Oil and gas surge in 2013

Oil and gas surge in 2013


The renaissance in domestic oil production has many beneficial aspects for the Golden Triangle with its concentration of refining facilities, transportation infrastructure and oil field service firms. The U.S. average daily oil production is thought to have surged by 1 million barrels per day in 2013, the biggest one-year jump in the nation’s history, according to federal data.

The U.S. Energy Information Administration projects that oil production will jump by another 1 million barrels per day in 2014, an estimate based largely on the production of the Eagle Ford Shale and Permian Basin regions of Texas.

Market guides LNG projects

The unprecedented surge in oil and gas production in recent years has caused radical changes in industry projections. A decade ago, a domestic natural gas shortage was forecast, causing Cheniere and Golden Pass to construct projects to facilitate the importing of liquid natural gas (LNG). Cheniere built in Cameron Parish and Golden Pass in Jefferson County, both with price tags in excess of $10 billion.

By the time the facilities were complete, market forces dictated that they be converted to export LNG from the large surpluses now being discovered.

Cheniere moved quickly with its Sabine Pass Liquefaction Project, with a total cost expected to exceed $18 billion when fully complete in 2019. The completed facility should directly create 580 new jobs in the region.

Golden Pass LNG, a partnership between ExxonMobil and Qatar Petroleum, moved in the same direction with more deliberate speed. As a result, they are not as far along in the complex federal permitting process, but both companies announced contracts in 2013 to sell the future output of the converted facilities.

UPDATE: Cheniere Energy’s Sabine Pass Liquefaction Project is well underway in Cameron Parish, Louisiana, with $5 billion spent since construction began and 2,000 construction workers currently on site.

Largest methanol plant in U.S. coming to Beaumont

Netherlands-based fertilizer giant OCI N.V. unveiled plans to build a massive new facility in Beaumont, a project previously shrouded in secrecy under the name Project Firewater. The company detailed plans for Natgasoline LLC, an OCI subsidiary, to build a new greenfield world scale methanol plant in Beaumont.

The plant will be on a portion of a 514-acre plot near the intersection of Highway 69 and Texas 347 and is expected to start production in late 2016. OCI estimates that the project will create about 3,000 construction jobs over the next three years and has committed to create 240 permanent jobs.

Natgasoline president Frank Choufoer noted that his company could have built this facility anywhere in the world but chose Beaumont for a variety of reasons, including infrastructure, a viable employee base and the welcome they received from local business and government officials.

UPDATE: With strong support from local and state officials, the new plant expects the permitting process to proceed in an orderly manner, which means site preparation work could begin before the end of 2014.

Jefferson Energy’s Big Opening

2013 saw the unveiling of a major new facility — Phase One of the Port of Beaumont Petroleum Transload Terminal.

“The situation with the recent surge in domestic energy production creates business opportunities for companies in the oil and gas sector,” said Al Salazar, CEO of Jefferson Energy Companies, which is developing the transload terminal on land owned by the Port of Beaumont. Jefferson Energy Companies has a 30-year lease with a 30-year option on the port land where it’s building the terminal, one of four ambitious projects the company plans for Southeast Texas and the first to come online.

The project was financed in part by $46 million in tax-free industrial bonds, a much-misunderstood financial instrument. “Industrial revenue bonds like these don’t create any liability for taxpayers,” said Jeff Branick, Jefferson County judge. “The economic development corporation is really just a conduit for the bondholders. Payment for the bonds is between Jefferson Energy and the bondholders, with no taxpayer involvement.” Jefferson is also planning the development of a light crude oil refining facility at the site of the former Independent Refinery facility near Hamshire, which closed its doors in 1983.

UPDATE: Jefferson Energy received its first unit train of crude oil Dec. 11 at the newly constructed Jefferson Transload Railport facility. The shipment of crude oil originated from the Niobrara shale oil fields in Colorado and was sold to a major local refinery in the Golden Triangle. The first unit train had 70 rail cars with a total capacity of 43,000 barrels.

Regional airport revived

Commercial air travel returned to Southeast Texas in mid-February when American Airlines began regularly scheduled American Eagle flights between Jack Brooks Regional Airport and the Dallas-Fort Worth International Airport (DFW).

Airport director Alex Rupp said the route was made possible through a culmination of efforts by counties, cities, businesses and people in the community who want to see the area flourish.

Jefferson County commissioners approved a $250,000 contribution from the county to a “minimum revenue guarantee” (MRG) to American Airlines for the route. Other counties, cities and local businesses joined in the effort to accumulate the $1.5 to $2 million guarantee required by American Airlines for them to establish the route.

The statistics for the performance period Feb. 14 through Nov. 30 are encouraging with 2,144 scheduled flights with only 76 cancelled flights for an enviable overall completion factor of 96.5 percent. November’s 78.9 percent load factor is a 33 percent increase over February’s 45.8 percent load factor. None of this would be possible without the minimum revenue guarantee.

UPDATE: For 2013, more passengers have traveled out of Jack Brooks Regional Terminal than the previous three years combined. Since the airport has more than 10,000 passengers departing, the airport is eligible for a $1 million FAA grant.

Rupp said, “2013 was a great year for the airport, and I expect 2014 to be an even better one.”

Panama Canal CEO visits Lamar

In February 2013, the CEO of the Panama Canal Authority Jorge Quijano visited Lamar University to describe progress on the massive expansion of the canal and its implication for ports along the Gulf Coast, including Beaumont and Port Arthur. Quijano described how that $5.25 billion project will double the capacity of the canal by 2015. It was something of a homecoming for Quijano, a native of Panama City, who attended Lamar, earning his bachelor’s degree in industrial engineering in 1973 and a master’s in industrial engineering the following year. That Lamar education has enabled him to guide the international consortium that is constructing the new locks that will greatly increase the number and size of the vessels that utilize the canal.

UPDATE: During his Lamar visit, Quijano met engineering student Andrea Llamas Perez, a native of Guanajuato, Mexico, who graduated in spring 2013 and is pursuing a master of engineering with a concentration in civil engineering. Obviously impressed with Perez, Quijano arranged an internship at the Panama Canal expansion project, otherwise known as the Third Set of Locks Project. “Coming from a phenomenal experience, I am now looking forward to bigger projects,” Perez said after her Panama Canal internship.