*Ike expected to make landfall late Friday, early Saturday
*Storm could flood 100,000 homes
*20 percent of US refining capacity lies in Ike's path
By Tim Gaynor
GALVESTON, Texas, Sept 12 (Reuters) - Hurricane Ike bore down on the coast of Texas on Friday, driving a wall of water into seaside communities and threatening catastrophic damage all the way up to Houston.
In what may be the worst storm to hit Texas in nearly 50 years, Ike's center was within hours of overwhelming low-lying areas near Houston with a possible 20-foot (6-metre) storm surge.
High winds and rain lashed the coast, sending huge waves crashing against a 17-foot (5-meter) sea wall built to protect the port of Galveston after a hurricane in 1900 killed at least 8,000 people in the deadliest weather disaster in U.S. history.
The National Weather Service warned that people in coastal areas could "face the possibility of death" and officials said Ike could flood as many as 100,000 homes and send a storm wave across 100 miles (180 km) of U.S. coastline.
"This certainly falls in the category of pretty much a worst case scenario," he said.
Crude oil markets nervously watched to see if Ike would swamp low-lying coastal refineries in its path that collectively process 20 percent of U.S. fuel supplies.
Ike's ferocity surprised many just 11 days after Hurricane Gustav forced 2 million people to flee the Louisiana coast, but largely spared New Orleans.
Some 600,000 people left low lying Texas counties under mandatory evacuation orders, but some who thought they would stick it out made a last-minute exit from Galveston.
"When I woke up, my bed was floating in the house," said David Daubuisson, a handyman who narrowly escaped from his home in Bayou Vista. "I just took what I could and got out."
Ike was a Category 2 storm with 110 mph (175 kph) winds as it moved on a course to pass directly over Houston -- the fourth-largest city in the United States.
The storm is expected to come ashore overnight, possibly as a dangerous Category 3 hurricane on the five-step intensity scale with winds of more than 111 mph (178 kph), the National Hurricane Center said.
At 8 p.m. CDT (0100 GMT), Ike was about 95 miles (155 km) southeast of Galveston and moving west-northwest at 13 mph (20 kph), the center said.
About 13 million people in 132 counties along the Gulf coast could face hurricane and tropical storm conditions, the U.S. National Census Bureau said.
Millions of residents could be left without power, authorities said. A dawn-to-dusk curfew was laid down in evacuated areas around Houston.
The Coast Guard had to rescue 65 people from rising waters on the the Bolivar Peninsula, east of Galveston.
U.S. crude oil futures rose 31 cents to settle at $101.18 a barrel after dropping below $100 for the first time since early April as concerns over U.S. economic weakness outweighed storm disruption fears.
Ports were closed and the Coast Guard said a 584-foot (178-metre) freighter with 22 people aboard was stranded without power 90 miles (145 km) southeast of Galveston. Conditions were too treacherous to attempt a rescue.
The storm's wide reach means that it will pack an unusually strong punch, taking the form of a huge wave of water it is pushing ahead of it.
"This is a Category 5 hurricane," said Jeff Masters, co-founder of meteorological Web site The Weather Underground. "I don't care what the Category 2 rating says," he said. Category 5 storms are the most dangerous.
The storm surge could push as far inland as NASA's Johnson Space Center south of Houston, Masters said.
Ike could be the third-most damaging storm in U.S. history behind Hurricanes Katrina and Andrew in 1992, experts said.
Risk Management Solutions pegged the value of insured property in the Houston area at nearly $1 trillion, including the city's port -- the nation's second busiest.
Katrina devastated New Orleans and other parts of the Gulf Coast in August 2005, killing 1,500 people and causing at least $81 billion in damage.
