Houston Chronicle: Beaumont-Port Arthur: Energy helping revive a region

Pilings are driven into the ground for the $7 billion expansion of the Motiva refinery in Port Arthur, one of the large-scale energy projects pumping life into the Beaumont-Port Arthur area’s economy.
STEVE UECKERT PHOTOS: CHRONICLE

Houston Chronicle: Beaumont-Port Arthur: Energy helping revive a region

By BRETT CLANTON
Copyright 2008 Houston Chronicle
Jan. 19, 2008, 1:57AM

PORT ARTHUR — In 1901, a prolific oil field called Spindletop transformed the Beaumont-Port Arthur area from a quiet rural outpost to a booming hub of oil production.

Today, large-scale energy sector projects are pumping new life into the region, home to more than half a million people in an eight-county area about 90 miles east of Houston.

About $15 billion in energy projects are under way, planned or being considered, according to the Southeast Texas Workforce Development Board.

The largest, a $7 billion expansion of Motiva’s refinery in Port Arthur, broke ground in December and will be completed by 2011. Other projects, including an Exxon Mobil Corp. liquefied natural gas terminal in Sabine Pass, a Cheniere Energy Partners LNG terminal in Cameron, La., and an Eastman Chemical coal gasification plant in Beaumont, will come online between now and then.

The region already is feeling the ripple effects of the investment.

New housing, restaurants and hotels have opened to accommodate thousands of construction workers and employees who soon will call the area home. New retail stores and hospitals are on the way. Millions in public bond money will soon upgrade schools in Port Arthur and Beaumont. And commuters are suddenly battling traffic.

“Of course, things take months, sometimes years in the planning. But what the general public is seeing is boom, boom, boom all over the entire region,” said Barbara Knight, chairwoman of the Partnership of Southeast Texas, an economic development group.

The area still shows symptoms of its troubles. Economic stagnation closed businesses that now stand as boarded-up shells on quiet downtown Port Arthur streets, and a near-direct hit from Hurricane Rita in 2005 further stalled recovery.

And even the surge of economic activity is bringing new challenges and highlighting old problems that have festered for years.

High on the list is how an area, rich in oil and gas infrastructure but poor in many other ways, will fill as many as 4,500 permanent high-skilled jobs created by the energy projects and more than 20,000 construction jobs needed to build them.

Another challenge: using the investment to help diversify the area’s economy, rather than hitching it more firmly to the ups and downs of the oil and gas industry.

But those concerns have largely taken a back seat to optimism many local officials express about what’s ahead for the area. “There is very little negative in what’s happening here in the next five years,” said Steve Fitzgibbons, Port Arthur’s city manager.

Improved employment

Indeed, the unemployment rate in the Beaumont-Port Arthur area recently dropped below 5 percent after hovering around 8 percent or 9 percent during most of the last decade, according to U.S. Census data.

And it appears destined to fall further as new projects move forward.

Take Motiva’s Port Arthur refinery expansion project. Though the project is still in its early stages, about 1,200 construction workers are reporting to the site each day, said Todd Monette, general manger of the refinery. At its peak next year, up to 6,000 workers will be there, he said.

And that’s just construction crews. The plant, which is doubling in size to become the nation’s largest refinery, will add 200 permanent positions, and is likely to have as many as 300 more openings within the next five years as older workers retire, Monette said.

“We’re trying to inform the public that these jobs are not going to go away,” said Robert Foster, labor market analyst for the Southeast Texas Workforce Development Board.

Motiva, a joint venture of Royal Dutch Shell and Saudi Arabia’s state-owned oil company, is investing money, along with other energy companies, into local training programs to ensure there will be qualified workers to fill vacant spots in coming years.

Better pay

And because jobs at the refinery will be some of the highest-paying in the area, locals like Gayle Gilbert are taking notice.

The 49-year-old Port Arthur resident was an office clerk for 21 years at a phone company and is now a contract laborer at a local chemical plant. But she is seeking more job security and better pay. Already, Gilbert has applied for several jobs at the Motiva plant.

Like many in this region, Gilbert’s life has been intertwined with the local refineries. Her father worked at one. So do many of her friends. And both of her children are applying for jobs at Motiva.

But decades of declines in the U.S. industrial and manufacturing sectors are making stories like Gilbert’s less common. The Beaumont-Port Arthur area has been trying to reinvent itself.

Access to transit

For energy companies locating projects there, however, the region still has plenty to offer.

For them, it’s about the access to waterways and rail lines, the huge concentration of pipelines and storage tanks, the proximity to other petrochemical plants, which then become interdependent by making products like hydrogen or petroleum coke that other facilities can use.

“So if you put all of those basic requirements together, along with a positive economic climate that’s welcome to industry, it just kind of focuses you in on Beaumont,” said David Gallaspy, managing director of project development for Eastman Chemical’s $1.6 billion gasification plant.

Construction on the Eastman project will begin in 2009, with the facility expected to begin production in 2011, he said.

Liquefied natural gas terminals, including the project by Exxon Mobil affiliate Golden Pass in Sabine Pass and another by Houston’s Cheniere Energy Partners in nearby Cameron, La., are expected to open sooner, while a proposed LNG terminal in Port Arthur by Sempra Energy is on hold.

Valero and Total?

A couple of other major projects proposed for the region are also up in the air.

Valero Energy is still in the “talking phase” about an expansion of its Port Arthur refinery, said Bill Day, spokesman for the San Antonio-based refiner. The project would boost the plant’s capacity from 325,000 barrels per day of capacity to 400,000 barrels per day and cost roughly $1.4 billion, he said.

Total Petrochemicals USA is still in “exploratory” discussions about an expansion of its Port Arthur refinery, said Karyn Grace, a spokeswoman for the Houston-based arm of the French energy company.

But Foster, with the Workforce Development Board, said while those companies and others make their plans, development elsewhere in the region will be charging ahead.

“Just about any where you go,” he said, “if a piece of dirt isn’t being turning over, you’re in the wrong spot.”

ENERGETIC EFFORTS

Companies with major energy sector projects under way or under consideration in the Beaumont-Port Arthur area, along with the project value and scheduled completion:

In progress or planned

• Motiva — Refinery expansion, Port Arthur, $7 billion, 2011

• Eastman Chemical — Coal gasification plant, Beaumont, $1.6 billion, 2011

• Cheniere Energy Partners — LNG terminal, Cameron, La., $1 billion, 2008

• Golden Pass (Exxon Mobil affiliate) — LNG terminal, Sabine Pass, $1 billion, 2008

Under consideration

• Total — Refinery expansion, Port Arthur, $1.8 billion, 2010

• Valero —Refinery expansion, Port Arthur, $1.4 billion, 2010

• Sempra — LNG terminal, Port Arthur, $1 billion, 2010

Sources: Southeast Texas Workforce Development Board, companies

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