Improving the reliability of power supplies to fuel terminals and retail service stations, and the need for fuel providers to strengthen relationships with government agencies are two key lessons learned from Hurricane Sandy, a Hess Corp. executive said Monday.
As improvements are made to fuel terminals in and around New York Harbor, special attention is being given to protection of the electric power supplies needed to keep those terminals operating in the aftermath of any future storm, Christopher Baldwin, senior vice president for retail and energy marketing at Hess, said.
"We are working hard to improve the water-facing parts of our terminals...as they get restored," and are working to strengthen the power restoration systems at those terminals, Baldwin said during a panel discussion on infrastructure sponsored by the Bipartisan Policy Center.
Hess' plans are similar to those being developed by Phillips 66 for its Bayway refinery and Linden terminal in the New York Harbor market.
"We are considering some other potential improvements at the refinery in addition to elevating the electrical equipment," Phillips 66 spokesman Rich Johnson said in response to a Platts inquiry. "At the Linden terminal, we are also constructing and installing critical control buildings and electrical systems above the 100 year flood plain in order to minimize future damage."
Baldwin praised government decisions to waive the Jones Act during the crisis in order to allow non-US flagged vessels to carry fuel to the New York, New Jersey and Connecticut area.
He said that before Hurricane Sandy, he had not made an attempt to establish a relationship with Vice Admiral Mark Harnitchek, director of the US Defense Logistics Agency.
"Unfortunately, it was about two o'clock in the morning on the day after the storm, the first time I met Admiral Harnitchek on the phone. Shame on me for allowing that to happen," Baldwin said.
But numerous conversations between the two in the aftermath of the storm were critical in ensuring that fuel supplies reached the area.
"Government relations matter. They matter a lot," Baldwin said. "We were able to speak clearly and cohesively about what needed to be done and at the right level. So we eliminated a lot of bureaucracy."
Baldwin said that establishing who has jurisdiction over fuel waivers was critical in the days after the storm.
"Different levels of ethanol, for example, are required in different localities. Finding a way to get to the right answer more quickly is helpful, along with clearer lines of authority."
Baldwin said that more discussion is needed before the next storm on better defining the role of government, which can dictate the "what" in a given situation, and private business, which is often in a better position to determine the "how."
One example is a discussion among some states to require all retail stations to have install a generator in case of a power outage.
"For a big company like Hess, that might be manageable," Baldwin said. But for a smaller operator with only a few stations, the cost could equal as much as a year's profit.
"The ability to have access to generators should be a requirement," Baldwin said. But how that gets done is better left to business to determine, he said.
