Oil giant BP is scrambling to assess the pipeline corrosion that will shut shipments from the nation's biggest oil field. The decision will remove about eight percent of daily U.S. crude production and is expected to cause more pain for drivers shelling out near record prices for gasoline. BP, already facing a criminal investigation over a large spill in March at the same Prudhoe Bay oil field, says it doesn't know how long the field will be offline. The news has sent crude oil futures up on the New York Mercantile Exchange. Once the field is shut down, BP says oil production will be reduced by 400,000 barrels a day. That's 2.6 percent of U.S. supply including imports, according to the U.S. Energy Information Administration.
The U.S. Energy Department says it is prepared to provide oil from the government's emergency supplies if a refinery requests it because of the disruption of supplies from Alaska. The Strategic Petroleum Reserve is the nation's emergency stockpile of crude oil. It was created after the 1973 oil embargo when Arab countries halted petroleum exports to protest U.S. support for Israel. The reserve has about 700 million barrels in storage on the Gulf Coast to be used in case of a serious supply disruption. The Energy Department in the past has lent SPR oil to refineries when there were disruptions because of pipeline or other problems. Most of Alaska's oil goes to refineries on the West Coast. Analysts say any oil put into the market to replace lost Alaska oil would tend to ease prices.
The discovery of corrosion in an Alaska pipeline is the latest in a series of woes for BP's U.S. operations--and its profits. Analysts speculate it could be months before production restarts at the troubled Prudhoe Bay oil field in Alaska. BP has begun shutdown of the largest producing oil field in the U.S., which accounts for eight percent of domestic output, after finding severe corrosion along a transit pipeline. The discovery is not the first major problem at Prudhoe Bay. BP is already facing a criminal investigation over a large spill in March at the field--also blamed on a corroded pipeline. A March 2005 explosion at BP's Texas City refinery killed 15 workers. Company officials in Alaska today announced BP will replace 16 of the 22 miles of transit pipeline. They'll also continue to keep the oil field closed and bring parts back into service once it's safe to do so.
More than two months have passed since federal prosecutors won convictions against Enron founder Ken Lay and former CEO Jeff Skilling. Now, the Justice Department's Enron Task Force is smarting from a blow to its trial record by the Fifth U.S. Circuit Court of Appeals. In a two-one decision last week, a Fifth Circuit panel overturned fraud and conspiracy convictions against four former Merrill Lynch executives. They'd been convicted of participating in a sham 1999 deal that allowed Enron to book bogus profits. Viewed with other Enron setbacks, some experts say the Merrill decision highlights some questionable government strategies. But they also say that bagging the Lay and Skilling convictions likely will define the Justice Department's success in ferreting out Enron crimes. The Justice Department formed the Task Force to launch a sprawling investigation that produced 16 guilty pleas from ex-Enron executives.
A pension reform bill passed by the Senate could help former Enron employees catch up on retirement savings. A provision within the bill allows workers who enrolled in a 401(k) plan at least six months before their company went bankrupt to boost their deductible contributions to an IRA. If executives are indicted or convicted for dealings related to the bankruptcy, former workers can contribute up to three times the limit each year to a tax-disadvantaged IRA. The bill has already passed the House.
Senate Republicans may have hit a roadblock in eliminating the federal estate tax--but since 2001 many states have been phasing out their own tax on inheritances. That includes Texas. A 2001 law has been phasing out the federal estate tax and fully repeals it in 2010. Many states like Texas set their state estate levy at the rate of the federal tax credit. On Thursday the Senate rejected a bill combining an estate tax cut with a boost in the federal minimum wage. The bill would have increased minimum wage from $5.15 an hour to $7.25. It also would have increased the amount of an estate exempt from taxation to $5 million for an individual and $10 million for a couple and other adjustments by 2015. State Comptroller statistics show Texas collected about $151 million in 2004 and $102 million last year in estate taxes. In 2007, Texas expects to collect about $35 million from the inheritance tax.
Consumers increased their borrowing at a faster-than-expected pace in June due largely to higher credit card debt. The Federal Reserve reports borrowing was up at an annual rate of 5.7 percent following an increase of 3.3 percent in May. The advance reflects a rise in consumer debt at an annual rate of $10.27 billion, compared with the increase of $3.7 billion that economists had been expecting. Analysts are expecting consumer borrowing to slow in coming months, reflecting the slowdown that has already occurred in consumer spending.
Houston-based Plains Exploration and Production is selling properties in Texas and California to Occidental Petroleum for $865 million, according to the Houston Chronicle. The deal is set to close September 30th to raise money for Plain's to reduce its debt and raise money for stock buybacks.
California-based firms Jacobs Engineering Group and Bechtel have been contracted by Motiva Enterprises to provide engineering and construction services for an expansion that will nearly double the size of Motiva's Port Arthur refinery. The expansion will make the refinery the largest in the United States. Motiva is jointly owned by Saudi Refining and Houston-based Shell Oil.
El Paso Corporation said today it earned $141 million in the second quarter. A year ago it reported a loss of $246 million. The Houston-based oil and gas processor and transporter credits increased pipeline and exploration and production revenue for the improvement. Revenue jumped nearly four percent to $1.21 billion.
The FDA wants Tanox to conduct another clinical trial of TNX-355, the company's drug to treat HIV. Although the drug has demonstrated therapeutic potential, the FDA wants Tanox to conduct another dose-finding trial. That could lead to a biologics license application and eventual FDA approval. TNX-355 is a humanized monoclonal antibody--a protein that binds to and attacks one particular bacteria or virus. It's part of an emerging class of viral-entry inhibitors to prevent HIV from entering and infecting cells.
The Astrotech Space Operations subsidiary of Webster-basedSpacehab has been awarded a new $1.6 million payload processing contract by Boeing to support the U.S. Defense Advanced Research Projects Agency's Orbital Express mission. The program, funded by the Department of Defense, is intended to validate the technical feasibility of robotic, autonomous on-orbit refueling and reconfiguration of satellites. The Orbital Express spacecraft is scheduled for a December launch.
Finger Furniture is moving its headquarters to Sugar Land on Gillingham, according to the Houston Business Journal, following the Sugar Land City Council's approval of a property tax abatement. The 79-year-old company will also operate a 500,000-square-foot distribution facility. The deal brings $27 million in new assets to Sugar Land, as well as 170 new jobs. Finger Furniture plans several new store openings in the next three years and has plans to boost Internet sales. The current warehouse on South Loop East will close in the next year. Construction on the new facilities begins in September, with completion slated for May of 2007.
Alliance Wood Group Engineering will begin its relocation to Barker Cypress in March, 2007, consolidating the three locations it currently leases. Alliance will reduce its overall square footage by more than ten percent, allowing the firm to save on operational expenses and duplication of support services.
A southern California gourmet pizza chain is entering the Houston market by the end of the year. zpizza is opening an outlet in Sugar Land, offering 17 different pizzas, as well as sandwiches, salads and calzones. Customers can create their own pizzas. The chain plans to open 60 new locations nationwide by the end of the year.
Federal land managers say a test project proposed by a west Texas company to extract oil from western Colorado shale won't hurt the environment. Midland-based EGL Resources is one of four companies in the running for Bureau of Land Management permits to run experimental oil-shale projects in Colorado and Utah. Shale formations in the west are believed to contain a trillion barrels of oil. That's four times the oil holdings of Saudi Arabia. But an affordable, environmentally safe method of extracting the oil has been elusive. EGL wants to drill a vertical shaft on a 160-acre parcel near Meeker, Colorado. They plan to fracture the shale, circulate superheated steam or fluids to melt the oil-bearing materials, then pump the oil to the surface. A final decision on EGL's proposal is expected by the end of September. Shell Frontier Oil and Gas and Chevron Shale oil seek BLM permits for experimental oil shale projects in Colorado. Oil shale exploration seeks a permit for a project in Utah.
Affiliated Computer Services said today it would conduct an internal investigation of its stock-option granting practices. The Dallas-based information technology outsourcing company says the review would examine granting practices from 1994 and onward. ACS expects the internal review to be completed sometime in September. The Securities and Exchange Commission and the U.S Attorney for the Southern District of New York requested the review. ACS joins a list of at least 60 other companies examining the dating of stock option grants to coincide with share price lows to boost the value of the option. The practice, known as "backdating,'' results in larger profits for recipients of the options.