Louisiana’s Calls on Mississippi Flood Fight Rely on Benchmarks

In Louisiana, the fight against the rising waters of the Mississippi, the largest U.S. river system, has come down to benchmarks of height and volume.

When the river’s flow reaches 1.5 million cubic feet of water per second at Red River Landing, the U.S. Army Corps of Engineers will open the Morganza spillway and send a torrent of water down the Atchafalaya River that may flood more than 3 million acres, said Governor Bobby Jindal.

That threshold may be reached by the day after tomorrow, according to the National Weather Service. Decisions on barge traffic and riverboat casino operations will be made when water height benchmarks are hit, Jindal said yesterday.

About 2,500 people inside the floodway may be affected by the opening of the Morganza for the first time in almost 40 years, Jindal said. Backed-up river tributaries also cause smaller rivers and bayous to flood, affecting as many as 22,500 others, he said.

“If the Morganza is not opened and the levees are breached, the downstream destruction would be worse,” Fred Bryan, a professor emeritus of renewable natural resources at Louisiana State University in Baton Rouge, said yesterday in a telephone interview. “Once the river, with that cutting capacity and speed, cuts a hole, you better get after it because it’s going to erode away the cut very quickly.”

Flood Impact

The floods along the Mississippi and Ohio rivers and other tributaries in the past month have helped to drive gasoline futures prices higher, forced thousands to leave their homes, flooded businesses along the riverbank and wiped out thousands of acres of farmland.

The torrent has also shut river traffic along large stretches of the system, interrupting coal, commodities and chemical shipments. While barges are still plying the river in Baton Rouge, navigation north of the city will start to shut down when the Mississippi goes higher.

A decision hasn’t been made regarding opening the Morganza, said Rachel Rodi, a spokeswoman for the Corps. If the Morganza isn’t opened, New Orleans would be threatened by flood waters, according to the New Orleans Times-Picayune, citing a Corps map it obtained.

The Morganza was built in 1954 and has only been opened during the floods of 1973, according to the Corps.

Gasoline Drops

Gasoline fell today in New York for the first time in three days on speculation that values rose too high without confirmation that flooding on the Mississippi will cut supplies. Gasoline for June delivery fell 12.3 cents, or 3.6 percent, to $3.2567 a gallon at 9:55 a.m. on the New York Mercantile Exchange.

The premium of June gasoline over crude on Nymex surged as much as $4.97 to $40.11 a barrel yesterday, the largest since at least 1990. It sank $3.02 to $35.05 a barrel today.

“The U.S. flooding issue, should it get worse, has the potential to throw the market another curve ball and drive prices higher just when the global economy can least afford it,” Edward Meir, a New York-based senior commodity analyst at MF Global Inc., said in a note today. “On the other hand, if the floodwaters recede, we could see a violent downside correction setting in, particularly in gasoline.”

The river in Memphis crested at 47.87 feet yesterday, just below the 1937 record of 48.7 and has lingered above 47 feet since then, according to the weather service. The bulge of water caused by the convergence of the swollen Mississippi and Ohio rivers at Cairo, Illinois, is moving slowly downstream toward New Orleans and the Gulf of Mexico, which it will reach in about two weeks.

Vicksburg Waits

At Vicksburg, Mississippi, due west of Jackson, the river is expected to crest at 57.5 feet on May 19, about 1.5 above the record crest of 1927, according to the Corps of Engineers. Two of the area’s four casinos, which employ about 2,000 people in all, are shuttered, and about 1,200 of Vicksburg’s 4,000 manufacturing jobs are idled, said Wayne Mansfield, executive director of the Warren County Port Commission.

The Corps of Engineers said it will shut down Louisiana’s Old River Lock when water reaches 63 feet there or 62.5 feet at Red River Landing, now at 60 feet.

The Old River Lock allows navigation on the Red, Mississippi and Atchafalaya rivers, Rodi said. It is designed for commercial and pleasure boats and handles mostly chemicals and agriculture shipments.

Baton Rouge Casinos

Jindal said riverboat casinos in Baton Rouge will begin to shut down when the river reaches 45 feet in the state capitol. At 5 a.m. local time, it was at 42.28 feet, according to the weather service.

Between New Orleans and Baton Rouge, there are 11 refineries along the river with a combined capacity of 2.5 million barrels a day, or 13 percent of U.S. output, according to Andy Lipow, president of Lipow Oil Associates LLC in Houston.

Valero Energy Corp. (VLO) was forced to reduce operations at its refinery in Memphis to between 80 percent and 85 percent of capacity because of the flooding, according to people familiar with refinery operations.

Alon USA Energy Inc. (ALJ)’s Krotz Springs refinery in Louisiana will be affected if the Morganza is opened, Lisa Vidrine, director of the St. Landry Parish office of emergency preparedness, said in a telephone interview yesterday.

NuStar Energy LP (NS) said it will suspend deep draft vessel operations at its St. James, Louisiana, terminal when the Mississippi reaches 32 feet at Donaldsonville.

The river is forecast to reach that level May 13, Greg Matula, a company spokesman, said in an e-mail yesterday. Barge operations will stop when the river stage reaches 33 feet, which is forecast for May 15, according to Matula.

“The current forecast indicates marine activity could be suspended for one to two weeks,” Matula said.

To contact the reporters on this story: Brian K. Sullivan in Baton Rouge at bsullivan10@bloomberg.net; Leela Landress in Houston at llandress@bloomberg.net.

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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