Photo: Steve Gonzales, Houston Chronicle
A third of BP’s local workforce has returned to its Houston campus over the past few days, squeezing into makeshift workspaces as contractors repair a flood-damaged tower that will remain empty until early next year.
Almost a month after Hurricane Harvey’s floodwaters sluiced through its sprawling U.S. headquarters and flooded roads in the Energy Corridor, the British oil company has begun reopening a few office buildings, including the 390,000-square-foot Helios Plaza, home of BP’s natural gas and power trading arm, one of the largest businesses of its kind in the United States.
In a sign that both BP and Houston’s energy industry continue to recover after Harvey, hundreds of traders worked the phones and watched an array of numbers, models and charts fly across six-screen computer banks on BP’s trading floor this week, combing the country for available gas to deliver to utilities, industrial sites and refineries.
For more than three weeks after Harvey, the trading floor room was silent and empty, an alarming prospect in a business where any prolonged interruption could disrupt the flow of energy to countless U.S. buyers and, ultimately, homes and businesses.
But BP’s operations, which oversee trading of almost a fifth of the demand in the U.S. natural gas market, hadn’t stopped. After markets had closed on Aug. 24, the Thursday before Harvey hit, one in five of the trading company’s 1,000 employees boarded a bus or drove a car to Dallas, taking families, pets and personal belongings to hotels, to work in a back-up trading site, a high-tech warehouse BP built in case of natural disasters.
Traders kept calling key clients, though they had to turn down new business. Meteorologists ran complex forecast models as Harvey, and then Hurricane Irma, slammed into the United States, causing gas pipelines to back up as power plants went offline in Florida. BP’s compliance department continued to report to the Commodities Futures Trading Commission.
“You can’t just do that from home,” said Orlando Alvarez, president and CEO of BP Energy Co., the oil producer’s natural gas, power and natural gas liquids trading arm. “We have to be a reliable source of supply. That’s why it’s so critical for us to be in one room, making sure everything is moving.”
After weeks in Dallas, the entire trading company has returned to Helios Plaza. More than 1,730 of the company’s 5,000 local employees have settled in there, including 230 who lost their workspaces. The company has also begun bringing workers into its Westlake Four office tower, with more than 700 workspaces available so far.
Thousands more continue to work from home. By the end of October, BP plans to house at least 60 percent of its workforce at its Westlake campus, until Westlake One, its main tower, is repaired.
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BP’s slow, partial return to its Westlake campus is the latest in a string of developments showing the energy industry is coming back after floodwaters crippled the Gulf Coast’s vast network of refineries, pipelines, seaside ports and petrochemical plants.
Gasoline prices climbed 20 percent after Harvey knocked out a quarter of U.S. refining capacity along the Gulf. Half of the nation’s production of petrochemicals such as ethylene, used in plastics, was shut down. Now, only 5 percent of refining capacity remains offline, and almost all of the region’s ethylene plants are up and running. Ethylene is the building block of most plastics.
BP executives still don’t know the full extent of the damage to its Westlake One tower, and they’re not sure exactly when it will reopen – although they expect early next year. Water had risen to the top of the turnstiles in the lobby, filling the basement and bringing down the electrical systems. Contract workers piled thousands of sandbags around the building so they could start pumping out the rushing water.
It is likely to cost a couple of million dollars to fully repair the building. Economists and bankers said the damage to commercial and industrial properties in Houston will be far less consequential to the local economy than the damage to homes. For big businesses like BP, the storm’s real economic punch was that employees couldn’t get to work because of impassable roads.
“There’s going to be a short-term impact because of that,” said Hank Holmes, president of Cadence Bank in Houston.
For the oil and natural gas market, oil companies with trading operations like Royal Dutch Shell and BP have become critical to the physical movement of energy in the United States. In recent years, the disappearance of Wall Street banks from the business of moving oil and gas inventories has made it harder for U.S. producers to lock in future prices.
Big banks once dominated global energy logistics, handling four of every five futures contracts U.S. oil companies use to price their product and get it to the market. Banks exited much of the business amid falling revenue and tougher financial rules.
Now, BP moves 25 billion cubic feet of natural gas per day. It also recently expanded its gas marketing business into Mexico, where demand could grow from 3.5 billion cubic feet a day to as much as 9 billion cubic feet a day in coming years. Its Mexican business only saw minor disruptions during Harvey.
A few days before Harvey made landfall, BP’s meteorologists knew the storm could be catastrophic. It could sit over Houston and dump at least 2½ feet of rain. That’s what they told Alvarez.
More than a decade ago, when Hurricane Rita hit the Gulf Coast, Alvarez learned not to hesitate on evacuation plans. BP told its traders to come to work on Aug. 24, packed and ready to hop on a bus, if it pulled the trigger. Information technology workers had already spent the previous night preparing the Dallas trading site.
“In my 22 years here, there’s never been anything close to a flood here at the Westlake campus,” Alvarez said.
But he knew if the roads flooded, workers couldn’t get into the building.
“So we deployed on Thursday, way ahead of everybody,” he said. “Our reputation is all we got, man.”