LAKE CHARLES, La./HOUSTON (Reuters) - The remnants of Tropical Storm Harvey drenched northern Louisiana on Thursday (Aug 31) as it moved inland, leaving rescuers to search homes around Houston and in the hard-hit south-eastern Texas coast for more survivors and victims.

The storm killed at least 35 people and its aftermath - including an explosion and dangerous smoke at a chemical plant and swollen rivers and reservoirs - threatened more misery for residents of Texas and Louisiana.

Harvey's death toll was rising as bodies were found in receding waters. Some 32,000 people were forced into shelters around the US energy hub of Houston since it came ashore on Friday as the most powerful hurricane to hit Texas in a half-century.

Storm-related power outages prompted two explosions at a flood-hit Arkema SA chemical plant in Crosby, Texas, 30 miles (48 km) northeast of Houston, with one sheriff's deputy sent to the hospital after inhaling chemicals as smoke plumes rose 40 feet (12 m) in the air.

"The plume is incredibly dangerous," Federal Emergency Management Agency Administrator Brock Long told reporters. A company official described the smoke as a noxious irritant created after refrigeration systems on a truck used to store the chemicals failed, causing them to overheat.

Eight more trucks also storing the chemicals also could explode, public safety officials and a company executive told reporters. "These things are going to catch on fire. They are going to burn with intensity," said Bob Royall, assistant chief of emergency operations at the Harris County Fire Marshal's Office."Most of the material is going to be consumed by a very hot fire."

A 1.5-mile (2.4 km) radius around the plant had been evacuated and the company urged people to stay away from the area.

DOWNGRADED TO DEPRESSION

By Thursday, Harvey was downgraded to a tropical depression, located about 15 miles (24 km) south of Monroe, Louisiana. The storm's rains wrought the most damage along the Gulf Coast and the National Weather Service warned as much as 10 inches (25.4 cm) could fall in Mississippi, Tennessee and Kentucky.

Rivers and reservoirs in Texas remained at or near flood level, with officials warning high water would remain a danger for the next few days.

The storm that paralysed Houston is predicted to be one of the most expensive natural disasters in US history and presents the administration of USPresident Donald Trump with massive humanitarian and rebuilding challenges.

STRATEGIC RESERVES

The US Energy Department will release 500,000 barrels of crude oil from the Strategic Petroleum Reserve in response to Tropical Storm Harvey, the first emergency release since 2012, a spokeswoman said in a statement on Thursday.

Flooding shut the nation's largest oil refinery in Port Arthur in the latest hit to U.S. energy infrastructure that has sent gasoline prices climbing and disrupted global fuel supplies. Average U.S. retail fuel prices have surged by more than 10 cents per gallon from a week ago, the AAA said on Thursday.

Average retail gasoline prices have risen to US$2.449 per gallon nationwide, up 4.5 cents a gallon from a day earlier and 10.1 cents from a week ago, data from the industry group showed.

The release will be delivered to the Phillips 66 refinery in Lake Charles, Louisiana, according to the statement. That refinery has not been affected by the storm, which has hammered the Gulf Coast for several days.

The release includes 200,000 barrels of sweet crude and 300,000 barrels of sour crude oil, according to the statement. The reserve, established in the 1970s, currently contains 679 million barrels of oil.

In Houston, the Fire Department will begin a block-by-block effort on Thursday to rescue stranded survivors and recover bodies, Assistant Fire Chief Richard Mann told reporters.

Flood watches and warnings extend from the Texas-Louisiana coast into Kentucky.

"Our whole city is underwater," said Port Arthur, Texas, Mayor Derrick Foreman in a social media post where he also broadcast live video of floodwaters filling his home in the city of 55,000 people, about 100 miles (160 km) east of Houston.

Nearly 30 inches (76.2 cm) of rain hit the Port Arthur area, the National Weather Service said. Beaumont, near Port Arthur, said it had lost its water supply due to flood damage to its main pumping station and residents in the city of about 120,000 people would lose water pressure from Thursday morning.

Fort Bend County ordered a mandatory evacuation on Thursday for areas near the Barker Reservoir, which was threatening to flood. The reservoir is about 20 miles west from Houston. The county did not say how many people would be affected by the evacuation order.

Clear skies in Houston on Wednesday brought relief to the energy hub and fourth-largest U.S. city after five days of catastrophic downpours. The first flight out of Houston since the storm hit boarded on Wednesday evening. Mayor Sylvester Turner said he hoped the port of Houston, one of the nation's busiest, would reopen soon.

Police in Harris County, home to Houston, said 17 people remained missing. Nearly 200,000 homes and businesses in Louisiana and Texas were without power on Thursday, utilities reported.

NEIGHBOURS HELPING NEIGHBOURS

Moody's Analytics is estimating the economic cost from Harvey for southeast Texas at $51 billion to $75 billion, ranking it among the costliest storms in U.S. history. At least $23 billion worth of property has been affected by flooding from Harvey just in parts of Texas' Harris and Galveston counties, a Reuters analysis of satellite imagery and property data showed.

"The worst is not yet over for southeast Texas, as far as the rain is concerned," Governor Greg Abbott said on Wednesday. He warned that floodwaters would linger for up to a week and said the area affected was larger than that hit by 2005's Hurricane Katrina, which killed more than 1,800 people in New Orleans, and 2012's Superstorm Sandy, which killed 132 around New York and New Jersey.

Houston's metropolitan area, with an economy about as large as Argentina's, has a population of about 6.5 million, far greater than New Orleans' at the time of Katrina. A day after visiting Texas to survey the damage, Trump pledged on Wednesday to stand by the people of Texas and Louisiana. The storm made it less likely Trump would act on his threat to shut the federal government over funding for a border wall with Mexico, Goldman Sachs economists said. They now estimate that probability at 35 percent, down from 50 percent previously.

Vice President Mike Pence and several Cabinet secretaries will travel to Texas on Thursday to meet residents affected by the storm as well as local and state officials, Pence's press secretary said.

An army of volunteers has turned out to help the thousands of police, National Guard personnel, Coast Guard flood teams and emergency crews to ferry thousands of people stranded in floodwaters to safety.