NEW ORLEANS -- The Army Corps of Engineers pushed on Thursday with the inspection of about 300 miles of levees, floodwalls and gates in the wake of Hurricane Gustav.

So far, the agency has declared New Orleans' partially rebuilt levee system intact.

Gustav came ashore Monday, driving a storm surge into waterways that surround New Orleans.

The biggest problem was on the Industrial Canal where ships and barges broke loose during the storm and slammed into a railroad bridge, compromising a harbor embankment near one of the lowest and weakest segments of the federal levee system.

Overall, the corps said Gustav caused minimal damage to the ongoing $14.8 billion construction project to build a robust levee system for greater New Orleans.

"The whole system ran for 36 hours," said Randy Cephus, a corps spokesman. "The system performed."

The massive pumps installed at drainage canals after Hurricane Katrina to pump water from the city into Lake Pontchartrain did not fail. The pumps were manufactured by Florida-based Moving Water Inc.

But it was a close call on the Industrial Canal, which is near the French Quarter and borders the Lower 9th Ward.

Gustav's surge overtopped floodwalls and pushed large vessels -- including a Navy ship and a giant hopper barge -- docked at a scrap metal yard into the Almonaster railroad bridge.

A minor side road and embankment collapsed, but more worrisome were visible signs of deep erosion and channeling by the storm surge and the fact that a corps floodwall protecting an industrial corridor is a short distance away.

"This could have been much worse," said Ivor van Heerden, a hurricane expert with Louisiana State University's Hurricane Center, as he surveyed the site.

"You've got a lot of scour here associated with water flow," he said. "Another 30 yards and it could have been eroding right here at the federal floodwall."

"We know there are concerns here," Cephus said as emergency crews, towboats, the Coast Guard, city officials and the scrap yard owners tried to untangle the mess of ships, repair the damage and assess blame.

Chris Bonura, a Port of New Orleans spokesman, said work to shore up port-provided flood protection at the Almonaster bridge has not moved along very quickly. On the canal, the port has its own floodwalls, but they are much smaller and meant to protect harbor business.

"That floodwall does not protect one citizen in the city of New Orleans," he said about the embankment the ships ran aground against. "It doesn't protect anything but our industrial properties."

The accident shined a spotlight on the expense and complications of building flood protection in an urban, industrialized area.

At Almonaster, the corps is dealing with an engineering nightmare. How do you build adequate levees where a CSX railroad crosses over a low-lying Port of New Orleans bridge in a narrow shipping channel inside old and neglected levees and floodwalls?

The corps' solution is to leave the Industrial Canal floodwalls -- old and neglected as they are -- alone and build navigable floodgates at the entrances to the canal at a cost ranging well over $700 million. That work is scheduled to be done by 2011. In the meantime, the corps plans to block surge with an interim structure.

The Industrial Canal has a long history of trouble. It's blamed for major flooding in Hurricane Betsy in 1965 and Katrina, which struck Aug. 29, 2005 and flooded 80 percent of New Orleans.

Directly related to the Industrial Canal is the threat from another shipping channel, the 74-mile Mississippi River-Gulf Outlet. The MRGO was dug in the 1960s as a shortcut for big ships to the Gulf of Mexico.

The channel has been blamed for the disappearance of an extensive area of cypress forest and wetlands that once existed southeast of New Orleans and helped dissipate hurricane surges.

Some storm surge experts believe the MRGO is a primary conduit for surge and makes water pile up in the Industrial Canal.

The MRGO, too, is bounded by levees. They failed during Katrina, flooding the impoverished Lower 9th Ward and wiping out St. Bernard Parish.

The corps said there was no obvious damage to the MRGO's rebuilt levees.

Van Heerden said he inspected a portion of the levee from Bayou Dupre to Bayou Bienvenue on Wednesday.

He said he found no major problems but saw evidence of initial erosion, what is known as "scalloping." And that, he said, was a concern.

"Even though this was a low-energy wave field, we still saw some scalloping of the surface," he said. "The whole thing is that the MRGO levees as they stand presently will not survive another Katrina."

Since Katrina, the corps has done extensive repairs and improvements on the MRGO levees.

(Copyright 2008 by The Associated Press. All Rights Reserved.)