to over thirty-seven thousand in 2002. These are jobs that offer good pay even for workers with only a basic education. Consequently, Louisiana has continued to encourage the petrochemical industry, and many see the chemical corridor as a key to the state’s economy. Yet, while the number of jobs and plants have increased, the industry’s momentum has diminished as production has shifted to more vulnerable locations and environmental problems grow more pressing.

Louisiana was rarely buffeted by hurricanes during World War II and for about ten years afterwards. Beginning in 1956, however, a series of storms began to alter the equation of offshore production and onshore processing. Hurricane Flossy blew onshore near the mouth of the Mississippi in September of that year, with winds between 90 and 110 miles per hour. Flossy did considerable damage to offshore facilities and onshore production in the coastal wetlands, as waves battered drilling derricks, sediment filled canals dug for moving product out of the wetlands, and storm-driven waves severed underwater pipelines.{5} Eight years later Hurricane Hilda struck south-central Louisiana with winds of 100 to 120 miles per hour. A 10-foot storm surge inundated some 3 million acres of coastal wetland. There was heavy damage to oil fields and onshore support operations in Lafourche Parish, and offshore operations suffered even worse; every offshore platform in the storm’s path was damaged, six rigs were lost, and many wells destroyed. But even as the oil extraction sector sustained an estimated thirty-two million dollars in losses, manufacturing operations along the river were relatively unaffected.{6}

Then in September 1965 came Hurricane Betsy, the worst storm to hit the Louisiana coast since the petrochemical buildup began. With winds in excess of 120 miles per hour, Betsy drove a massive storm surge across much of the lower delta, causing flooding in several parishes. In New Orleans the water crested at over 12 feet. In addition to disrupting some eight thousand active oil wells, it also battered onshore support facilities and pipelines; production fell by 7.1 million barrels.{7} Still, the rich offshore reserves prompted the industry to rebuild, while less vulnerable and still plentiful onshore reserves provided a buffer against refinery shortages. Louisiana oil production peaked in 1970 during another period of quiet weather following Hurricane Betsy.

After that, inland and near-shore production declined—onshore output fell from more than 500 million barrels per year in 1970 to around 100 million barrels in 2000—while output from rigs located along the outer continental shelf increased dramatically, approaching 500 million barrels per year in 2000. That is to say, the vast majority of production was now occurring in a zone most exposed to damaging hurricanes. In contrast to the practice in 1970, when each rig serviced a single well, deep-water extraction is now done with fewer fixed drilling platforms, and each rig generally collects oil from several wells. Although this reduces the number of facilities exposed to hurricane-force winds, repair costs can be much higher and disruptions to production much greater.{8}

At about the same time as Hurricane Betsy delivered its reminder that an extended period of calm autumn weather along the Gulf Coast is an exception to the rule, the environmental costs of the petrochemical boom began to intrude on the public’s attention. A huge fish kill during the fall and winter of 1963–64 heightened concerns over toxic releases into the Mississippi River. Although authorities eventually identified the Velsicol Chemical Company’s plant in Memphis, Tennessee, as the culprit, this calamity led to greater regulatory oversight of waste management practices downstream in Louisiana as well. In the early 1970s, as the Safe Drinking Water Act of 1974 was making its way through Congress, a survey by the Environmental Protection Agency highlighted the threat posed by industrial discharges. The EPA identified forty-six organic chemicals attributable to industrial releases that were showing up in the public water supplies of the lower Mississippi Valley, and activists charged that these chemicals were increasing cancer rates in parishes along the river.

Such public scrutiny, in conjunction with the enforcement of federal water quality and hazardous waste laws, began to impose new costs on the petrochemical companies, which increasingly chose to dispose of chemical wastes on land rather than discharging them into the river.{9} Those chickens came home to roost in the 1980s, when the designation of a number of Superfund sites placed a further burden on companies that the EPA identified as responsible parties. One of the most notorious was the Petro-Processors facility near Baton Rouge, which was used by several major petrochemical manufacturers. In 1970 a lagoon at the poorly managed site had flooded an adjacent farm, resulting in a lawsuit, and massive quantities of untreated wastes released to impoundments eventually threatened local groundwater sources. In 1984 the EPA estimated clean-up costs at fifty million dollars—not a devastating amount when spread among many corporations, but enough to appreciably affect their costs of operation.{10} According to the Louisiana state inventory, there were forty inactive or abandoned hazardous waste sites along the chemical corridor by 2003.{11} While few of these were Superfund sites, and some had no ties to the petrochemical industry, the concentration of hazardous wastes in the region fueled public concern.

That concern was intensified by the regular incidence of explosions and other industrial accidents throughout the chemical corridor. Hurricane Betsy caused a chlorine barge to break loose from its moorings, and authorities fought desperately to recover it before it could release a cargo that would have caused massive fatalities. Explosions at the Shell refinery at Norco in 1979 and 1988 killed several workers and scattered debris through neighboring residential areas.{12} A 1989 explosion at the Exxon refinery in Baton Rouge blanketed surrounding neighborhoods with a residue of asbestos.{13} During the 1980s New Orleans led the nation in chemical plant accidents with seventy-one and Baton Rouge was fifth with thirty-nine.{14}

More recently, huge toxic releases have been permitted throughout the corridor, and in 1997 chemical plants along the lower Mississippi accounted for more than 77 percent of Louisiana’s Toxic Release Inventory (TRI) emissions. The top five TRI-producing parishes—Ascension, Jefferson, St. Charles, St. James, and East Baton Rouge, all along the river—accounted for over 142 million pounds of chemicals spewed into the environment. While the state reported a significant decline by 1999, this mainly reflected a change in the regulation that exempted one plant from the reporting requirements.{15}

Even before the storms of 2005, rising natural gas prices had taken a toll in the chemical corridor. Louisiana lost about four thousand chemical-industry jobs between 1999 and 2004. The decline began in methanol and ammonia production facilities, which derive their products directly from natural gas. Horizontal integration produced a ripple effect: fertilizer makers padlocked their gates as ammonia became scarce, and plastics manufacturers did likewise in response to methanol shortages.{16} Louisiana is now pushing for construction of liquid-natural-gas (LNG) terminals along the coast in order to alleviate shortages of that essential raw material, even though such facilities will be vulnerable to tropical storms. A few years before Katrina and Rita, powerful meteorological events had demonstrated once again the vulnerability of the existing oil-production infrastructure: tropical storm Isidore and Hurricane Lili in 2002, and Hurricane Ivan in 2004, which blew across offshore oil fields and destroyed seven major platforms, seriously damaged another six, and ruptured twelve pipelines, disrupting production and refining for four weeks.{17}

But Katrina and Rita have been the most devastating. These back-to-back hurricanes showed the vulnerability of the petrochemical industry despite the construction of safer and stronger platforms. Rita took a path across the offshore production area and disrupted operations around Lake Charles, Louisiana, and Port Arthur, Texas. Thirteen rigs suffered serious damage—a huge impact in an era of larger platforms collecting oil from numerous sea-floor wells—and nine pipelines delivering crude to onshore operations had to be temporarily closed. Katrina disrupted refining activity at fifteen plants in Louisiana and Mississippi. At this writing, refineries in the New Orleans area have been closed for more than four months, while those near the Texas-Louisiana state line endured shorter disruptions. Refinery production fell by more than 1.7 million barrels a day (to put that in context, total U.S. daily consumption is about twenty million barrels).{18} Katrina also caused a massive spill at the Murphy Oil refinery at Meraux, Louisiana. More than 670,000 gallons of crude oil escaped from a damaged storage facility, and early assessments have suggested the necessity of razing four thousand houses and removing two or three feet of contaminated soil in the affected area.{19} New Orleans-area refineries had not seen a major hurricane since Betsy in 1965, and the southwest Louisiana coast had been spared since Audrey in 1957. The costs to the industry from Katrina and Rita have been staggering. And in an era of declining supplies and little relatively safe onshore production, the implications are much greater than in the 1960s.

When one adds to these storm-related disruptions the growing influence of the environmental justice movement, it is clear that the petrochemical industry in the Mississippi River corridor is facing significant challenges. That movement began to take shape during the BASF labor dispute during the 1980s. Locked-out workers allied themselves with environmental groups and began to push for safer waste management practices. They forced BASF to clean up its operations and pushed the state to monitor industrial wastes with greater care.{20} Since then, petrochemical manufacturers have bought out some adjacent landowners and citizens groups have successfully opposed the siting of new chemical plants, forcing costly delays and searches for secondary sites.{21}

The technological infrastructure of the petrochemical industry in the Gulf Coast has become more vulnerable in recent years for several reasons. Declining global crude oil and natural gas reserves have rendered supply chains more tenuous and less flexible. Storms have struck the area with increasing ferocity and frequency. Vulnerable new drilling operations in deepwater locations compound the industry's problems, as do environmental regulation and an active environmental justice movement, which add to operational costs and foreclose previously available options for disposing of wastes. In the context of a global economy, it is reasonable to predict that oil refining and chemical processing will begin to shift to other locations with lower potential risks from tropical storms, less stringent governmental regulations, and less well-organized environmental justice activists. Meanwhile, rising prices for crude motivate oil companies to push into ever more vulnerable locations in the Gulf of Mexico and along the Atlantic coast.{22} The combination of these two factors foretells an ever more tenuous supply for American consumers. Hurricanes Katrina and Rita put in sharp focus the impact that severe storms can have on an industry in an already precarious situation.

{1}Robert N. McMichael, “Plant Location Factors in the Petrochemical Industry in Louisiana” (Ph.D. diss., Louisiana State University, 1961).

{2}Barbara L. Allen, Uneasy Alchemy: Citizens and Experts in Louisiana’s Chemical Corridor Disputes (Cambridge, Mass., 2002), 67.

{3}Craig E. Colten, “Too Much of a Good Thing: Industrial Pollution in the Lower Mississippi River,” in Transforming New Orleans and Its Environs (Pittsburgh, 2000), 148-49.

{4}Albert Cowdrey, Land's End: A History of the New Orleans District, U.S. Army Corps of Engineers, and Its Lifelong Battle with the Lower Mississippi and Other Rivers Wending Their Way to the Sea (New Orleans, 1977).

{5}U.S. Army Corps of Engineers, New Orleans District, Memorandum Report: Hurricane Flossy, 23-24 September 1956 (New Orleans, 1957), 17.

{6}U.S. Army Corps of Engineers, New Orleans District, Hurricane Hilda, 3-5 October 1964 (New Orleans, 1966), 7-17.

{7}U.S. Army Corps of Engineers, New Orleans District, Report on Hurricane Betsy, 8–11 September 1965 (New Orleans, 1965), 39–40.

{8}Dianne Lindstedt et al., History of Oil and Gas Development in Coastal Louisiana (Baton Rouge, 1991), and Minerals Management Service, Deepwater Gulf of Mexico 2002: America’s Expanding Frontier (New Orleans, 2002).

{9}U.S. Department of the Interior, Federal Water Pollution Control Administration, Endrin Pollution of the Lower Mississippi River (Dallas, 1969); U.S. Environmental Protection Agency; Industrial Pollution of the Lower Mississippi River in Louisiana (Dallas, 1972); Colten, “Too Much of a Good Thing.”

{10}U.S. Environmental Protection Agency, “NPL Site Narrative for Petro-Processors of Louisiana Inc.,” 21 September 1984, http://www.epa.gov/superfund/sites/npl/nar757.htm.

{11}Louisiana Department of Environmental Quality, “Inventory of Active or Abandoned [Hazardous Waste] Sites, 2002-2003” (2003). http://www.deq.state.la.us/remediation/ias/ar/2002-03/Confirmed%20Sites%20by%20Parish.pdf.

{12}“Cause of Shell Blasts Sought,” New Orleans Times Picayune, 23 June 1979, and “Six Still Missing in Norco Blast,” New Orleans Times Picayune, 6 May 1988.

{13}Raymond J. Burby, “Baton Rouge: The Making (and Breaking) of a Petrochemical Paradise,” in Transforming New Orleans and Its Environs, ed. Craig E. Colten (Pittsburgh, 2000), 160–77.

{14}Susan Cutter and John Tiefenbacher, “Chemical Hazards in Urban America,” Urban Geography 12 (1991): 417–30.

{15}Louisiana Department of Environmental Quality, Louisiana Toxics Release Inventory Report 1997 (Baton Rouge, 1997), 58; and Louisiana Department of Environmental Quality, “DEQ Reveals Drastic Reductions in Louisiana’s Toxic Release Inventory for 1999” (Baton Rouge, 2001). The key to the 1999 reductions was the elimination of phosphoric acid from the TRI tabulations. This was a major item released by the fertilizer industry along the chemical corridor both before and after the modification in the inventory reporting process.

{16}“Will Natural Gas Prices Turn Off Louisiana’s Chemical Industry?” New Orleans Times Picayune, 1 August 2004.

{17}National Hurricane Center, “Tropical Storm Report, Hurricane Ivan,” June 2005, http://www.nhc.noaa.gov/2004ivan.shtml?.

{18}MSNBC, “Rita Wreaks Havoc on Oil Rigs, Platforms,” 28 September 2005, and BBC, “US Counting the Cost of Katrina,” 1 September 2005, http://newsvote.bbc.co.uk/mpapps/pagetools/print/news.bbc.co.uk/1/.

{19}“Katrina’s Oily Wake: Cleaning Up and Environmental Mess,” Pittsburgh Post Gazette, 12 September 2005.

{20}Timothy J. Minchin, Forging a Common Bond: Labor and Environmental Activism during the BASF Lockout (Gainesville, Fla., 2003).

{21}Allen; Gerald Markowitz and David Rosner, Deceit and Denial: The Deadly Politics of Industrial Pollution (Berkeley, Calif., 2002); Steve Lerner, Diamond: Struggle for Environmental Justice in Louisiana’s Chemical Corridor (Cambridge, Mass., 2005).

{22}“New Offshore Drilling Could be off New Shores,” Baton Rouge Advocate, 30 October 2005.