April 2010 Vol. 237 No. 4

Features

More Than A Recovery: Working Hard In The Big Easy

On Aug. 28, 2005, the day before Hurricane Katrina hit, utility Entergy New Orleans (ENO) served approximately 144,000 customers in the gas side of its electric and gas business.

The hometown subsidiary of the much-larger Entergy Corporation experienced occasional difficulties with its 19th-century cast iron gas mains and mid-20th-century steel pipe. Like much of New Orleans, the gas system was well-established, full of history and difficult to predict. But it worked, for the most part–until Katrina.

A Utility’s Nightmare
“After Katrina, when the levees broke and the flooding occurred, we flooded about 534 miles of our low-pressure system,” recalled Perry Dufrene, rebuild project manager at ENO. The New Orleans system was a mix of utilized pressure and 90-pound high pressure, with the low-pressure areas concentrated on the east side of the city and around the devastated Lower Ninth Ward.

“We had water, saltwater and brackish water in approximately 840 miles of pipe — about 60% of our system — and about 110,000 of 144,000 total customers were without gas service. By the time we got the entire system back up, it was May 2006.”

Barely four years later, ENO has been recognized with a Platts Energy Award for Global Infrastructure Project of the Year for a ground-up rebuild of 844 miles of its gas line network. In the first three years of the project, it has so far replaced more than 135 miles of pipe — ahead of schedule and under budget. The goal is to completely renovate the city’s gas lines, using 21st-century methods and materials, decrease cost of ownership, increase service reliability — and while they’re at it, send a message to the city.

“We faced both the uncertainty of those dark days and the gravity of the task ahead with the same resolve,” said Rod West, who was named president and CEO of ENO in 2007. “We were going to do everything in our power to help restore the gas system and, in doing so, help New Orleans recover. We’re not there yet, but we’ve made tremendous strides.”

The distance from the starting place to the goal is indeed staggering. As Katrina approached, Dufrene and about a dozen other ENO employees stayed within city limits, on call to respond to emergencies and begin damage assessments as soon as the storm passed.

“After the storm was over we went right back to work,” Dufrene said. The team left its headquarters at the downtown Hyatt, next to the Superdome, and visited ENO’s Tulane Avenue facilities, about 1.5 miles away.

Dufrene, a native of New Orleans who has been with ENO for 30 years, noticed the water in the streets wasn’t all due to the storm. “The water just kept on rising. It was like, okay, something’s not right here.” Other people who’d stayed in town were also beginning to come out to assess the situation. ENO’s team split in two, with some members staying behind at Tulane Avenue while Dufrene’s party returned to the Hyatt, not yet knowing that the levees had burst. The group at Tulane Avenue quickly found itself trapped by rising water and rising fears among the refugees outside.

“They had a boat, but if they went out the front entrance, they would have been sunk by all the stranded people trying to get out of the water,” Dufrene explains. “So they went out the back of the property onto the interstate, cutting through fences.” Central New Orleans was covered with so much water that they made the entire journey back to the Hyatt in the boat.

Destruction In Katrina’s Wake
The aftermath of the storm hit ENO hard — and Entergy itself, since the energy corporation is the only Fortune 500 company to make its home in New Orleans. ENO petitioned for bankruptcy protection in September 2005, borrowing $200 million from Entergy to pay salaries and tide it over on the wait for insurance payouts and federal help. Gas customers were down by more than 50% and difficult to count, since citizens were widely dispersed and no one knew how many would return. The electric side of the business was in even worse shape.

The human cost, however, was harder to handle.

“We had people missing. Probably 30% of our group lost their houses. We had a lot of people living in the east who just lost everything,” said Dufrene, whose own house in Jefferson Parish also sustained some damage.

Sherri Winslow, vice president of Entergy’s gas business, emphasized the scale of the loss.

“It was a tremendous blow to employees — the majority of our employees are citizens of New Orleans, and just seeing that devastation…” The utility was hit with the twin problems of an overwhelmed workforce and a ruined system.

“First and foremost, we had to make sure that the employees were focused on safety, for themselves personally as well as for anything they might encounter on the job,” said Winslow, who has worked for Entergy since 1998. Management focused on reassuring employees that it would support them: ensuring that they had somewhere to stay, arranging work from secondary offices or occasionally from home.

ENO’s employees gave no doubt to their dedication, but the work was crucial and almost unending.

“Everybody was working 16 hours a day, as much as we could, to try to get the system back up to speed for a long period of time,” said Dufrene.

“Needless to say, the water didn’t go away for a couple of weeks. We started following the water back and cutting off the valves to the systems. We pumped and sectionalized the areas of the low pressure and the high pressure to start and try to get gas back onto our system. It took us seven or eight months to get it back up and running.

“The population started coming back the next year. Around Thanksgiving, when it started getting cold, we were really experiencing a bunch of outages. We had water trouble — we still have water trouble,” Dufrene said.

“Water trouble means water outages. Typically in a low-pressure system you’ll have some outages, but where we used to have maybe a couple hundred a year, we were getting a couple hundred a day. Our system was so messed up. We had to do something,” he said.

Rebuilding From The Ground Down
As shift after shift worked to get the gas lines back to some semblance of normal function, the company was preparing to get the most from the rebuild that was obviously going to be necessary.

One bright spot through the trouble was the brand-new GIS system ENO had begun installing before the storm. “As it happened, we put the system into the west bank first, and there was no damage,” Dufrene explained. With some quick attention to expand the area the GIS covered and usefulness of the data it delivered, the team had a new tool to help with repairs and planning.

Meanwhile, ENO brought in consultants to look at the corrosion on its seawater-abused cast iron and steel pipes. It compared corrosion from the flooded areas to dry areas. It segmented the city into 13 parts based on dewatering. It explored creative financing measures, including grants and government partnerships, to keep costs down. And it weighed tricky problems that most rebuild projects never consider — for instance, what portion of the city’s population would come back.

“You couldn’t really make a leap and guess how many folks would return to the city. Essentially, we just came to the decision that you assume that they’ll all return. And you base your strategy and your planning on how a particular area is being repopulated,” said Winslow.

The strategy meant ENO wouldn’t plan for too few people and wind up under-serving citizens who came back. But it also gave the company flexibility to respond to areas as they repopulated rather than before. And as outage complaints poured in, it allowed the company to focus resources in the areas that were hardest hit.

With the time for strategic planning, ENO aimed for more than patching the system or simply laying down pipe that worked. The new system called for several significant upgrades designed to decrease the cost and frequency of repairs, while disrupting citizens’ lives as little as possible.

First, the system would be a high-pressure (90-pound) system, composed of durable, non-reactive high-density polyethylene pipe. It would deploy meters readable from off site. Contractor A & L Underground would install the pipe using directional drilling methods to keep streets open and costs down. And perhaps most attractive to the teams at ENO who would eventually be maintaining this system, the lines were to be moved from under the streets to under the sidewalks.

“I don’t know if you’ve been to New Orleans for awhile, but there are potholes everywhere and we get blamed for a lot of that,” explained Dufrene. “We were trying to eliminate our exposure in the street because there’s a lot of city street-paving projects that come through and make us move when we’re in the way. So if we could move to the sidewalk, that would eliminate a lot of our future costs.” Repairs would also be cheaper and would rarely require street closures in case of a leak or outage.

Making It Happen
With the plan set, ENO presented it to New Orleans City Council, suggesting an initial three-year schedule and a reevaluation after that time to assess the project’s continuation. The first year, already half gone by the start date, aimed for only 30 miles of pipe total. The second and third year called for 50 miles of pipe each. The project’s budget hovered near $500 million, with estimates for total cost around $577,000 per mile. Using funds from the Community Development Block Grant and insurance proceeds, ENO was expected to complete its mission without impacting customers’ rates. The city council gave its nod of support in June 2007, just a month after ENO emerged from bankruptcy.

Once the project was under way, an ENO initiative toward incremental improvements showed its worth. Dufrene, the leader of the project team, credits that and his team’s hard work with the results they achieved.

“The first year we got a little over 30 miles, a little under the $577,000–a-mile rate,” he explained. “The next year we got a little better, in the 50-mile range, and we were able to keep it a little under what we did the year before. Going into this third year, we saw some ways we could really save some dollars.”

The team cut cost per pipe-mile from around $150,000 to around $50,000 with the idea to move mains just to the side of sidewalks instead of directly underneath, saving thousands in concrete costs for repairing the sidewalks. With that innovation and a better method of paying for meter installation, the 2009 results clocked in at 63 miles — 26% more than planned — and $4 million under budget.

A & L Underground, lead contractors on the project’s first leg, found the speed and extent of the job the highlight of the work. The trenchless directional drilling methods they employed also helped minimize the disruption the project piled on to the work already facing residents. “People here have been damaged enough,” said Fred Harrah, A & L’s vice president of operations. “We need to try to save as much of their yards and sidewalks as possible.”

The effectiveness of the project caught the eye of the Platts Global Energy Awards council, which honored Entergy with the inaugural Infrastructure Project of the Year Award in December 2009 for the New Orleans rebuild. The award recognizes “significant achievement in bringing a much-needed, high-profile energy project online in a timely manner.”

As the project manager, Dufrene could perhaps claim a lion’s share of the credit. But he spotlights the cooperation between upper management, planning and the people charged with deploying the plan. “It is truly an organizational award. It’s not just three or four people. This could not happen unless we had everybody working on the same page — and that’s what we have.”

December 2009 also marked the meeting in which ENO presented its results to the City Council to determine if the project would continue. With the targets exceeded, the budget well in the black and the project as a whole garnering international recognition for the city’s renewal, it was no surprise when the council applauded the progress — “a tremendous ‘attaboy’ for this team,” according to Winslow. The second three-year term is now under way.

Perhaps the most important success the project has had so far, though, is with its customers, whose ranks are back up to 96,000 as of the beginning of 2010. Water-related gas outages are down 50%. With fewer reminders of Katrina’s devastation every day, better service has meant contented clients.

Winslow notes, “The further along we got in this project, the more community response turned from a concern with outages to pride. One thing about being in the utility business is that you want to hear from customers, but you usually hear from them more when they’re not happy. They are happy — we’ve had folks stand up and take notice.”

For a utility as involved with its community as ENO, that’s a satisfaction to savor for a long time.