Wednesday August 9th, 2006
by: Ed Mayberry, August 9, 2006 5:08:00 am
Oil giant BP was under scrutiny for allowing its Alaska pipeline to deteriorate even before its decision to shut down its North Slope operations. The Justice Department is pursuing possible criminal charges in connection with an oil spill in March on one leg of BP's feeder system in its Prudhoe Bay field. A federal grand jury is taking evidence in that case. But even before that spill, BP's pipeline maintenance had come into question. Company whistleblowers reportedly raised concerns about how BP dealt with pipe corrosion as early as 2004, leading to an EPA probe. Charles Hamel, a retired management consultant, says technicians in the pipeline maintenance division contacted him, complaining of inadequate attention to pipe corrosion. Members of Congress are pressing for hearings, possibly in September, into BP's maintenance of its pipeline system.
Traders seized upon the Energy Department's update on fuel inventories today to send crude oil futures higher on the New York Mercantile Exchange, topping $77 a barrel. Stockpiles of gasoline dropped by 3.2 million barrels last week--almost twice what analysts had been expecting. The decline was the third in as many weeks. Crude oil supplies were down by 1.1 million barrels, versus the drop of 840,000 barrels that had been forecast. And distillates, which include heating oil and diesel fuel, fell by 200,000 barrels, surprising analysts, who'd been looking for a rise of 700,000 barrels. Refineries meanwhile, ran at 91.6 percent of capacity--a little stronger than had been projected.
UK-based INEOS is creating new jobs in League City with the expansion of its North American Olefins and Polymers business and its newly-formed Nitriles and Oligomers businesses. The expansion will have an annual regional economic impact of $173 million, according to the Bay Area Houston Economic Partnership. Doug Frazior is the economic development coordinator for League City.
"Well, this is a strong win for the City of League City, because of the type of employer that INEOS is and the level of pay of its employees, and it represents the type of companies that we target--the business headquarters, those companies whose market is not in this area, but elsewhere. And we think it's very important that we attract those types of companies because they bring new money to the region."
INEOS employees will contribute more than $1.1 million to the local tax base annually and help create over 727 indirect jobs for the region, resulting in more than $28 million in new salaries. Construction and build-out will realize more than $160,000 in local sales tax.
"We go after these firms because many, many communities want this type of investment in their community, and we compete with other communities--in this case, around the country and several other states."
Charles Saunders is with INEOS.
"Olefins are essentially ethylene. We crack ethane and propane and it becomes ethylene and propylene, which are the building blocks for polymers, which are basic building blocks of all of the plastics that we see around us everyday. Those are the plastics in your dashboard, plastics in your phone. An offshoot of that is the acrylonitrile business, which has a lot to do with fibers originating from the polymers business."
The expansion means many new jobs for League City.
"Somewhere in the neighborhood, here in Marina View in League City, around 300 employees total. We had 150 when we were part of Inovene vis a vis BP, and now we're looking at adding approximately 150 additional positions, whether they be by relocation or consolidation."
League City's Doug Frazior says INEOS is precisely the type of business that League City wants to attract.
"Several reasons. First, according to their officials, the availability of office space close to their other related businesses was available. Also the proximity to the Gulf Coast region, where a lot of the U.S. petrochemical industry is concentrated. Our area is highly educated and very technically proficient, plus the city provided economic development incentives to INEOS."
The INEOS Nitriles and Oligomers companies will occupy 26,000 square-feet of space, in addition to the 34,000 square-feet already occupied by the Olefins and Polymers business at the Marina View office building in South Shore Harbour.
U.S. District Judge Vanessa Gilmore has denied the request by former Enron Broadband executive Kevin Howard for a new trial. Howard claims jurors pressured one another and swapped votes before convicting him in May. Court documents allege that two jurors and a pair of alternates say there was a vindictive atmosphere created by the high-profile trial of Ken Lay and Jeff Skilling next door. One juror complained of being bullied by other panelists into changing their verdicts to guilty and swapping them for not guilty decisions on Michael Krautz, who was acquitted of all charges. Howard is scheduled to be sentenced on October 30th, and his attorneys say they will appeal.
The so-called NatWest Three have been subpoenaed to give evidence in an Enron shareholders class action suit, according to London's Guardian. David Bermingham, Gary Mulgrew and Giles Darby have been served papers requiring them to give depositions on September 28th in the civil case. The news emerged when Bermingham told the Toronto Star they were served shortly after the three were extradited from Great Britain last month. This class action is directed at Royal Bank of Canada, which is accused of helping Enron inflate its profits through a series of fraudulent off-balance sheet deals. The NatWest Three joined Canada's largest financial institution when their employer, Greenwich NatWest, was taken over in 2000.
Sterling Construction has secured a $90.1 million contract from the Texas Department of Transportation. The company says this is the largest contract for a single project in its history. Sterling will reconstruct and expand about five miles of Highway 59 just north of Kingwood in Montgomery County, including installing a major storm drainage system, six bridges, excavation and laying ten-to-15 inch concrete paving.
Dynegy said today it swung to a second-quarter loss from a year-ago profit. The Houston-based electricity producer also lowered its full-year forecast. Dynegy blames a hefty debt management charge and declining segment sales volume. After paying preferred dividends, quarterly losses totaled $211 million. In last year's second quarter, it posted a profit of $19 million. The latest period includes a $190 million charge related to the company's liability management. Its year-ago quarter had a boost from a $112 million benefit associated with the sale of the company's midstream natural gas business. Revenue fell 4.4 percent to $439 million. Looking ahead, the company lowered 2006 guidance, now forecasting a wider loss of $215 million to $260 million. That's greater than a previously expected loss of $175 million to $240 million.
The second quarter profit of Reliant Energy fell 86 percent, with the company citing climbing fuel and electricity costs. Reliant's net income dropped to $14.2 million from $98.7 million a year earlier. Revenue rose 14 percent to $2.77 billion. Costs for power and natural gas jumped 22 percent to $2.23 billion. Reliant is the second-biggest power seller in Texas after TXU. Reliant's retail power price rose 27 percent for Houstonians in the past year, averaging $163 a month for 1,000 kilowatts.
A judge in Austin has upheld a new Public Utility Commission rule that restricts providers from cutting electricity to some needy customers. The PUC voted last month to ban power shutoffs through the end of September for low-income, elderly customers and those with serious medical needs. Those customers must pay at least 25 percent of their outstanding bill starting in October, and the rest will be due within five months. Supporters say the rule is needed to help vulnerable Texans avoid losing their electricity during the hot summer months. The judge rejected a plea from Dallas-based Freedom Power, which complained the rule could put it out of business. The company provides pre-paid electric service to mostly poor customers or those with bad credit histories.
A five percent increase in the number of males who receive a high school diploma could result in about $691 million to the Texas economy, according to the Alliance for Excellent Education in Washington, D.C. The study says it could also result in significant crime-related savings. Projections based on current data indicate that an increase of male graduates could potentially reduce its arrest rate and prison population, resulting in annual savings of about $428 million. The graduates would increase their earning power, adding an annual $263 million in wages to the state's revenue. The group says statistically, high school dropouts are more likely to be arrested and convicted than those who have graduated.
Consumers can now find something they haven't seen as much of lately: falling airline fares. Several major airlines are offering fare sales on select leisure routes heading into the traditionally slow early fall season. One analyst says even so, the discounts were expected and prices have continued to rise on shorter-term business fares. Demand for air travel has remained strong recently. The industry typically faces something of a lull before picking back up again before the holidays. United Airlines, the nation's number-two carrier, offers discounted fares between some U.S. cities for tickets purchased by August 18th, used for travel between August 22nd and November 16th. Delta, American and U.S. Airways are making similar offers.
A new Baker Street Pub & Grill is planned for The Woodlands by Houston-based Hospitality USA Management Group, according to the Houston Business Journal. The British-themed pub and restaurant will open in November in the new 25 Waterway Avenue building under construction near The Woodlands Waterway in Town Center.
A southeast Texas ambulance company hired a day after Hurricane Katrina landed is suing Texas for about $755,000. Nederland-based Metrocare EMS says in its lawsuit that that's what Texas owes after hiring its ambulances to send to Louisiana. In the lawsuit filed in Jefferson County State District Court in Beaumont, Metrocare says six of its fully staffed ambulances were deployed to a staging area in Baton Rouge, Louisiana. That was at the request of Texas officials. The suit alleges the state agreed to pay Metrocare $5,500 per day for each unit deployed. Metrocare said the bill came to about $1.15 million, but a check sent to the company in December was only for about $400,000. A spokeswoman for Governor Rick Perry says state policy discourages comment on pending litigation.
The Edwards Aquifer Authority Board has approved new rules for storing hazardous materials over sensitive recharge lands. The board also set shorter deadlines for reporting spills. General Manager Robert Potts says facilities that store small containers but large quantities of hazardous materials or regulated substances would have to register with the authority. They'd also have to have a plan for responding to a catastrophe to protect the aquifer. Businesses such as home repair or department stores would be affected by the rules if they stored 1,000 gallons or 10,000 pounds of regulated substances. Also, spills of petroleum products or hazardous materials would have to be reported to the authority within 72 hours under the proposal approved yesterday. The rules could take effect early next year.
Shares in a company that says it will make ethanol plunged today after a story that's critical of the project. A web site financed by Dallas Mavericks owner Mark Cuban reported there was little evidence the company had produced significant amounts of the gasoline additive. The story about the Xethanol Corporation was the first published by the Cuban-backed stock fraud-investigating site Sharesleuth.com. Xethanol has said it can convert wood chips, corn stalks and paper sludge into ethanol. The Web site said Securities and Exchange Commission filings listed eight shareholders who've been disciplined by the SEC or other regulators. A spokeswoman says Xethanol made all necessary disclosures with the SEC--and declined comment on reports that are written for blogs.
Erie, Pennsylvania-based Rent-Way is being sold to a larger Dallas area-based furniture rental chain. Rent-a-Center of Plano says it has a $567 million deal to buy Rent-Way. Rent-a-Center has more than 2,700 stores and 17,000 employees in all 50 states, Puerto Rico and Canada. Rent-Way has almost 800 stores in 34 states and about 4,000 employees. Founded in 1981, Rent-Way was rocked by an accounting scandal six years ago. Founder and chief executive William Morgenstern announced that some executives had cooked the company's books to meet Wall Street earnings expectations in the late 1990s.
Carl's Corner is getting a makeover, Willie Nelson-style. The songwriter and performer is an investor in a $5 million project to add hotels, a saloon, even a golf course to the famous Interstate 35 truck stop south of Dallas. Carl's Corner Mayor Carl Cornelius is a longtime Nelson friend who ran the truck stop and incorporated a town around it so he could sell alcohol in otherwise-dry hill county. He says the group is "looking at a 'Branson, Missouri' concept out here.'' The truck stop will be closed for about four months during construction, then will reopen as "Willie's Place.'' Nelson says he won the place in a poker game with Cornelius and now is "trying to lose it back.'' Cornelius says a grand opening is planned for New Year's Eve with a concert featuring Nelson, Kris Kristofferson, Merle Haggard and Ray Price. In 2004, Nelson began selling biodiesel at the stop, which features giant dancing frogs on the roof.
Alcatraz will soon come alive again with the metallic wallop of its main cell block doors crashing closed--in unison. Texas-based Southern Folger Detention Equipment is repairing the worn-out 1930s levers that slammed the doors shut on the notorious island prison near San Francisco. A crew is spending this week wiping layers of oil and grease off the mechanisms and taking measurements for replacement parts. National Park Service rangers used to lock entire tourist groups into the main cell block to simulate life on the inside. But the claustrophobic exercise was halted after the doors sometimes failed to open and locksmiths had to free imprisoned visitors. Alcatraz operated as a federal penitentiary from 1934 to 1963.
It's often identified with plumbers, but it's a problem for other workers who toil in a crouch in work pants with waistbands that are a bit too low. You know how the waistband will slip in the back in a most unsightly way? Revealing a most unappealing cleavage? The makers of Dickies work jeans and pants want to do something about it. Starting next spring, Fort Worth-based Williamson-Dickie will offer work jeans with a lower rise but a roomier seat. Williamson-Dickie marketing vice president Jon Ragsdale says he doesn't expect Dickies to spotlight the change in its advertising. But he tells the Fort Worth Star-Telegram "if there's anything we can do to beautify America, we're in favor of doing it.''