In this issue:
The Texas Gulf Coast Coastal Tales: Past and Present Heading for the Coast Diminishing Returns The Oil Boom-1990s Style Downstream Making Waves Houston's Back in Business Viva Victoria Corpus Keeps its Wings Beaumont on the Rebound
The Texas Gulf CoastEnergy has long been a mainstay of the Texas economy. For that, the area along the Gulf Coast can take a bow. Two-thirds of all U.S. petrochemical production and almost a third of the nation's petroleum industry straddle the dredged channels of the Texas Gulf Coast. With the Gulf of Mexico again becoming a hot spot for explorations and drilling, energy continues to be vitally important to the coastal region.
Tourism is another leading economic contributor, and the Gulf Coast provides some of the state's most popular vacation spots. Recreational fishing, boating, birding and beachcombing draw hundreds of thousands of tourists, including one out of every four non-Texans who tour here. Travel contributes a large payroll to coastal communities, and the thriving hotel business helps too.
All together, these activities can strain coastal natural resources, and that can have economic consequences. Some species of fish that once were popular in Texas kitchens now cannot be caught or sold commercially due to overfishing.
Manmade improvements have had an impact on the delicate coastal ecosystem, affecting not only seafood harvests but the balance of nature in bays, estuaries and lagoons. On the flip side, activities such as dredging can help mitigate these problems. New navigation channels and disposal sites can improve water circulation, enhancing fisheries. Dredged material can be used to restore wildlife habitat and replenish eroding shorelines.
Almost 5 million people live in the Texas coastal area. As these communities further develop, so will the need to maintain their local assets. Thousands of volunteers, for example, regularly turn out to pick up litter on public beaches. This month,Fiscal Notes examines some of the communities and industries along the Texas Gulf Coast--to see where we've been and where we might be going.
From the Comptroller:
Coastal Tales: Past and PresentThe Gulf Coast is a special place for Texans and a very special place for me. It's where I was born and raised. My hometown of Placedo in Victoria County is exactly 13 miles from Port Lavaca.
I hope that Texans, especially school children, know that our roots are embedded in the Gulf Coast.
Just look at the history books. When Stephen F. Austin brought 300 Anglo families to the Texas province ruled by Mexico, many settled on the coastal prairies between the Brazos and Colorado rivers.
Later, under the Republic of Texas, some of the first counties organized were along the coast; in fact, Matagorda and Brazoria had been municipalities under the Mexican government.
At the end of the Civil War, months after the South had surrendered, the Union Army landed at Galveston Island and proclaimed all slaves freed. The anniversary of that event on June 19, 1865, is still observed as the state holiday, Juneteenth.
Southern coastal counties were pivotal in the colorful era of cattle drives. The Shawnee Trail ran right through Brownsville and Kingsville as cattle were herded north from Mexico. The huge King Ranch, formed in the 1850s and located in the coastal counties of Kenedy and Kleberg, became a leader in introducing purebred cattle.
In 1901, the discovery of the Spindletop gusher near Beaumont gave birth to the Texas oil and gas industry. Oil refineries and related industries located along the upper Gulf Coast to be near the oil wells and water transportation.
During World War II when the nation needed synthetic rubber, Texas answered the demand because we had the raw materials for petrochemical production. Now, the area between Corpus Christi and the Sabine River is home to the largest petrochemical complex in the world.
Texas' portion of the Gulf enjoys an abundance of natural treasures: beaches, wetlands, endangered species and one of the world's few biologically productive saltwater lagoons. Then there are the manmade resources: offshore rigs, deepwater ports and a manned spacecraft center.
That's why Fiscal Notes this month takes a special look at the Texas Gulf Coast.
Our coastal communities often feel the turn of economic events sooner and deeper than many of the rest of us. They benefited from the prosperous energy industry for many years. But when energy's fortunes soured, coastal residents were hit hard by the subsequent hardships.
If you ask me, the Gulf Coast area is not only an interesting region to study, it's an awfully fun place to visit too.
--John Sharp
Heading for the Coast
Much of the $23 billion-a-year tourism industry in Texas involves communities along the Gulf Coast. With 367 miles of beaches and a variety of attractions both natural and man-made, the Texas coast is an abundant source of vacation activities.
In 1993, travel-related spending along the Texas Gulf Coast topped $5.4 billion, most of that generated in Harris, Nueces, Cameron and Galveston counties.
Travel and tourism along the Texas coast provided 103,600 jobs in 1993 and a $1.9 billion payroll across an 18-county area.
Of the 34 million non-Texans who visit the state each year, one in four has a destination somewhere along the Gulf Coast, reports the Texas Department of Commerce.
Spring surge: South Padre expects to be the top spring break destination along the U.S. Gulf Coast in 1996, beating out Panama City, Florida, which has yet to recover from last year's hurricane.
Spring break activities in 1995 added $94.8 million to the local economy, according to the South Padre Island Convention and Visitors Bureau. In March 1996, hotels reported 95 percent to 100 percent occupancy during spring break, suggesting another successful season. But Mexico continues to be South Padre's closest competitor with its cheaper prices and lower drinking age.
"Padre," as the island is known, is only one-half mile wide. It was incorporated in 1964 when the Port Mansfield Channel was completed and severed Padre Island's southern tip.
Each spring, college students fill local hotels, bars and beaches. Two of South Padre's restaurants--Charlie's and Louie's Backyard--are among the state's top grossing mixed beverage establishments in the month of March, according to Comptroller data.
A March 1995 survey indicated that the typical spring breaker spent $559. An average of five persons rented a room together, and two-thirds of the revelers said they stayed at Padre seven nights or longer. A majority of those surveyed were out-of-state college students.
Coastal Bend: More than 9 million visitors a year travel to the Coastal Bend counties of Nueces, Aransas, Kleberg and San Patricio, resulting in an economic impact of more than $400 million for the region.
The Greater Corpus Christi Alliance estimates that 5 million visitors a year tour the Corpus Christi area. One attraction has been the annual U.S. Open Windsurfing Championships. This year, Corpus Christi will host several major sailboat contests, including the sailing competitions before the Olympic trials in Georgia.
The USS Lexington, a vintage wartime aircraft carrier, serves as a floating naval museum in Corpus Christi Bay. The Texas State Aquarium each year attracts almost 500,000 visitors interested in marine life. Spanish-built recreations of Christopher Columbus' famous vessels are also popular attractions at the port.
About half of the wintertime visitors to Corpus Christi are retirees from the Midwest and Canada, who migrate south for the mild weather. These "winter Texans" typically live in their own recreational vehicles, but bring in about $250 million a year to the South Texas economy, according to the University of Texas Pan-American.
Birdwatching is big business in the Rockport/Fulton area. Tourists hoping to see some of the 300 species of birds in the Aransas National Wildlife Refuge pour $5 million into the economy each year.
On the boardwalk: Once a gambler's paradise, Galveston Island has updated its appearance and taken a family-oriented approach to tourism. Visitors are expected to surpass last year's 6 million with completion of a $6-million project converting a rocky shoreline into a four-mile stretch of beach.
Galveston beaches once drew lively, sometimes rowdy crowds, but by 1993 the island had banned alcohol on most public beaches and was targeting family vacationers. Moody Gardens has been a major draw with its IMAX 3-D theater and rainforest pyramid. Comptroller data show that tax revenue from amusement and recreation services nearly doubled in Galveston County after Moody Gardens opened in 1993.
Galveston has been praised for its historic renovation. With these enhancements came outlet stores, restaurants, fine hotels and, more recently, a $10 million development at Pier 21 that features restaurants, boat slips, shops, art galleries and a museum.
The most popular annual event is Mardi Gras, a 12-day festival that drew 575,000 visitors in February 1995 and pumped $20 million into the economy. Another highlight, the Christmas-time Dickens on the Strand Festival, brought in 53,000 visitors in 1995.
Bayou City: Tourism is a near $4-billion-a-year industry in Houston. About 16 million people a year visit the nation's fourth largest city. More than $390 million was generated by the 510 conventions and trade shows held in Houston in 1994.
The Galleria shopping complex is the top attraction, hosting 10 million visitors a year.
The 1996 Houston Livestock Show and Rodeo broke previous attendance records, attracting 1.8 million fans, including visitors from 75 countries. Livestock show officials estimate the economic impact of the event was almost $207 million.
Further up the coast in Port Arthur, the Museum of the Gulf Coast opened its doors in July 1994. In its first year of operation, this unique regional history facility attracted visitors from every state in the U.S. and from more than 30 foreign countries. The museum explores the course of Gulf Coast history since before the arrival of mankind, with special exhibits on the region's musical heritage, sports legacies and fine arts.
Contributing to this article:
Jessica BunceDiminishing Returns
Annual fish harvests in Gulf show troubling declineCommercial fishing is one of the main industries along the Texas Gulf Coast. The state's annual catch of shrimp, other shellfish (used for consumption or bait) and finfish pumps $400 million into the economy each year and provides jobs for about 30,000 coastal residents.
Texas fishermen hauled in about 85 million pounds of seafood in 1994, valued at an estimated $197 million. Of that, the shrimp catch was 71 million pounds, worth about $180 million. By far, shrimp is the most important part of the industry, making up 80 percent of the annual seafood catch.
Typically, the volume of the annual shrimp harvests fluctuates, but in recent years the trend has been down. Shrimping in the 1990s has produced some of the smallest yields of the last 20 years. As a result, the number of shrimp boats licensed to operate off the Texas coast--about 1,460 boats--has shrunk by one-third since 1986.
Bay watch: After hatching in the Gulf, young shrimp are carried by tides close to shore, where they feed and grow in the shallow estuaries and coastal lagoons. Juvenile shrimp then return to the waters of the Gulf, where they mature and spawn.
As maturing shrimp make their way back to the Gulf, they must pass through large bay systems, including the Galveston, Matagorda, San Antonio and Aransas bays. Increasingly, shrimp boats work in these bays. Bay shrimping has more than doubled since 1972, while Gulf shrimping has declined 18 percent.
Pisces, an organization representing some 350 bay shrimpers, contends that the increased bay shrimping is insignificant because the smaller shrimp they catch would not make it to the Gulf anyway.
However, the Texas Parks and Wildlife Department (TPWD) and many Gulf shimpers take the position that fewer numbers of juvenile shrimp reaching the Gulf to spawn affects the size of succeeding generations, and some experts fear that the entire stock could collapse some day. As a result, TPWD has capped the number of bay shrimping licenses at the September 1995 level--1,700 licensed bay shrimpers.
Turtle trouble: The use of turtle excluder devices (TEDs) has generated much controversy. Shrimpers are required by the federal government to attach these devices to all trawling nets to provide an escape route for turtles, specifically the endangered Kemp's ridley sea turtle. All sea turtles in U.S. waters are classified as endangered or threatened.
As air-breathing reptiles, turtles will die inside trawling nets if not allowed to resurface after a short amount of time. The National Academy of Sciences reports that shrimp trawlings kill more sea turtles in the Gulf of Mexico than all other causes combined.
According to the U.S. National Marine Fisheries Service (NMFS), 274 dead Kemps' ridley turtles were found along the Texas coast in 1995. That count was down from 437 in 1994. During both years, according to NMFS, the number of dead turtle findings increased dramatically during the shrimping season.
Shrimpers argue that the TEDs allow as much as one-third of their catch to escape, making it difficult for them to make a living. Already, they say, restrictions on mesh and net dimensions limit their catches.
Citing another problem area, shrimpers contend that property taxes levied on commercial fishing vessels and equipment ignore the accelerated deterioration that occurs with continuous exposure to salt water and air.
Voters in 1995 rejected a proposed state constitutional amendment that would have allowed local governments to exempt from local property taxes all boats under 100 feet in length and any equipment used in commercial fishing and production.
Texas' newest breed of shrimpers--those operating inland shrimp farms--is having a hard time too. The Taura virus, which is fatal to shrimp, has caused inland yields to fall from 3.7 million pounds in 1994, worth about $12.8 million, to 1.4 million pounds in 1995, or about $3.5 million, according to the Texas Agricultural Extension Service. There are eight saltwater shrimp farms in the state, most of which are located along the South Texas coast near the Rio Grande.
Bait shrimp also makes a contribution to the coastal economy, although its value is difficult to assess because catches are not reported to TPWD; however, the number of boats licensed to fish for bait-sized shrimp provides an idea of its importance. In 1994, 1,475 boats were licensed to fish for bait-sized shrimp.
Other catches: The 1994 blue crab harvest of 5.1 million pounds made up about 6 percent of the overall commercial catch and was worth $3 million. In contrast, about 11.7 million pounds of blue crab were caught in 1987.
Oysters make up a significant portion of the annual catch. About 4.6 million pounds, worth almost $8 million, was harvested in 1994. Contamination in Galveston Bay has severely curbed the volume of oysters harvested. Finfish, including black drum, flounder and snapper, made up about 5 percent of the total catch weight in 1994 and was valued at $5.7 million.
In the 1970s, redfish and spotted sea trout accounted for three-fourths of Texas' finfish catch. Sales of the fish were banned by the state in 1981, and the Gulf of Mexico Fishery Management Council closed the Gulf to all commercial fishing for both species in 1987. TPWD reports now that both species are making a comeback.
Rod and reel: Sport fishing is an important component of Texas' fishing industry. The Sport Fishing Institute in Washington, D.C. reports that anglers spent some $320 million on saltwater fishing in Texas in 1991. Further, saltwater fishing supported about 11,000 jobs in Texas, and generated about $770 million in expenses related to food and lodging, transportation, guides, boat use and equipment rental.
All sport fishing--both salt and freshwater--brought about $2.8 billion to the state's economy in 1991, according to the Sport Fishing Institute. Only Florida and California reaped a greater economic benefit from their sport fishing industries.
Contributing to this article:
Greg Mt.JoyThe Oil Boom--1990s Style
Advanced technology revives activity in Gulf of MexicoIn 1947, off the coast of Louisiana, Kerr-McGee Corp. drilled the first well in the Gulf of Mexico beyond the sight of land. Since then, the Gulf has become a mainstay of the U.S. energy supply--the source of about one-sixth of the nation's crude oil production and one-fourth of its natural gas production. By the end of 1992, operators had punched more than 29,000 wells in the Gulf seabed.
Offshore oil and gas development has spread around the world--into some areas that are barely navigable, such as the North Sea--and has spawned innovative techniques not previously imagined. As development shifted to new arenas, the Gulf of Mexico lost much of its sparkle, and some observers wrote off the region's future. Now, a new drilling boom is under way in the Gulf, driven by technological advances that have lowered the cost of finding oil and gas offshore.
For the offshore drilling industry, 1995 proved to be the strongest year in more than a decade. In the spring of 1995, only 63 percent of the offshore drilling rigs available in the Gulf region were actually at work; by year's end, the rig utilization rate approached 85 percent. Rig rental rates doubled during the year to more than $100,000 a day in some cases. In February 1996, more than 150 rigs were operating in the Gulf, the most since 1990.
Increased exploration, drilling and production in the Gulf generate economic benefits for Texas, especially for the Houston area. Because support firms perform a wide variety of services for offshore oil and gas producers, it is hard to trace the economic impact of this activity on a local or regional economy. Certainly the new boom has created a lot of work for geophysical and drilling firms, exploration crews, helicopter leasing companies and other support industries located along the Texas and Louisiana coasts.
Also, the sophisticated nature of geophysical exploration has called forth new types of support service firms, such as Petroleum Geo-Services of Houston, a start-up company that, by its third year of operation in 1994, had revenues of $258 million and employed 1,100 workers.
Survivors' game: The Gulf of Mexico is an "old play" with well-known geological and technological characteristics. However, new seismic survey techniques, new views of Gulf salt structures and the ability to drill cost-effectively in deep water have renewed excitement for this old production area. Improved economics, better technology and growing experience are converging to expand development in the deepwater portion of the Gulf.
The improved economics stem, in part, from consolidation of the traditional support and service industries based along the coast. Much of this winnowing was an inevitable--yet painful--adaptation to the plunge in oil prices.
During the heyday of the early 1980s, a great deal of capital and facility development occurred in Texas' oil and gas service industries, primarily in Houston. But when oil prices collapsed in 1986, these service firms were left to scramble for a dwindling volume of business. Some folded, while others hung on and made do with less business than they had capacity to handle.
Overall, the ratcheting down of oil prices and the corresponding cutback in oil and gas exploration left the market with a lot of excess capital--and indebtedness.
By now, most of this excess capital has been sold, scrapped or absorbed into an industry that can efficiently use the remaining capital equipment. Firms that support oil and gas exploration and production are lean, efficient and hungry for business. Moreover, the surviving firms assembled the "best and brightest" from the 1980s, a cadre of engineers, geologists and geophysicists well suited to take advantage of the increasing sophistication of offshore operations.
3-D breakthroughs: New seismic technology is largely responsible for improving the economics of oil and gas exploration and production in an era of low prices.
Two- and three-dimensional seismic surveying techniques have long guided geologists and geophysicists in locating oil and gas deposits. What is new and particularly useful in the Gulf is the increasing accuracy and decreasing cost of 3-D seismic techniques.
Part of the reason for declining costs comes from using vessels specially designed and outfitted for deploying seismic survey equipment. Many new seismic operations carry powerful onboard computers with specialized software that can immediately arrange and process the prodigious quantity of data generated in a 3-D seismic survey. Onboard processing not only compresses the time required to acquire and interpret seismic data but allows for a quality check of the data. Accelerated data processing has sharply cut the time between acquisition and drilling.
Geometric increases in the storage and capabilities of computers make it possible to interpret the massive data generated from open-water surveys of large areas. Moreover, powerful computers with superior graphics capabilities are more affordable. Open-water 3-D seismic surveys can gather data at a cost of about $10,000 per square mile--one-fourth of the cost in 1992.
Below the salt: The precision and accuracy of 3-D seismic geophysics, allied with powerful data processing, can substantially lower the risk of drilling dry holes.
Three-dimensional seismic data boost the probability of finding missed pockets of oil in worked-over provinces like the Gulf. The 3-D process also helps exploit the full potential of these pockets by guiding the drilling process to put the borehole into or through a bearing formation. Without 3-D seismic imagery, probing around with wildcat wells in hopes of "getting lucky" would be too costly.
The Gulf of Mexico is filled with salt formations, and 3-D seismic imagery is beginning to create a more accurate delineation of the boundaries of those formations. Still, the only way to know whether hydrocarbons lie below the salt is to drill through the salt into the sediments beneath it.
The salt sheets in the Gulf are in shallow waters--150 to 400 feet deep--suited for drilling from conventional jackup rigs. Nevertheless, drilling a subsalt well costs from $13 million to $15 million each, so not many mistakes can be tolerated.
Mahogany, the Phillips Petroleum subsalt project in 370 feet of water 80 miles off the Louisiana coast, identified a field 15,000 feet beneath the Gulf floor with potential reserves in the range of 100 million barrels. This 1993 find set off a scramble to lease properties in the Gulf and drove the next federal lease sale to a near record of $277 million--exceeded since then by a $307 million sale in May 1995. The notable subsalt plays, however, have turned up mixed results.
A host of domestic and foreign players are using 3-D seismic processing techniques to look under salt formations in the central Gulf and in such areas as the southern United Kingdom basin and the Gulf of Suez.
Deep waters: Some oil and gas deposits in the Gulf lie in water depths beyond the reach of current technology--but maybe not for long. Most development in the Gulf has occurred in water less than 1,000 feet deep.
But in the spring of 1994, Shell Offshore set a new record for Gulf water-depth production from its Auger platform, located 255 miles southeast of Houston and anchored in 2,860 feet of water. Wells from the Auger platform are producing 71,000 barrels of oil and 156 million cubic feet of gas per day.
Mars, another Shell project along with British Petroleum, was developed in 2,933 feet of water east of the Auger site. This project is expected to begin production in 1996 and recover some 200 million barrels of oil in its lifetime. Ram Powell, a Shell project with Amoco and Exxon in 3,220 feet of water off the coast of Mississippi, is scheduled for production in 1997. While exploratory and delineation wells have been drilled in Gulf waters more than 6,000 feet deep, none is yet scheduled for production, though many appear promising.
Auger, Mars and Ram Powell will each produce from a tension leg platform (TLP), essentially a steel and concrete vessel with a production platform that is tied to the ocean floor by a series of enormous steel cables attached to seabed anchors the size of a barn.
The TLP, first used in North Sea operations, was adapted to Gulf use in 1989. This type of platform makes production from deep water economically viable--even at today's low oil and gas prices--by shortening the lead time from exploration to production. If Mars goes into production as scheduled, oil will have begun flowing only seven years after field discovery. Fields developed with older technology can take more than 10 years to come on stream.
As an incentive to speed up deepwater drilling, Congress in 1995 approved royalty relief for new wells drilled on federal leases in the central and western Gulf of Mexico in water deeper than 656 feet over the next five years. Operators of such wells will pay royalties to the federal government at rates lower than the standard one-sixth. The law also grants this relief to operators of existing leases who demonstrate that they could not expand production significantly without the lower royalty payments.
On the horizon: High technology has enabled producers to find new oil and gas reserves in the Gulf and thus extend the productive life of this vital area.
In 1994, according to the U.S. Department of Energy, proved reserves of crude oil in the federal portion of the Gulf increased by 6 percent to 2.2 billion barrels, while proved reserves of natural gas in that area climbed by 5 percent to 27.2 trillion cubic feet. Gas production in state and federal waters in the Gulf rose by 4 percent to nearly 5.1 trillion cubic feet, while oil production also rose by 4 percent to 338 million barrels.
Thanks to the cumulative and ongoing investments by operators in the Gulf, this venerable oil and gas province will continue to supply a major portion of America's energy needs--and contribute importantly to the Gulf coast economy for many years into the future.
Contributing to this article:
Gerald Higgins and Susan KimbroughDownstream
Petrochemical, refining industries a mainstay along the Gulf CoastPetrochemical plants along the Texas Gulf Coast--the largest such complex in the world--supply nearly two-thirds of the nation's major petrochemicals, while petroleum products from the Texas Gulf Coast refineries account for more than 20 percent of U.S. capacity. Nearly 80,000 Texans were employed in the Gulf Coast petrochemical and refining industries in 1994.
Refineries and petrochemical manufacturers produce chemicals and fuels by applying heat and pressure to crude oil and natural gas. The Texas Gulf Coast complex includes an enormous system of pipelines, rail cars, barges and tank trucks, in addition to 250 chemical plants, 30 refineries and 74 gas processing plants.
Chemical manufacturing wages in 11 counties along the coast topped $700 million, according to a 1992 study by Texas A&M's Center for Business and Economic Analysis. The chemical industry was the fifth largest manufacturing employer in Texas in 1994, accounting for almost 9 percent of the state's manufacturing work force.
Employment at Texas Gulf Coast petrochemical facilities rose by 5 percent from 1984 to 1994, reaching 55,800 workers.
A growing worldwide demand for petrochemicals--particularly plastics and synthetic fibers sought by developing countries--has been driving plant expansions, such as Exxon Chemical in Baytown, Phillips Petroleum in Pasadena, Solvay Polymers and Rohm and Haas Texas Inc. in Deer Park, Bayer Corp. in Baytown, Chevron Chemical in Port Arthur and Mobil Chemical in Beaumont. In 1994, Formosa Plastics opened a new plant in Point Comfort, and Dow Chemical started an ethylene unit in Freeport.
Ethylene is fundamental in the manufacturing of antifreeze, synthetic fibers and polystyrene. When converted to polyethylene, it is used to make plastic bottles, packaging films, housewares and toys. Texas produces 70 percent of U.S. ethylene, according to the A&M study.
Industry pairing: Refineries provide basic raw materials used in the production of petrochemicals. The intermingling of pipes and distillation towers in Texas City, Port Arthur and Baytown illustrate the virtual marriage of the petrochemical and refining industries.
In early 1995, the Texas Gulf Coast's 30 refineries had a crude oil capacity of 3.9 million barrels per day, more than one-quarter of total U.S. refinery capacity, according to the Oil & Gas Journal. In comparison, California's 24 refineries processed 1.9 million barrels per day, and Louisiana's 18 refineries processed 2.3 million barrels per day.
In September 1995, Texas Gulf Coast refineries held nearly one-third of U.S. refinery stocks of crude oil and one-fifth of U.S. petroleum product stocks, according to the U.S. Energy Information Administration. The 1992 shipments from Texas refineries were valued at $38.3 billion, representing 28 percent of the U.S. total.
Employment at Texas Gulf Coast refineries was 23,500 in 1994, down 30 percent from 1984.
New regulations: Petrochemical companies and refineries operate under new environmental laws, which increase refining costs by requiring cleaner fuels to be produced with fewer emissions. U.S. companies face having to spend as much as $36 billion over the next 10 years to comply with federal environmental, health and safety regulations, according to the National Petroleum Council.
Clean Industries 2000, TNRCC's statewide voluntary program, is working to get businesses to reduce polluting chemical releases by half or more by 2000, primarily by implementing environmental management and participating in community environmental projects.
Of the 73 chemical firms listed in the March 1995 Clean Industries 2000 directory, 61 were located on the Gulf Coast. All 12 of the refineries in the directory operate on the Gulf Coast.
Among the exemplary projects cited by TNRCC are Valero Refinery in Corpus Christi, which invested $30 million in pollution prevention and waste minimization projects, and Howell Hydrocarbons in Channelview, which installed a recovery unit for controlling vapors released when loading barges with chemicals. Also, ARCO Chemical in Bayport trimmed releases by 22 percent by using improved chemical processing methods.
Contributing to this article:
Julie CrimminsMaking Waves
Gulf Intracoastal Waterway provides vital commercial link for Texas portsIn 1905, a group of Texas businessmen met in the Victoria Opera House to discuss the feasibility of an inland waterway system. Their bold proposal was to connect 18,000 miles of navigable waters from the Great Lakes, through the Mississippi Valley and along the Louisiana and Texas coastlines.
The idea came at a time when the population along the Gulf Coast was booming with the discovery of East Texas oil fields, and local industrialists realized that shipping goods by rail was expensive.
The businessmen formed the Interstate Inland Water League, later to become the Gulf Intracoastal Canal Association. After World War I, Congress authorized building a canal in Texas and Louisiana. During World War II, the canal was used to ship petroleum products overseas and served as a protected route for vessels carrying wartime supplies. The waterway was completed in 1949 with the opening of a channel from Corpus Christi to Brownsville.
Today, the Gulf Intracoastal Waterway (GIWW) stretches 1,300 miles from Brownsville to Florida, parallel to the coastline. Texas has the largest section--more than 400 miles connecting the state's industrial and agricultural complexes to national and international markets through 12 deepwater ports and 15 shallow-draft ports.
On the waterfront: This vital commercial trade route connecting deep-draft and shallow-draft ports forms the nation's third-busiest waterway.
In 1993, the GIWW transported almost 115 million tons of cargo, third behind the Mississippi River, 298.3 million tons, and the Ohio River, 227.2 million tons. Texas handles about 70 percent of the cargo moved on the GIWW, according to the Texas Department of Transportation (TxDOT). The Texas GIWW has three distinct segments:
The Sabine River-Galveston channel, which carries an average 49 million tons annually, is the busiest segment. In 1993, 48 million tons of cargo were carried, with shipments of petroleum, petroleum products and chemicals and allied products accounting for 87 percent of total tonnage.
Spanning 190 miles, the Galveston-to-Corpus Christi segment is the longest. Cargo traffic runs a little more than 25 million tons a year, with petroleum, petroleum products and chemicals and allied products constituting the bulk.
The Corpus Christi-to-Brownsville segment carries only about 2 million tons, more than half of which is gasoline shipments.
Overall, the petroleum and petrochemical industries are the primary users of Texas' water transportation system. They account for more than 85 percent of total traffic moving in all three Texas segments of the GIWW, reflecting the proliferation of refining capacity and petrochemical plants in Texas' coastal counties.
Lift that bale: The importance of the waterway as a transportation route has increased tremendously since World War II. From 1940 to 1993, annual cargo volume between Texas and Florida increased tenfold.
Most cargo is transported by a towboat pushing two barges. Primarily, the types of barges used are: 1) a liquid cargo barge that transports liquid products such as chemicals, petroleum and oil; 2) a covered dry-cargo barge that carries dry cement, fertilizer and farm products; and 3) an open-hopper barge that handles sand, gravel and coal.
Hauling large amounts of cargo by barge is efficient and cost-effective. An estimated 15 rail cars or 60 semi-trailer trucks would be needed to transport the 1,500 tons of goods carried by one dry-cargo barge. Furthermore, 50 rail cars and 200 trucks would be needed to transport the 5,000 tons of petroleum carried by a single two-liquid-cargo barge tow.
Rough waters: While the GIWW sustains a broad range of economic activities, development of an inland waterway did not occur without problems.
The effect of open-water dredged material disposal in the Laguna Madre is a leading concern. The Texas Center for Policy Studies has proposed halting dredging in the section of the GIWW that runs through the Laguna Madre. A 1994 study by the nonprofit research organization concluded that the direct and indirect economic benefits of that segment of the GIWW "are minimum when compared with the other segments of the GIWW."
On the other hand, the Texas Transportation Institute at Texas A&M University has projected that long-term closure of this segment of the GIWW would result in more than half of the tonnage transported on the waterway being shifted to other modes of transportation.
The big picture: The existence of a water transportation system in Texas affects the long-term economic development of coastal regions and the state.
Trade between Texas and Mexico is expected to increase as a result of the North American Free Trade Agreement, although the effect on the overall waterway traffic has yet to be determined. While the Port of Brownsville reports transporting increased shipments of iron from Mexico to the U.S., the higher volume is due to the peso devaluation, which lowered the price of Mexican iron.
The Mexican state of Tamaulipas has proposed extending the GIWW from Matamoros south to Tampico. In early 1996, Tamaulipas awarded a $756-million, 25-year concession to Protexa, a Mexican construction company, to construct and operate the Canal Intracostero Tamaulipeco-the Mexican extension of the GIWW. Groundbreaking is scheduled for late spring 1996.
Improvements on the Victoria Barge Canal will provide better access to the GIWW. The canal is being widened from 100 to 125 feet and deepened from 9 to 12 feet. The $25 million expansion will enable more cargo to be unloaded at Victoria.
Contributing to this article:
Augustin RedwinePorts of Call
Port of Houston: Opened in 1914, this port is a major U.S. gateway for international trade. The 25-mile-long complex of public and private facilities along the Houston Ship Channel includes 200 steamship lines providing service between Houston and 250 international ports. The port is surrounded by a $15 billion petrochemical complex, the second-largest in the nation and worldwide. Four major railroads and 130 trucking lines connect to the port and provide access to the U.S., Canada and Mexico.
Port of Corpus Christi: With a depth of 45 feet, this is one of the deepest ports along the Gulf of Mexico. In 1994, tonnage reached an all-time high of 78 million. Known for its capacity to handle bulk cargo, the Port of Corpus Christi has invested more than $35 million to expand facilities designed to handle nontraditional general cargoes such as forest products, steel, machinery, vehicles, cotton and project shipments.
Port of Texas City: Numerous oil refineries and chemical-processing plants are located on this privately owned port property. Port owners have completed a five-year, $25-million dock renovation. About half of the 43 berths are privately owned by such companies as Amoco Oil, Union Carbide and ARCO Pipeline. The remainder are owned by Texas City Terminal Railway Company and used as public berths by Marathon Petroleum, Amoco Chemical and others. An average of 1,500 ships, 6,000 barges and 60,000 rail cars are handled annually by the port and railway companies. In 1994, the port handled more than 44 million net tons of crude oil and refined products.
Port of Beaumont: One of the oldest along the Texas coast, this port has steadily increased its role as a major partner in worldwide commerce since 1949. The 40-foot-deep port handles a variety of cargo, including forest products, grains, bagged goods and military cargo. As headquarters for the U.S. Army's 1314th Medium Port Command, the port provided support in the Gulf War and coordinated humanitarian shipments to Cuba and Haiti, loading several ships with thousands of tons of specialized engineering equipment, trucks, shelters, bedding and sanitation equipment.
For the most part, Houston has recovered from the humbling oil bust of the 1980s, thanks to a new, diversified service-oriented economy. And now comes an unexpected boost from an old friend-the energy sector.
Over the last decade, the city has looked to medical, computer and biotech industries to restore the economic landscape. Those expanding businesses have built impressive portfolios in the state's largest urban center, helping to soothe memories of the trouncing Houstonians suffered when oil prices bottomed out.
In 1995, the Houston metropolitan area added more than 50,000 jobs, bringing the total to almost 1.8 million. The city's improving economy prompted the addition of 18,000 service jobs, 16,600 jobs in wholesale and retail trade, and 7,700 construction jobs in 1995. Manufacturing jobs rose by 5,200 from 1994.
The economic outlook is even brighter with technology-based firms in demand to assist in the revived exploration and drilling in the Gulf of Mexico.
On the energy front, Atlantic Richfield Co. is moving its U.S. exploration and production headquarters to Houston, and Amerada Hess Corp. is consolidating its exploration and production operations there. Shell Oil Co. completed a $1 billion upgrade at its Deep Park facility and has begun refining Maya crude from Mexico in partnership with Petroleos Mexicanos (PEMEX).
In 1995, employment growth was significant in the sectors of oil and gas field machinery and natural gas pipelines.
Recognizing the prospects for continued business growth, Fortune magazine has ranked Houston one of the 10 best cities in which to do business.
On the mend: The Houston area can thank the medical industry for much of its economic resurgence. The Texas Medical Center alone employs about 54,000 doctors, scientists, technicians and nurses.
Five area hospitals completed expansion projects in 1995. Memorial Hospital Southwest added 212,000 square feet for outpatient care, operating rooms and labor and delivery rooms, while Memorial Northwest Outpatient Center completed a $2.5 million surgery center, part of a $50 million expansion.
West Houston Medical Center added the Surgical and Diagnostic Center of Sugar Land, a $13.5-million center with four operating rooms and a 20-bed preoperative and recovery suite. Baylor's 30,000-square-foot Sports Medical Institute opened its doors in 1995, and Hermann Hospital began construction of a $160 million patient pavilion.
Growing markets: Houston's manufacturing sector, which includes the growing high-technology electronics industry, looks strong. High-tech employment increased almost 14 percent from 1984 to 1995, from 32,800 jobs to 37,300. During that time, according to Comptroller data, the computer industry grew by 84 percent, from 10,150 to 18,700 jobs.
A number of high-tech firms have relocated to the area, and established firms such as Compaq Computer Corp. and Texas Instruments have added jobs as the demand for personal computers continues to skyrocket.
An important part of the high-tech field is the relative newcomer industry of biotechnology. The 1995-96 Bio-Texas Industry Directory shows that of the 92 "core" biotech companies located in Texas, 39 are in Houston and another 16 in The Woodlands, just north of Houston.
In Houston, 27 of these firms specialize in biomedical research. These firms spent about $449 million on medical research in 1995, according to BCM Technologies, Inc., the biomedical research arm of Baylor College of Medicine. Such research was almost nonexistent as recently as 1986. The majority of this research is centered around the Texas Medical Center, one of the world's premiere biotech medical research centers.
Land rush: After several years of stagnation or minimal growth, housing starts are up, and the industrial real estate market is seeing a revival as well. The monthly newsletter Houston Real Estate Trends reports that more than a dozen major commercial projects are on the drawing boards and will add about 1 million square feet to the area's industrial sector. Another 1.6 million square feet is under construction, mostly in expansion projects for owner-operated space.
New home sales were up about 30 percent in the fourth quarter of 1995 over the same period in 1994, with low mortgage interest rates persuading many that the time has come to buy. Market conditions haven't been this good since 1982, reports the Greater Houston Builder's Association. About 16,500 home starts are expected in the area in 1996, up from 14,000 in 1995.
Retail space is expanding at a healthy clip. Wulfe & Co., a Houston realty firm specializing in shopping malls, predicts an addition of 4.2 million square feet of retail space in 1996. The projects, costing an estimated $250 million, can be expected to add 12,000 new jobs. The newly opened First Colony Mall in Sugar Land contains 1 million square feet.
Contributing to this article:
Greg Mt.JoyViva Victoria
Located 30 miles from the Gulf of Mexico, the historic town of Victoria, a former Spanish settlement and the third Texas city to receive a charter, is regaining the strength it lost in the 1980s oil bust.
In 1995, about 1,900 jobs were created in Victoria County, bringing total employment to 40,800, according to the Victoria Economic Development Corp.
More than $500 million in manufacturing plant expansions was announced in 1995 for the three-county area of Victoria, Calhoun and Jackson. An expansion of the Inteplast Group plastics manufacturing facilities in Jackson County added 200 jobs, bringing total employment to 2,000. The $1-billion complex is the largest in the world making finished products out of polyethylene and polypropylene.
Industrial development in the area has created hundreds of construction jobs. A $70-million wastewater treatment plant is under construction for DuPont, and Alcoa will complete a $40.7-million expansion by the end of 1996. British Petroleum Chemicals is in the midst of a $50-million expansion of its chemical production facilities.
A three-year project to widen and deepen the Victoria Barge Canal is under way. The upgrade, combined with renovations at the Port of Port Lavaca-Point Comfort, is expected to bring more international trade through the area. Also, the regional airport is undergoing a $600,000 upgrade.
Local medical centers are growing too. A $22-million expansion of Citizens Medical Center will add three patient floors and an obstetrics unit. A medical office building is planned near the Victoria Regional Medical Center. The University of Houston-Victoria has about 1,550 students. Victoria College now has 3,700 students.
Contributing to this article:
Jessica BunceThe Texas Gulf Coast has a significant military presence. Three of the state's four naval installations are located in the Corpus Christi area.
The three naval facilities and their tenants at Corpus Christi, Ingleside and Kingsville employ almost 12,000 military, civilian and contract workers. The combined fiscal 1994 payroll for the three bases was an estimated $316 million. In terms of local economic impact, the Corpus Christi Naval Air Station is second only to the Port of Corpus Christi and its channel industries.
The Corpus Christi air station is the Navy's main training command center and home to the Chief of Naval Air Training and 47 other tenant commands. Ingleside, known as the Navy's "mine warfare center of excellence," serves as homeport to mine countermeasure ships and coastal minehunters. The Kingsville air station is the Navy's principal advanced jet training base for carrier-based aviation.
Local residents have long feared what the federal government's military downsizing might mean for the area. In recent years, the federal Base Closure and Realignment Commission has recommended various closures and realignments across Texas.
The Coastal Bend area took a hit in 1991 when Chase Field, a naval air station in Beeville, was closed. Nonetheless, defense-related employment increased due to the growth of Homeport Ingleside. In 1993, Corpus Christi had to defend Ingleside against efforts to close it.
Later, the Secretary of Defense recommended that the Corpus Christi Naval Air Station be realigned and its undergraduate pilot training function and associated personnel, equipment and support transferred to Florida. But 1996 brought good news when the Secretary of the Navy announced that the air training squadrons will remain on the premises, thus saving 1,100 jobs.
In addition, two mine warfare helicopter squadrons are going to make Corpus Christi their home. The transfer from Alameda, California, will bring 650 personnel by mid-1996 and another 650 from Norfolk, Virginia, by 1999. Construction projects to accommodate the new squadrons are expected to reach $114 million.
Also, the USS Inchon, a naval mine-warfare command and control ship in Norfolk, is relocating to Ingleside, with 700 personnel on board. The Greater Corpus Christi Business Alliance predicts the area's defense payroll will reach $353 million this year and as much as $400 million a year by the end of the decade.
Contributing to this article:
Jessica BunceOnce crippled by cutbacks in the energy industry, the Beaumont-Port Arthur area has found a new niche--the criminal justice business. After the turbulent 1980s, which cost the Golden Triangle much of its luster, Jefferson County now has a goal to become one of the largest criminal justice centers in the state.
The $400-million Mid-County Correctional Complex encompasses a state prison for the chronically ill, a state jail division, a county jail, a Texas Youth Commission institution and a federal prison. All the facilities are open except for the federal prison, which is still under construction.
The entire complex is expected to employ a total of 3,400 workers and generate a combined annual payroll of $126 million. Almost 13,000 prisoners will be held in the various components, which are located within a few miles of each other.
Boom and bust: For eight decades, the economy of Jefferson County was wedded to oil refining, petrochemicals and shipbuilding. Originally, East Texas timber was the commodity that kept ports busy in Jefferson and Orange counties. When oil and gas exploration heated up, the local ports already had the infrastructure in place to serve those industries.
As a major refining and chemical center, the Beaumont-Port Arthur area once refined close to 5 percent of the world's petrochemicals. In the mid-1980s, when the bottom dropped out of oil prices, the Golden Triangle sustained enormous economic losses. Total employment for the metropolitan area fell from 157,000 in 1981 to 130,000 in 1987.
Refineries laid off workers as production capacities shut down, reflecting the dwindling number of barrels of petroleum produced. In shipbuilding alone, about 5,000 jobs dried up in a two-year period as major shipbuilding and repair businesses moved overseas, leaving only defense-related work active in Port Arthur. Much of the shipbuilding activity had been connected to offshore rig fabricating, repair and servicing.
Chemical manufacturing remained relatively stable during the 1980s, with only about 500 jobs lost. But in 1990, that industry saw significant losses as the domestic production of ethylene dried up and related manufacturing left the area.
Back on track: Construction is picking up now as refineries and chemical companies modernize facilities and as new jail and prison facilities are in demand. Construction activity has created the need for more housing, rentals, retail stores and restaurants. With the jails and prisons opening for business, the area is experiencing increased overall population and payroll. A $9-million, 232-unit apartment complex was built in Beaumont in early 1996, the first in 14 years.
To win the state prison, which is located on U.S. 69, local officials had to compete with other areas of the state. Jefferson County purchased, then donated the land for the state and federal prisons. The county and the city of Beaumont paid for water and sewer lines as well as road improvements.
Not all residents see the prison boom as a cure-all, saying that jobs tied to jails and prisons will not be as high-paying as those that were lost in the energy sector.
The traditional industries of oil and gas remain important to the Golden Triangle. Indeed, DuPont, Mobil Oil and Texaco are still some of the area's largest employers. Also, Beaumont and Port Arthur have completed multi-million dollar upgrades to their port facilities, reflecting renewed activity in oil and petrochemicals.
Today, government and services are the primary growth sectors, representing a combined 42 percent of employment in the metropolitan area. In 1995, employment stood at 149,000.
Contributing to this article:
Jessica Bunce