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Thursday July 20th, 2006

Chemical Safety and Hazard Investigation Board releases report on 2005 explosion at Formosa Plastics…Yukos Oil president resigns just hours before creditors meeting that he says would back liquidation…Lyondell Chemical and Citgo Petroleum drop efforts to sell Lyondell-Citgo Refining… Investigators say better fireproofing of equipment and automated shut-off valves could have lessened the impact of an […]


Chemical Safety and Hazard Investigation Board releases report on 2005 explosion at Formosa Plastics…Yukos Oil president resigns just hours before creditors meeting that he says would back liquidation…Lyondell Chemical and Citgo Petroleum drop efforts to sell Lyondell-Citgo Refining…

Investigators say better fireproofing of equipment and automated shut-off valves could have lessened the impact of an explosion at a Texas plastics plant. The update came today from the U.S. Chemical Safety and Hazard Investigation Board. October’s explosion at the Formosa Plastics USA plant in Point Comfort injured 16 employees and sent flames more than 500 feet in the air. New Jersey-based Formosa Plastics is urged to revise how it analyzes hazards at its facilities and to provide fire-resistant clothing to workers. CSB member John Bresland says the company that built the plant shares some of the blame.

“We recommend that Kellogg, Brown & Root the company that designed Formosa’s facilities, use the most current safety standards when designing new facilities, including standards for fireproofing. And we urge a key safety organization–the Center for chemical Process Safety–to strengthen its hazard evaluation guidelines to include vehicle impact hazards and the isolation of equipment during emergencies.”

The accident happened at the Olefins Two unit of the plant after a forklift towing a trailer pulled out a small drain valve. That allowed liquid propylene to escape, forming a large vapor cloud that ignited. The report says the flow could have been stopped if the Olefins Two unit had been equipped with valves that could be shut down remotely. The board also found employees in the unit weren’t required to wear flame-resistant clothing.

The president of Yukos Oil announced his resignation just hours before a meeting of creditors that he called a “sham” that he says would back the liquidation of the company. Steven Theede said he has exhausted all possibilities to recover value for Yukos as a result of the expropriation of Yuganskneftegaz, the giant West Siberian production unit sold at a disputed auction in 2004 against Yukos’ multi-billion dollar back tax claims. Theede mentioned his inability to stop this week’s initial public offering of the Russian-controlled Rosneft company on the London Stock Exchange. Rosneft was the company that acquired Yuganskneftegaz. Attorney Robert Amsterdam defended Yukos founder Mikhail Khodorkovsky, and speaks out about corruption and the implications of Russian energy relations.

“Without the rule of law we’re all in danger. And you know, I was guilty of defending my client to the best of my ability, and for that, you know, I had five members of the secret police show up at my door at one in the morning. I didn’t really, you know, two of the lawyers that I worked with are in jail. One woman who’s 32 years old is facing seven years of hard labor. Her crime was being a lawyer at Yukos. I think what is going on in Russia is not understood by the people in the U.S., and I really do think that’s a tragedy.”

Amsterdam says energy companies hoping to reap the benefits of the new Russian market players should be careful about jumping into partnerships. He says the U.S. government should have the issue of Khodorkovsky brought to the surface again.

“He was in many ways a representative of what Russian energy could have been. Russian energy has been in decline since his arrest, and I believe having the strength to actually raise it as an issue would put a marker in the sand about where the United States wants to stand in respect to due process and the rule of law. Six billion dollars of foreign investment in Yukos that has been flushed away as a result of this Rosneft IPO, and that is something that the U.S., in my view, has a vital interest in objecting to.”

Yukos is in receivership with billions of dollars of back tax bills that have brought the company to near bankruptcy. Observers say it’s a Kremlin drive to restore its influence in the oil sector, as well as a bid to quash the political ambitions of Khodorkovsky. The bankruptcy hearings are the final chapter in the campaign against Yukos, which has seen its top managers arrested or flee the country.

Here’s another reason you are paying more for gasoline these days. China’s been importing more oil. The Beijing government confirms oil imports soared by more than 17 percent in the first half of the year, to fuel a soaring economy. The official news agency says net crude oil imports totaled 492 million barrels. Imports of refined products rose a stunning 48 percent. China is the world’s third-largest oil importer, after the U.S. and Japan. Chinese imports have soared in recent years, prompting complaints that their consumption is driving up world oil prices. The government has tried to rein in rising consumption by boosting state-set Chinese market prices of gasoline and other products, but most are still below world levels.

Lyondell Chemical and its partner Citgo Petroleum have dropped efforts to sell Lyondell-Citgo Refining in Houston. The companies said all offers have been insufficient to overcome the benefit of retaining an ownership stake in the refinery. The partners are evaluating alternatives, including Lyondell’s acquisition of Citgo’s stake or continuation of the joint venture. The partners in April announced they were looking into selling the refinery because of demand for refined products.

A subsidiary of Plains All American Pipeline has agreed to buy three refined products pipeline systems from Chevron Pipe Line for about $65 million, according to the Houston Business Journal. The assets include a 257-mile system originating in El Paso and terminating in Albuquerque, a 2.5-mile pipeline from El Paso to the Rio Grande River and a 39.7-mile pipeline from Big Springs to Midland.

Houston-based pipeline operator Kinder Morgan reports its second-quarter profit jumped 29 percent. Kinder Morgan is in the middle of a $13.5 billion management-led buyout. The company said it earned $157.2 million on revenue of $2.8 billion. Revenue surged because the company changed the way it accounts for income from business units and because natural gas sales have been boosted by recent acquisitions. In May, Richard Kinder and members of his management team, board of directors and a group of investment firms proposed taking the company private. The buyout is being challenged by shareholders in Texas and Kansas courts.

Continental Airlines today reports its second-quarter net income almost doubled. Houston-based Continental says a 23 percent boost in passenger revenue helped offset higher fuel prices and a hefty accrual for employee profit sharing. Net income rose to $198 million dollars. That compares to year-ago Continental earnings of $100 million. Total revenue rose nearly 23 percent. Continental chief financial officer Jeff Misner says–after five years of challenges and hard work–it’s great to see a payoff for everyone’s efforts. But Misner says the carrier must still focus on eliminating unnecessary costs.

Fort Worth-based American Airlines said today it’s seeking permission for a second route to China. The airline hopes to offer daily nonstop service between Dallas and Beijing beginning in March. American is the largest U.S. carrier. The company says it filed an application for the route today with the U.S. Department of Transportation. The airline plans to fly the route with a 245-seat Boeing 777 aircraft. Last year, American and Continental Airlines won government approval to begin nonstop passenger service from the United States to China. American started service from Chicago to Shanghai this year, following Continental’s service between Newark, New Jersey, and Beijing. United Airlines and Northwest Airlines dominate passenger service between China and the United States.

Consumer advocates want the state to block electric providers from cutting power to needy customers who fall behind on payments this summer. The Texas Public Utility Commission considered the request today. Supporters argue that vulnerable Texans are endangered by rising electricity rates and hot weather. They also point to the legislature’s decision last year to redirect funds that had been set aside to help the needy pay their bills. Electricity retailers are opposed to the request. They say customers are protected by federal and private programs that help people who are behind on their bills. Advocates say those programs aren’t enough. They want the commission to assure that seniors, the medically needy and people who pay at least part of their bills have service until October 1st.

The government says there were fewer people applying for unemployment benefits over the past week, reflecting fewer layoffs in the auto industry. The Labor Department says new claims for jobless benefits dropped 30,000 to a seasonally adjusted 304,000. The auto industry has seasonal layoffs tied to retooling. That can add a measure of volatility to the jobless claims which doesn’t speak to broader trends in the job market. The weekly decline is the biggest in six weeks. The less volatile, four-week moving average of new claims declined last week by 1,200 to nearly 317,000.

The 2nd annual Destination Occupation Job Fair is putting out the word to employers interested in space at their upcoming event. The regional job fair is set for August 15th at the George R. Brown Convention Center, hosted by The WorkSource. Last year, more than 8,500 job seekers attended, and many employers filled positions on the spot.

Pearland Emergency and Imaging Center has opened its doors to provide 24-hour emergency medical treatment. The facility on Shadow Creek Parkway just west of State Highway 288 is a department of Clear Lake Regional Medical Center. The imaging center will offer diagnostic radiology, CT Scan, MRI, digital X-ray, digital mammography, ultrasound and bond densitometry.

After declining for two straight months, the Conference Board’s Index of Leading Economic Indicators may be in positive territory. says Wall Street expects an increase of two-tenths percent in the index–a gauge of what the economy is likely to be doing in the next three-to-six months. The largest gaining components are expected to be initial claims and consumer expectations, while manufacturing deliveries and stock prices as reflected by the S&P 500 are likely to have posted the biggest declines.

Freddie Mac says mortgage interest rates have risen over the past week, taking back last week’s drop. The average for 30-year fixed-rate mortgages stands at 6.8 percent, up from last week’s 6.74 percent. On 15-year fixed rate mortgages, the average is put at 6.41 percent. That’s up from 6.37 percent. One-year treasury-indexed adjustable rate mortgages stood at 5.8 percent. Freddie Mac says that was up from 5.75 percent.

Two research firms say personal computer shipments grew roughly ten percent in the second quarter–despite soft sales in Europe. Analysts found rivals continuing to gain on leading PC maker–Round Rock-based Dell–and predicted that low prices would continue for the rest of 2006. Researchers at IDC say worldwide PC shipments grew 9.7 percent. Analysts at Gartner, which used slightly different measurement methods, pegged the increase at 11 percent. The review found that worldwide, Dell just managed to outgrow the broader market. Hewlett-Packard gained less than one percentage point of market share in both analyses to hold steady as the worldwide number two PC provider.

The owner of Nocona athletic goods is seeking a new manufacturing site after fired destroyed the company’s main building. Officials say employees will be paid as work continues to set up new operations. Tuesday’s fire destroyed most of the facility, which makes baseball gloves and other athletic equipment. Owner Rob Storey says the building burned–but the company didn’t. He’s hoping that operations will soon resume in the community of about 3,200. Investigators are looking into whether an electrical problem sparked the blaze. The factory had been operating in Nocona, located about 70 miles northwest of Fort Worth, since the 1920s.

Oil and gas well permitting in Pennsylvania is on pace for a third straight record year. The market is prompting exploration companies to range farther from Pennsylvania’s traditional oil and gas fields in the western part of the state. Houston-based Anadarko Petroleum has leased land in Pennsylvania, although a spokeswoman wouldn’t say where and says the company has no firm drilling plans. Ultra Petroleum of Houston says it’s expanding its drilling plans in Pennsylvania after it scored a successful well in Tioga County on its first attempt in the state last year. Experts say the lure is Appalachia’s relatively unexplored and deep veins of natural gas that are close to major cities like New York and Philadelphia. David Straub with Pennsylvania General Energy says there’s a lot of hiring going on.

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