* Heavy rainfall, little flooding in New Orleans
* Tidal surge hits low-lying coastal areas
* Mississippi, Alabama and Tennessee could see floods (Adds downgrade to tropical depression, Texas fires)
By Kathy Finn
NEW ORLEANS, Sept 4 (Reuters) - Tropical Storm Lee weakened to a tropical depression as it neared Mississippi on Sunday, and New Orleans' flood defenses held up under one of their biggest tests since Hurricane Katrina devastated the city in 2005.
The National Hurricane Center said the remnants of Lee were 55 miles (90 km) west-southwest of McComb, Mississippi, with maximum sustained winds of 35 mph (55 kph) around 11 p.m. EDT (0300 GMT on Monday). The storm was moving east-northeast at 7 mph (11 kph).
The storm has temporarily shut over 60 percent of offshore oil production. [ID:nN1E78304S]
Even as a tropical depression, the storm remains a rainmaker, carrying the potential to dump up to 10 inches (25 cm) of rain over the Tennessee Valley and southern Appalachian Mountains, forecasters said.
The remnants of Lee could still bring flash flooding and tornadoes to Mississippi on Monday, and to Alabama and Tennessee on Tuesday, the Miami-based hurricane center said.
In New Orleans, the storm recalled Hurricane Katrina, which flooded 80 percent of the city, killed 1,500 people and caused more than ${esc.dollar}80 billion in damage to the tourist destination. Lee has dropped up to 13 inches (33 cm) of rain on New Orleans since it developed late last week.
Half the city lies below sea level and is protected by a system of levees and flood gates.
Some street flooding was reported, but the city's massive pumping system kept ahead of the volume and diverted the waters into Lake Pontchartrain.
Low-lying parishes around New Orleans did not fare as well, as Lee's winds drove a tidal surge over levees and onto roads.
"For a while we got some false hope that we might be out of the woods, but we realized overnight we would get more rain," Lafourche Parish spokesman Brennan Matherne said. "We're getting call after call about street flooding."
New Orleans Mayor Mitch Landrieu warned residents to stay alert for flash floods and high winds expected before Lee departs.
"Let's not be lulled to sleep by the breaks that we've had," Landrieu said.
New Orleans' levees saw less stress because Lee's winds were too weak to drive a massive storm surge into the city, as was the case during Katrina.
"The levees at this point are really not being tested because the surge is not coming into the system," said Colonel Edward Fleming of the U.S. Army Corps of Engineers. "This is mainly a wind and a rain event."
There were isolated reports of flooding in roads and homes. No injuries or deaths were reported in Louisiana.
Wet conditions associated with the storm appeared to be a factor in an early morning car wreck in Mobile, Alabama, that killed one man and left several injured.
In Texas, just east of Austin, Lee's gusty winds fed a 14,000-acre (5,700-hectare) wildfire that threatened 1,000 homes and caused evacuations. Wildfires have burned more than 3.5 million acres (1.4 million hectares) of Texas, which is in the grips of a historic drought. [ID:nN1E78304T]
FLOODING THREAT
Lee's tidal surge could spur more coastal flooding in Louisiana, as well as in Mississippi and Alabama, before drenching a large swath of the Southeast and Appalachian regions in the coming days.
Storm winds have already pushed Gulf waters inland, slamming barriers in low-lying areas such as Lafourche Parish and prompting mandatory evacuations in the coastal communities of Lafitte, Crown Point and Barataria.
In Mississippi, local governments were taking precautions as forecasters predicted tides could be 2 feet to 4 feet (0.6 metres to 1.2 metres) above normal.
As of Sunday afternoon, 6,149 customers were without power in Louisiana and 609 in Mississippi, utility Entergy Corp <ETR.N> reported.
More than 60 percent of U.S. offshore oil production, all based in the Gulf of Mexico, and over 44 percent of offshore gas production were shut as of Saturday, according to the U.S. government. Most of that output should quickly return once the storm passes.
Major offshore producers like Royal Dutch Shell <RDSa.L>, Exxon Mobil Corp <XOM.N> and BP Plc <BP.L> <BP.N> shut down platforms and evacuated staff late last week.
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Shell, Exxon and Anadarko Petroleum Corp <APC.N> have started to return workers to offshore platforms.
Low-lying refineries in Louisiana that collectively account for 12 percent of U.S. refining capacity were watching the storm closely, but reported no disruptions.
In the open Atlantic on Sunday, Hurricane Katia strengthened rapidly to a Category 2 storm.
Katia had top sustained winds of 105 mph (165 kph), the hurricane center said, but it was too soon to gauge the potential threat to land or the U.S. East Coast from the storm, which could become a "major" hurricane with maximum sustained winds of at least 111 mph (178 kph) on Monday [ID:nN1E783030]. (Additional reporting by Kristen Hays in Houston, Tom Brown in Miami, Kelli Dugan in Mobile, Alabama and Jim Forsyth in San Antonio; Writing by Chris Baltimore; Editing by Xavier Briand and Peter Cooney)
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