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Damage to oil refineries not as bad as feared

TEXAS CITY, Texas — Hurricane Rita caused some damage to oil refineries near the Texas-Louisiana border and raised the prospect of gasoline shortages and higher prices during the arduous process of restarting refineries all along the Gulf Coast. But it did not cause the widespread destruction of the energy infrastructure that some had feared.

On the edge of this workaday city of refineries and modest ranch houses near Galveston, a flare burned silently from a tower at the large BP refinery on Saturday afternoon, evidence that it was largely unscathed.

Up and down the energy corridor between Galveston and Houston, industry officials said refining locations had managed to avoid extensive damage from the hurricane, which made landfall to the east, near the Louisiana border.

Refineries sat waiting for workers to return to assess their conditions. In Texas City, there were no signs of wind damage or flooding at any refining installations.

Egrets gathered in the marshes in the shadow of refineries and petrochemical complexes owned by energy giants like Valero, BP, Marathon-Ashland and Praxair. A toppled sign from a Phillips 66 gas station was the only indication that a hurricane's edge had passed through.

The situation was less sanguine in and near Port Arthur, Texas, and Lake Charles, La., near the Texas-Louisiana border, where officials said they expected refineries and industrial plants to be out of service longer because of heavy wind damage, power failures and scattered flooding.

Depending on how much of the nation's already stretched refining capacity is affected and for how long, that could cause shortages of gasoline and other fuels and push up retail prices again.

"It looks like we may have dodged some of the bullet in terms of the impact," said John Felmy, chief economist for the American Petroleum Institute. "It certainly is better than if it had hit some of the bigger refining centers."

Chuck Dunlap, who rode out the storm with 50 others at Pasadena Refining Systems, just outside Houston, said that at first glance, his plant and other facilities in the area appeared to have sustained limited damage. But even so, it will take a few days for his plant, which normally processes about 100,000 barrels of crude oil a day, to return to full speed.

"We are actually walking through the plant and doing a more detailed inspection," said Dunlap, the refinery's president. "We won't be at full operations till midweek."

As the hurricane approached Texas on Friday, Galveston and Houston seemed directly in its path, and had the storm plowed into those cities, laden with petroleum tank farms, refineries and natural gas processing plants, insurance experts feared that losses could have run to $30 billion. But initial estimates put insured damage at $5 billion or less.

With hurricane winds extending 85 miles from the center of the storm, Galveston and Houston got heavy rain and strong gusts of more than 75 miles an hour, and they sustained scattered damage. Royal Dutch Shell and Valero Energy said their Houston-area plants would be restarted as workers returned and power was fully restored.

Companies shut down 16 refineries that make up about 23 percent of the nation's capacity in the days before Hurricane Rita struck. Less than half of the facilities that closed were in or near Port Arthur or Lake Charles.

Valero and Shell both said the wind knocked down cooling towers and power lines at their Port Arthur refineries, but they reported minimal damage from flooding. Valero said it would take two weeks to a month to complete repairs and restart the plant.

Hurricane-damage experts said the destruction may have been limited because as the storm churned inland, the refineries were on its west side, where wind speeds are lower, according to Dr. Jayanta Guin, vice president for research at AIR Worldwide, a Boston firm that tracks hurricanes and the damage they inflict.

Industry officials warned that the lack of obvious damage should not be read as assurance that things will quickly return to normal. Offshore oil platforms still need to be inspected, and restarting refineries, especially the kind of hulking operations that are common in the region, can take several days, even weeks.

During that period, gasoline supplies may start to run short in much of the eastern half of the country, which gets most of its fuel from the Gulf Coast via pipelines. The largest of these, owned by Colonial Pipeline, was operating at about half its usual volume on Saturday because it had lost power at pumping stations.

Retail gasoline prices rose to more than $3 a gallon after Hurricane Katrina. Regular unleaded gas sold for an average of $2.748 a gallon on Saturday, down from $2.755 on Friday, according to the AAA.