September 1, 2008 / 4:45 PM / 9 years ago

Hurricane Gustav tests New Orleans levees

* Gustav weakens as it moves inland over Louisiana

* Oil, natgas prices fall as threat to platforms eases

* Defense Department authorizes up to 50,000 troops for storm

By Tim Gaynor and Matthew Bigg

NEW ORLEANS, Sept 1 (Reuters) - Hurricane Gustav slammed ashore on the U.S. Gulf Coast just west of New Orleans on Monday, hammering the city devastated by Katrina in 2005 with surging floodwaters that threatened its rebuilt levees.

The storm was weaker than had been feared. But waves splashed over floodwalls containing the New Orleans Industrial Canal, triggering a tense watch over the barrier system that failed three years ago, flooding 80 percent of the city and stranding thousands of people.

Six inches (15 cm) of water pooled in some streets near the canal, and troops prepared to evacuate residents. But the U.S. Army Corps of Engineers said the levees had not been breached and city pumps were able to keep up with the flooding.

A National Guard official said the Department of Defense had authorized up to 50,000 troops to help with rescue, clean-up and the possibility of looting.

The storm roared through the heart of the U.S. Gulf oilpatch but oil and natural gas prices plunged as Gustav weakened to a Category 2 hurricane with 110 mph (177 kph) winds before landfall, easing fears of serious supply disruptions that had put energy markets on edge. [ID:nSYD35037]

Oil companies had shut down nearly all production in the region, which normally pumps a quarter of U.S. oil output and 15 percent of its natural gas.

Nearly 2 million people fled the Gulf Coast as Gustav approached and only 10,000 were believed to have remained in New Orleans.

Louisiana Gov. Bobby Jindal warned residents it was too early to sound the all-clear because floodwaters could take hours to recede.

"Just because the storm is moving over your area, do not think that the tidal surge impacts are yet over," he said.

By mid-afternoon the Louisiana National Guard reported only minor street flooding in New Orleans and the Army Corps of Engineers said the water levels had receded slightly in the Industrial Canal. The storm weakened to a Category 1 hurricane with 90 mph (145 kph) winds as it moved inland.

"All in all we think we are in pretty good shape, though we are not through yet," Corps Col. Jeff Bedey said.

Some officials noted that catastrophic breaches in the city’s levees occurred a day after Katrina departed.

‘NO PUNCH’

Hurricane Gustav also took center stage in U.S. politics. The Republicans opened their convention on Monday to nominate presidential candidate John McCain with a bare-bones program stripped of the usual pomp and circumstance.

A dangerous Category 4 hurricane a few days ago, Gustav hit shore near Cocodrie, Louisiana, about 70 miles (115 km) southwest of New Orleans, as a Category 2 storm on the five-step Saffir-Simpson scale of hurricane intensity, one step below Katrina’s strength when it made landfall.

Wind ripped through the city, knocking down trees, tearing down shop awnings and bowling trash cans through all but deserted streets.

"Gustav doesn’t have no punch," pool builder Randall Dreher said, head bowed into the gale. "I went through Katrina and this is totally different. It’s weak."

About 500,000 homes and businesses were without power in Louisiana, the governor said.

Natural gas futures dropped over 6 percent and oil fell about 4 percent on Monday on expectations that the storm would largely spare production facilities in the Gulf of Mexico. Katrina and Hurricane Rita, which followed it three weeks later, wrecked more than 100 Gulf oil platforms.

The storm was expected to trigger significant insurance claims. EQECAT Inc., which helps insurers model catastrophe risk, said it estimated insured losses at $6 billion to $10 billion. Katrina’s insured losses were more than $40 billion and total damage was more than $80 billion, making it the costliest hurrricane in U.S. history.

Gustav was likely to toss a dangerous storm surge of up to 14 feet (4.3 metres) of water ashore, forecasters said.

Hurricane Katrina, which killed some 1,500 people in New Orleans and other parts of the U.S. Gulf Coast, brought a 28-foot (8.5 metre) storm surge that burst New Orleans levees on Aug. 29, 2005.

The city degenerated into chaos as stranded storm victims waited days for government rescue and law and order collapsed.

BUSH‘S RESPONSE

President George W. Bush, who was heavily criticized for the slow Katrina relief efforts, canceled his appearance at the Republican convention and traveled to Texas to oversee emergency response efforts to Gustav.

McCain, facing Democrat Barack Obama in November’s election, went to Mississippi on Sunday to survey preparations and ordered political speeches canceled on Monday for his nominating convention, apparently concerned that television images of a choreographed Republican celebration while the storm was hitting Louisiana would be seen as out of touch.

In its run through the Caribbean, Gustav earlier killed at least 96 people in the Dominican Republic, Haiti and Jamaica.

The U.S. Coast Guard reported the first storm-related death in Florida on Sunday, where a man fell off his boat.

As Gustav blasted through Louisiana, Tropical Storm Hanna grew to hurricane strength near the southeast Bahamas and could threaten the U.S. east coast from Florida to the Carolinas. And a new tropical depression formed in the Atlantic, and could become a tropical storm on Monday, the hurricane center said. (Additional reporting by Tom Brown in Miami, Lilla Zuill in New York and Bruce Nichols, Chris Baltimore and Erwin Seba in Houston; Writing by Jim Loney; Editing by Mary Milliken and Frances Kerry)





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