The 2005 hurricane season caused unprecedented levels of damage to coastal communities throughout the Gulf of Mexico. Hurricane Katrina and Hurricane Rita were of particular interest to petrochemical and refining companies, given the impacts they had to their onshore operations. Floodwaters and extreme winds from these two hurricanes damaged numerous types of assets, including tanks, cooling towers, generator buildings, process towers, pumps, controllers, utility poles, and transformers. They also caused prolong power outages, supply disruptions, and widespread employee dislocations, all major contributors to both property and business interruption losses.

Interestingly, the impacts of hurricanes Katrina and Rita could have been far more devastating had either storm passed further west of their landfall points. This paper will address the nature of damages sustained by these two events; the history of the design of these facilities in the context of current practices; the likelihood of such events occurring during the operating life of a plant; and options for mitigating future damage. Also discussed are ways to quantify risks in a manner that will enable operators and owners to make informed, cost-effective decisions regarding mitigation planning and associated reductions in loss exposures. Such efforts are important not only in light of the tightening market for commercial insurance, specifically in the form of lower coverage limits, higher deductibles, and reduced underwriting capacities, but to increase the chances that an operation can recover quickly in order to restore services to their customers while also minimizing business interruption losses.