TXU warns of rolling blackout possibilities… Lyondell Chemical confirms sale of Venezuela’s minority share in Lyondell-Citgo refinery…$340.9 million in high bids made for 381 offshore Gulf of Mexico tracts…
The biggest provider of electricity in north Texas says the ongoing heat wave is pushing its generating, transmission and delivery systems to the breaking point. Highs of 104 to 105 degrees were reported in Dallas-Fort Worth and Waco yesterday, and a repeat is in today’s weather forecast. TXU Energy spokesman Chris Schein says power demand approached a record peak yesterday, and that record could be tested again this afternoon. Schein says TXU power plants are running full throttle, and its system is nearing a point where it can’t ensure reliable delivery of electric power. That could mean rolling blackouts are possible if there are any disruptions.
Lyondell Chemical is finally confirming that Venezuela is selling its minority share in the Lyondell-Citgo refinery in Houston. The $2.1 billion transaction gives Lyondell sole ownership of the 268,000-barrel-a-day refinery. Lyondell is acquiring the 41 percent stake held by Venezuela’s Houston-based Citgo Petroleum. Lyondell also announced it’s negotiated a new five-year, 230,000 -barrel-per-day crude oil contract with a subsidiary of Citgo’s parent, Petroleos de Venezuela, for the refinery. The new contract is based on market prices, which in recent years have been lower than those under the previous crude supply agreement. Lyondell makes chemicals and gasoline blending components and has 10,000 employees worldwide.
Lawyers for the estate of the late convicted Enron founder Ken Lay have filed court papers formally asking a judge to erase Lay’s convictions. They asked that the indictment against Lay be dismissed because he died before he had appealed. But a one-sentence addition to the filing revealed that federal prosecutors aren’t willing to rubber-stamp the request. The filing noted that Lay’s attorney Michael Ramsey had conferred with prosecutor Kathy Ruemmler, who indicated the government would oppose this motion. Lay was convicted of ten counts of fraud, conspiracy and lying to banks in two separate cases in May. In July, he died of heart disease. If U.S. District Judge Sim Lake clears Lay’s record, that would thwart the government’s bid to seek $43.5 million in ill-gotten gains prosecutors allege he pocketed by participating in Enron’s fraud. The government could still pursue those gains in civil court, but they would have to compete with other litigants, if any, also pursuing Lay’s estate.
Bidders largely ignored court challenges to additional petroleum drilling off the coasts of Texas and Louisiana. Companies made $340.9 million in high bids for 381 offshore Gulf of Mexico tracts. The bid total was the highest in eight years for the federal government’s annual sale of exploration leases in the western Gulf. In last year’s sale, the Minerals Management Service accepted $283.4 million on 342 tracts. Despite a lawsuit filed by Louisiana Governor Kathleen Blanco to halt the sale–no bids were withdrawn. Blanco, as part of a campaign to get a bigger share of federal offshore royalties for Louisiana, claims the government isn’t doing enough to protect wetlands from damage due to drilling. The MMS says high bids by Petrobras America totaled $45.5 million; BP bid $37.5 million; Shell Offshore, $35.4 million; Cobalt International Energy, $33.1 million; and Chevron, $26.1 million.
Both city councils have approved a company’s plan to pay $181 million to drill for natural gas beneath Dallas-Fort Worth International Airport. Oklahoma City-based Chesapeake Energy would also pay a 25 percent royalty on any gas produced at the airport, which is owned by Dallas and Fort Worth. The Fort Worth council approved the deal yesterday. The Dallas council endorsed it today. The airport board on August 3rd approved a proposed lease with Chesapeake. The company, joined by a group of minority investors, hopes to begin drilling in 18 months. Drilling plans need approval from the Federal Aviation Administration.
A state audit finds Texas Southern University has mismanaged its endowments. The Houston school recently fired its president for misspending university funds. The review done by the state auditor’s office criticized TSU for spending the principal on endowment investments, which is supposed to stay intact; ineffective record keeping; poor monitoring of whether donor restrictions on money was followed; unproductive investment practices; and inequitable distribution of endowments. TSU has agreed to take the auditor’s recommended steps to fix the problems by February 1st. The report was issued weeks after former university president Priscilla Slade was indicted on two charges of criminally misusing university money for her private benefit. University regents fired Slade in June.
OPEC’s president says the world’s major oil-producing nations are unlikely to cut oil production for the rest of this year. Edmund Daukoru, who is also Nigeria’s oil minister, says producers will hold the line because they want to make there’s enough oil for the global market. While some cartel members have been exceeding their production quotas, Daukoru says OPEC has no plans to review quotas this year.
The Congressional Budget Office is estimating that the federal deficit will fall to $260 billion this year–an improvement from last year’s actual deficit of $319 billion. At the same time, though, the agency says the red ink total will rise to $286 billion next year. The longer-term outlook worsens further, with total deficits over the next decade projected to hit $1.7 trillion.
The Labor Department reports the number of Americans filing claims for unemployment benefits last week staged the biggest decline in a month. Some 312,000 people applied for jobless benefits, marking a decline of 10,000 from the previous week. The less volatile four-week moving average of new claims was up to slightly more than 311,000. It’s the first increase in the average since early July. The unemployment rate rose to a five-month high of 4.8 percent in July as employers added just 113,000 new jobs.