Thursday PM June 14th, 2007

Engineers discuss wind energy, other topics at annual conference...Samsung Electronics opens new $3.5 billion semiconductor plant in Austin...Mortgage Bankers Association: late payments, foreclosures on "subprime'' adjustable-rate home mortgages spike to all-time highs...

The Texas Society of Professional Engineers is holding its annual meeting this week, with seminars and panel discussions on project management, professional ethics and emotional intelligence. TSPE's Nancy Blackwell says the organization covers all kinds of engineering, but one topic being discussed is wind energy.

"TSPE is a multi-disciplinary organization, so we have engineers in civil, mechanical, petrochemical, petroleum--pretty much every aspect of engineering that we have licensed in the state of Texas is involved in the organization. The experts who were talking this morning about wind energy, several of them were from the University of Houston. We also had a couple of folks from private development companies who are working in partnership on wind development, so their focus is the fact that Texas should become the next--or the biggest--wind manufacturer in the country, because we have the biggest opportunity here in Texas—our location, our infrastructure, our government support for wind energy. This is the place to do it, and the folks from UH are actually in competition. They're one of the two runners-up in a competition with the Department of Energy to put in a study facility in wind energy, and we're looking to get it here in Texas."

The Texas Society of Professional Engineers is meeting at the Omni Hotel through Friday.

Costs for offshore wind power projects are forecast to cost 42 percent higher to construct over the next five years, compared to those installed in the previous five-year period. That's according to John Westwood of Douglas-Westwood, speaking at the Pushing Offshore Wind in the European Regions conference in Bremerhaven, Germany. He expects further cost increases because the offshore wind energy lacks the necessary economies of scale and there is insufficient competition in the supply chain. There's only one installation vessel operator currently in the market. And there's been a lack of the continuous stream of projects needed to justify the necessary capital improvements. Turbine reliability remains an issue--onshore systems are being built in marine environments, where the costs of site access are much higher due to more restricted weather windows.

Governor Rick Perry joined leaders of Samsung Electronics to formally open its new $3.5 billion semiconductor plant in Austin. The ceremony featured country star Leann Rimes--who's from Garland--singing the national anthem. Perry, company executives and others donned white gloves to cut the blue ribbon on the 1.6 million square foot building. The unit is the size of nine football fields. It's the second fabrication plant in Austin for the South Korea-based company. The first one opened a decade ago. The new factory will produce NAND flash memory chips, which are used in consumer products such as mp3 players, cell phones and digital cameras. Perry's job-creating Texas Enterprise Fund played a role in landing the plant.

Authorities say a worker has died of injuries suffered in a fiery oil-related explosion just east of Cisco. Officials say 64-year-old James Mayes of Cisco was cleaning out water pumps on his night shift Tuesday when a bolt of lightning struck a nearby oil battery. The employee of United Energex in Cisco died at a Lubbock hospital.

Nasdaq CEO and President Robert Greifeld told an audience at the Petroleum Club that his market is stepping up efforts to compete head-to-head with the New York Stock Exchange. Traditionally the market for technology and small and mid-sized companies, Nasdaq points out that 20 percent of its listed companies are now in the energy industry—the same percentage as technology. Nasdaq lists 54 Houston companies compared to 108 on the NYSE. Nearly half of the locally-listed Nasdaq firms are in the energy or chemical businesses. Nasdaq opened a Houston office eight months ago.

Experts are warning drivers not to look for a summer slide in gas prices. The head of the Energy Information Administration says the combination of tight supply and geopolitical concerns leaves crude oil and gas markets poised "for continued volatility.'' Guy Caruso has told a Senate panel there is "upward pressure'' on prices, though he added that could ease if there are increases in production and imports. He says the average price of unleaded, regular gas this summer will be about $3.05 a gallon. That's about 21 cents higher than last year. Caruso warns that given low inventories, any major refinery shutdowns or outages because of the weather would likely cause gas prices to climb.

Late payments and new foreclosures on "subprime'' adjustable-rate home mortgages made to Americans with spotty credit histories have spiked to all-time highs. The Mortgage Bankers Association says payments 30 or more days past due for those home mortgages jumped to 15.75 percent in the first quarter. That's a sizable increase from the prior quarter's delinquency rate of 14.44 percent, and the highest on record. In its quarterly snapshot of the mortgage market, the MBA also says the percentage of subprime adjustable-rate mortgages that started the foreclosure process in the first quarter climbed to 3.23 percent. That's up from 2.7 percent in the prior quarter and also the highest on record.

A top Federal Reserve official says the central bank may use its legal authority to crack down on mortgage-lending abuses. The remark from Fed Governor Randall Kroszner came at a hearing to discuss the possibility of writing new rules to ban or restrict questionable practices in the subprime market. Actions under consideration include limiting the use of loans that do not require proof of a borrower's income and barring subprime lenders from imposing financial penalties for early payments. The government is under pressure to do something about the troubled home-loan market. Just Wednesday, House Financial Services Committee Chairman Barney Frank threatened to strip the Fed of its authority to write rules against home lending abuses if the central bank fails to act quickly.

Long-term mortgages rates are now at their highest levels in nearly a year. Freddie Mac says the average rate on the 30-year fixed-rate mortgage jumped to 6.74 percent this week from 6.53 percent a week ago. It's the highest level since last July 20th. The 15-year loan is averaging 6.43 percent--up 21 basis points from last week and the highest since July 6th of last year. Freddie Mac Vice President and Chief Economist Frank Nothaft says the increase in the 30-year fixed-rate mortgage average was the biggest in more than three years. He says the increase parallels rising yields on treasury securities as hopes dim for an interest rate cut.

A reception this afternoon celebrates the fifth anniversary of the Port of Houston Authority's Small Business Development program. The event at the Gus Wortham Theater Center on Texas Avenue is for PHA commissioners, executive staff and small business development staff, as well as hundreds of participants in the program. The commission established the program in 2002 with the goal of awarding 35 percent of all eligible PHA contracts to certified small businesses. The PHA has awarded $183.5 million in contracts to small businesses through the first quarter of this year.

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