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Wednesday AM June 13th, 2007

Houston purchasing managers note continued economic growth…Terminals conference hears about biofuels…Independent oil and gas producers drilled 96 percent of 2006 wells, according to Texas Alliance of Energy Producers… Houston’s economy continues growing for the 30th consecutive month, although at a slower rate, according to the latest Purchasing Managers Index from the National Association of Purchasing […]


Houston purchasing managers note continued economic growth…Terminals conference hears about biofuels…Independent oil and gas producers drilled 96 percent of 2006 wells, according to Texas Alliance of Energy Producers…

Houston’s economy continues growing for the 30th consecutive month, although at a slower rate, according to the latest Purchasing Managers Index from the National Association of Purchasing Management. But the index is at 59.4 percent for May, lower than the same time last year. The PMI is based on a monthly survey of purchasing executives in oil and gas exploration and production, manufacturing, engineering and construction, chemicals, distribution, business and financial services and healthcare. Components include sales, production, employment, purchases, prices paid and inventory levels. Houston area employment remains strong, with 44 percent of survey respondents increasing staff and 16 percent reporting reductions.

Attendees at the ILTA 27th annual International Operating Conference and Trade Show at the Hilton Americas and George R. Brown Convention Center are hearing discussion about the future of the biofuels industry. Merrill Kramer with Chadbourne & Parke says there’s an existing infrastructure with terminals, and those companies are accommodating alternative fuels.

“Most alternative fuels, and biofuels in particular, are used in blends. They’re blended as maybe one part biofuel and four to five to six to nine parts conventional fuels–petroleum fuels–which is the business these terminal operators are in. Even though biofuels is an industry that originates in the agriculture business, it is predominantly a petroleum business if it is to be integrated into the fuel supply and distribution chain. Terminals already have in place existing infrastructure–tanks, transportation–they have the distribution. They’re petroleum customers are the same customers who are now demanding–for environmental reasons, policy reasons, carbon reasons, independence of energy reasons—they’re demanding renewable fuels. There seems to be an increase in interest amongst the terminal operators.”

Kramer says energy companies and terminal operations are very aware of the public’s interest in global warming.

“Whether you like Al Gore or not, he’s put that on the map, and it’s entered into the public perception. It’s entered into the political realities. People are no longer talking about whether, in fact, global warming is occurring–it’s become an assumption, and certainly it’s an assumption in Washington, D.C., that global warming does exist, the globe is warming and that carbon dioxide is strongly linked to that rise in temperatures. The debate has now shifted about what to do with the O2 emissions and climate change–whether we should adopt renewable portfolio standards, coming up with an emerging global consensus on carbon emission trading. But the debate over global warming in Washington, I think, is over. And that new reality, I think, is going to drive the energy industry, including the liquid terminals business.”

Concerns about carbohydrates versus hydrocarbons—issues with using food as energy feedstock—are on the minds of early investors, according to Kramer. But he says there’s sufficient acreage for that not to be an issue.

Independent oil and gas producers play an increasingly larger role in the state’s energy future, according to a new study from the Texas Alliance of Energy Producers. Independents drilled 96 percent of the wells drilled in Texas in 2006. Independents produced 88 percent of the natural gas and 92 percent of the crude oil produced in the state last year. That’s up from 86 percent for natural gas and 90 percent for oil in 2005.

Idaho-based Washington Group International has been selected by the FutureGen Industrial Alliance to provide design and engineering services for the initiative, a public-private partnership to develop and build a first-of-its-kind, coal-fueled, near-zero emissions electric power plant. The billion-dollar project will also be the world’s first integrated carbon sequestering and hydrogen gas production research plant. It will convert a variety of coal to hydrogen gas for power generation. It will generate electricity while capturing and permanently storing carbon dioxide deep underground. Texas is competing against Illinois to attract FutureGen to the state.

Houston rental rates increased in May despite a decline in occupancy, according to O’Connor & Associates. The real estate services firm says the Houston apartment market continues having the lowest occupancy among major markets in Texas, falling to 88.37 percent in May. The average rent per unit increased almost $2 in May, bringing the average to $715.92 per month. Houston has 520,361 apartment units operating or under construction.

The Houston Association of Realtors registered more than one billion hits on its Web site in March, more than doubling the 490 million hits on the site in the same month last year. The site had 920,000 unique visitors—the highest level of traffic ever experienced on the real estate listing site. The HAR site was initiated in 1997.

Employers are taking a cautious approach to increasing their payrolls this summer. Nearly all industry sectors expect hiring activity will remain steady. Employers in construction, manufacturing, transportation finance and services don’t see much change in the hiring climate from their spring forecast. Geographically, job prospects are strongest in the west, while employers in the northeast continue to be the least optimistic.

The nation’s corporate chief executives continue to leave their jobs at a torrid pace. Challenger, Gray and Christmas, the outplacement consulting firm, says 144 CEOs headed for the exits last month. That’s 14 percent above April’s departures and the largest monthly exodus since last September. According to the Challenger report, exactly half of the May CEOs who left resigned or stepped down and 31 retired. Fifteen were in their posts on an interim basis. Since January, Challenger has recorded 614 CEO changes, slightly above the record-setting pace set last year.

Houston-based Bike Barn has acquired Katy-based ACME Bicycle Company, according to the Houston Business Journal, and now operates six stores in the Houston area. ACME grew from its start as a small shop in Katy. The 24-year-old Bike Barn now services the clear Lake, Rice village, West Houston, Champions, Copperfield and Katy areas.

Developers say the redevelopment of San Antonio’s landmark Pearl Brewery will include Texas’ largest solar energy project. Silver Ventures, which is redeveloping the former brewery, announced plans Monday for the $1.35 million effort. It will install 758 panels atop a former warehouse, which once stored finished beer. The panels will be capable of generating 200 kilowatts, or about one-fourth of the power needed in the 67,000-square-foot building. The building will house office, retail and residential space. The system is the equivalent of 50 solar-powered homes. CPS Energy, a city-owned utility, is contributing $400,000 to the project. A utility official says it’s an economically viable project that provides a chance to measure the benefits of solar power.

AT&T has agreed to pay the University of Texas $25 million in exchange for naming rights and a 25-year service agreement at the school’s new hotel and conference center. The center will now be called the AT&T Executive Education and Conference Center. Official say it will host seminars and continuing education programs for academics and business professionals. The deal calls for AT&T to pay the university $5 million a year over the next five years. Most of the money will go toward the ongoing construction of the center, which is scheduled to open in August 2008. UT has also made a 25-year agreement to use AT&T technology and communication services at the center. Jim Cicconi of AT&T says the company will make sure the center is outfitted with the latest technology to help make it a leading executive education facility.

It’s getting cheaper to get a movie from Blockbuster. The Dallas-based movie rental chain has cut the cost of its most popular mail order plan, which allows customers to have three DVDs at any one time. Blockbuster dropped the price by a buck to $16.99 per month. Netflix pioneered the mail-order service. Blockbuster has been scrambling to take a notch out of Netflix’s market share after Blockbuster’s in-store rental traffic began to slip. Blockbuster has been expanding its mail subscriber base. The company had 2.8 million paying subscribers at the start of April.

Chip maker Texas Instruments narrowed its earnings forecast for the second quarter. Dallas-based TI also says it expects revenue to come in between $3.36 billion and $3.51 billion. It’s within the range that Chief Executive Officer Rich Templeton had predicted at an annual meeting with analysts last month. Texas Instruments is the largest supplier of chips used in cell phones.

Baylor University’s Hankamer School of Business is accepting nominations for its 18th annual Texas Family Business of the Year awards program. Baylor’s Institute for Family business sponsors the annual awards ceremony, recognizing outstanding family firms in Texas. The deadline for nominations is August 15th, and winners will be announced on November 15th.