Economic Trends November 2012
Jefferson, Hardin, and Orange Counties
Over the last four years, three major refinery expansion projects have helped keep the Southeast Texas economy in considerably better health than the rest of the nation. By spring 2013, the last of the construction work on those projects should be complete. The good news looking forward is that gas prices are expected to be stable for the next 20 years, thanks to “fracking,” which is attracting much interest from prospective petrochemical producers. Construction related to LNG export facilities in the region is also a bright spot for the future.
INDUSTRY
The Valero Port Arthur Hydrocracker project is nearing completion and commissioning activities are well under way. The new hydrocracker is expected to be in operation in December 2012.
CB&I’s project on Island Park (just south of the I-10 Neches River bridge in Beaumont) appears to be complete. All components constructed for the Refinería de Cartagena (REFICAR) in Columbia having been barged off. The project that started in October of 2010 employed about 500 workers at peak.
According to the Beaumont Enterprise, Motiva new crude unit should be fully functional by spring 2013 after months of rework from a fire on June 9th. The project commissioned on May 31st doubled the refinery’s capacity to 600,000 barrels per day. The five-year, $10 billion and 14,000 construction-worker project was the largest single expansion in the U.S. in four decades. The project’s estimated economic impact to the region during construction is estimated in excess of $17 billion. It also created 300 permanent jobs.
GT Logistics recently hosted its official ribbon cutting at its Port Arthur facility and announced they have been meeting with seven international companies considering manufacturing or distribution facilities at the site. The companies represent a combined potential for $2.3 billion in investment.
Clearing and grading of land for the controversial Keystone Pipeline project has begun in Jefferson and Hardin counties. Property owners are awaiting appeals court hearings on the legality of using their property for the project.
Construction projects expected for the not too distant future include: Jefferson Refinery with 300 construction jobs and 200 full-time jobs and Cheneire’s $10 billion export LNG facility in Cameron Parish, Louisiana, which will bring benefits to Southeast Texas in terms of workers, suppliers, and service industries. Golden Pass has applied for federal permits to also become an LNG exporter and is awaiting response.
REGIONAL AIRPORT
American Airlines will begin servicing four roundtrip flights per day from Jack Brooks Regional Airport to DFW beginning February 14, 2013. Flight booking began November 4th. Various entities in the region combined resources to provide a $1.5 million revenue guarantee to attract American’s service. Hopefully, there will be enough passenger traffic that the fund will not have to be tapped. United ended its air service from Beaumont to Houston in July of 2012.
HURRICANE FUNDS, FACILITIES, and INSURANCE
Jefferson County and 13 other Texas coastal counties are preparing for the Texas legislative session starting in January 2013. The Texas Windstorm Insurance Association (TWIA) is the state-run insurer of last resort for the 14 Texas counties from which private insurers have withdrawn coverage. Texas State Insurance Commissioner Eleanor Kitzman recently told Texas lawmakers that by most insurance company standards, TWIA is not solvent. Seven areas to be considered for legislation include: statewide catastrophic insurance, the claims handling process, the need for adjusters to know the Texas rules, incentives for private insurance companies to come back to the market by establishing a cap, mediation before litigation, enforcement of building codes (particularly in unincorporated areas), and representation of consumers on the Windstorm Oversight Committee.
During the last eighteen months (18), the South East Texas Regional Planning Commission (SETRPC) Disaster Recovery Division has supervised the reconstruction of 715 homes in Hardin, Jefferson and Orange Counties with Round 1 Hurricane Ike Housing Funds. Round 1 is nearing completion with funds from a second round expected to be awarded by the end of the year. While Round 1 activities were concentrated on the reconstruction of single family homes, Round 2 will have a broader focus with the inclusion of multi-family and single family rental units. Round 2 funds will be reserved for very low, low and moderate-income families. Housing has not been the only focus of recovery funds. Funds have also been awarded to local cities and counties to address local infrastructure projects as well as a small economic development
project. It is estimated that more than $500 million dollars have been awarded for Hurricane Ike Recovery.
Orange County’s Convention and Expo Center should be completed by the end of December. The $10.5 million dollar project on FM 1442 was funded through a grant from
Community Development Block Grant Funds, insurance proceeds, some FEMA dollars and other funds. The facility will house several different offices for Orange County and it will serve as a shelter for first responders during times of emergency such as hurricanes. A new state of the art Emergency Operations Center will also be located in the building. The space is dual purpose and can also be used as a convention and expo Center capable of seating 650 in banquet style. Redundant fiber optic, redundant electric feed, and an on-site water well are key features supporting its operation under emergency conditions.
Kountze and Lumberton are also building similar dual purpose structures using federal FEMA funds. Kountze is funding $150,000 of the $600,000 price tag for its 5,000 sq. ft. dome shelter, which will be made of reinforced steel and spray-on concrete. The dome will be built on U.S. 69 near the Kountze Trade Days facility and should be completed by the summer of 2014. Lumberton’s 20,000-sq. ft. dome shelter will be built at Lumberton High School and used as an auditorium by the school district when it’s not in emergency use. The city applied for a grant on behalf of the school district, which is responsible for the $633,000 matching funds to pay for the $2.4 million facility.
DEVELOPMENT
The City of Orange’s riverfront project is progressing quite well. Stabilization of the shoreline is complete. Concrete foundations for the boardwalk have been poured and finished, and the boardwalk is being installed in the eastern section of the project near Front Avenue and 2nd Street. Additionally, the concrete foundation base for the performance pavilion has been poured at the former Jack Tar Hotel site. New storm drainage lines are being installed along Front Avenue, 5th Street, Division Avenue, and 6th Street. Substantial completion of the $6.1 million Orange Boardwalk & Pavilion project is scheduled for the end of February 2013 with final completion by the end of March 2013.
Lamar Orange broke ground recently on a new $10 million, 32,000 sq. ft. nursing facility. Almost half of the total enrollment at the college is made up of the nearly 1,000 students in allied health sciences. They will benefit from new labs, lecture halls, computer rooms, and a simulation lab with two adult rooms, a birthing room, a pediatric room and a home setting environment. The facility should be completed by fall of 2013.
Orange County will host a Bass Masters event from March 14-17 in 2013. The event is expected to boost the economy because of the spending expected from as many as 15,000 visitors it will bring in. The four-day tournament will attract the top 99 anglers in the world as well as television and news media.
Silsbee is expecting two new assisted living centers to be built – one at the old Silsbee Doctor’s Hospital location and another that will break ground in November at the U.S. 96 bypass near the 327 intersection.
SALES TAX
Sales taxes reported in November, representing sales in September, showed a healthy 5.1% increase over September of 2011. The large increase for Kountze is attributed to success of the once a month Trade Days which has grown to over 250 vendors.
EMPLOYMENT
A record level of employment of 172,702 was reached for the area in September (based on records going back to 2000.) The number of unemployed workers dropped for the third month in a row – a decrease of 3,302 from June to September.
REAL ESTATE
There’s good news and bad news as related to real estate in the Beaumont area. For the third quarter, the numbers of homes sold increased by nearly 30% over 2011 and consequently the months of inventory decreased. The bad news is that the median and average price decreased by 5.5% and 9.9% respectively. Lower prices are driving the market.
Information in this report was provided by the named industries or through publicly available sources.
Prepared by Karen Bourdier – Entergy Texas economic development group