10/12 Industry Report [Q1 2017] by Baton Rouge Business Report

Q1 2017

INDUSTRYREPORT

The maintenance

BOOM A surge in turnarounds brings Gulf Coast manpower concerns into focus.

PLUS:

• Danos celebrates 70 • The Trump effect • FOCUS: Environmental services

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10/12 INDUSTRY REPORT • FIRST QUARTER 2017

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10/12 INDUSTRY REPORT • FIRST QUARTER 2017

CONTENTS

The maintenance

BOOM

Publisher: Rolfe McCollister, Jr. EDITORIAL Editorial Director: Penny Font Editor: Jerry Martin Director of Research: Sierra Crump Contributing Writers: Sam Barnes, Erin Z. Bass, Jen Bayhi-Gennaro, David Jacobs, Meredith Whitten Contributing Photographers: Lee Celano, Terri Fensel, Cheryl Gerber, Don Kadair ADVERTISING Sales Director: Jill Stokeld Account Executives: J.C. Applewhite, Angie LaPorte, Rebecca Robinson, Lindsey Russ Advertising Coordinator: Lacie Thibodeaux Marketing & Events Coordinator: Claire Rutland Community Liaison: Jeanne McCollister McNeil PRODUCTION/DESIGN Production Manager: Melanie Samaha Art Director: Hoa Van Vu Graphic Designers: Tammi deGeneres, Melinda Gonzalez, Rachel Parker, Emily Witt

PAGE 26 COURTESY SHELL CHEMICAL

LAUNCH

ICYMI Industry briefs and other intelligence

The big picture In Geismar, construction is underway on what will be the alpha olefins production plant with the greatest capacity in the world.

18 20

Built for the long term 70-year-old Danos is an institution in the oilfield services industry.

Tempered optimism Industry confidence is buoyed by expectations of a business-friendly Trump administration.

Technology A novel carbon capture project in Lake Charles takes a major step forward. People Meet Craig Romero, executive director of the Port of Iberia District

46 51

New port of call Brandy Christian brings tenacity, strategic mindset to the top spot at the Port of New Orleans.

Trendspotter Gregory Bowser talks trends in the petrochemical industry. Market Watch Industry insiders identify four critical issues for Louisiana industry in 2017.

NEWS

Mind and body Mental health programs for employees are becoming commonplace in the industrial workplace.

FOCUS: ENVIRONMENTAL SERVICES Safety net Precision and detail are the keys to effective emergency response. On the emissions trail Infrared cameras detect leaks at industrial sites across the Gulf South. Will they gain EPA acceptance?

The family business For three decades, George Lockhart has found profit in industrial waste transit.

INSIGHT Columnists weigh in on OPEC, New Year’s resolutions for Louisiana industry, keeping Louisiana competitive and cracking down on misclassification and payroll fraud.

CLOSING NOTES

Executive moves

Company news

Project maps Our maps of the megaprojects and medium-sized projects that are driving the industrial boom.

My toughest challenge Jennifer Dunphy, ExxonMobil Baton Rouge Plastics

ADMINISTRATION Chief Financial Officer: Jonathan Percle Chief Innovation Officer: Curtis Heroman Business Manager: Adam Lagneaux Business Associate: Lydia Spano Office Coordinator: Debbie Lamonica Courier: Jim Wainwright Receptionist: Cathy Brown AUDIENCE DEVELOPMENT Audience Development Coordinator: Kenna Maranto A PUBLICATION OF LOUISIANA BUSINESS INC. Chairman: Rolfe H. McCollister, Jr. President and CEO: Julio A. Melara Executive Assistant: Millie Coon SUBSCRIPTIONS/CUSTOMER SERVICE 9029 Jefferson Highway, Suite 300 Baton Rouge, LA 70809 225-421-8157 • FAX 225-928-5019 1012industryreport.com email: circulation@businessreport.com Volume 2 - Number 1 © Copyright 2017 by Louisiana Business Incorporated. All rights reserved by LBI. 10/12 Industry Report is published quarterly by Louisiana Business Inc. Reproduction without permission is prohibited. Business address: 9029 Jefferson Hwy., Ste. 300, Baton Rouge, LA 70809. Telephone (225) 928-1700. POSTMASTER: Send address changes to 1012 Industry Report, 9029 Jefferson Hwy., Ste. 300, Baton Rouge, LA 70809. 10/12 Industry Report cannot be responsible for the return of unsolicited material— manuscripts or photographs, with or without the inclusion of a stamped, self-addressed return envelope. Information in this publication is gathered from sources considered to be reliable, but the accuracy and completeness of the information cannot be guaranteed. No information expressed here constitutes a solicitation for the purchase or sale of any securities.

Send your ideas and company news to editor@1012industryreport.com. 6 10/12 INDUSTRY REPORT • FIRST QUARTER 2017

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IN THIS ISSUE

A double boom for industry

F PENNY FONT EDITORIAL DIRECTOR

our years ago, we started hearing about a renaissance in Louisiana manufacturing. National and international firms were planning billions of dollars in expansions and new facilities along the 10/12 corridor between 2013 and 2017. Now here it is 2017, and we’re anticipating a boom of a different sort: maintenance. Pent-up demand for turnarounds is driving this particular boom. Industrial Information Resources, a market intelligence firm in Sugar Land, Texas, estimates turnarounds and shutdowns are expected to increase by 5.4%, to $10.43 billion across all U.S. industrial markets, with the petroleum refining industry seeing the biggest increase. Refiners are projected to increase planned maintenance spending by 38.5% to $1.26 billion. Additionally, the chemical sector will see a 4% increase—to $1.81 billion—and the power sector a 9.3% increase, to $3.4 billion. Some 7,000 additional craftsmen might be needed to handle the demand for maintenance turnarounds in the first quarter alone, according to IIR. The level of work in the Gulf Coast region— maintenance and capital projects combined—is unprecedented, says Tony Salemme, IIR’s vice president of labor risk assessment. Read more about his projections—and how plants along the Gulf Coast are preparing for the maintenance boom—in our cover story on pages 26-33. FOCUS ON ENVIRONMENTAL SERVICES This edition of 10/12 Industry Report zeroes in on one of the most critical components of industry: environmental services. We introduce you to firms from Lake Charles to Belle Chasse that are providing emergency response services to plants across the corridor. As the regulations handed down by the Environmental Protection Agency and other federal and state entities have grown, so, too, have their markets. Writer Sam Barnes has a fascinating look at the expanded use of infrared cameras to detect leaks at industrial sites. One corridor company—Providence Engineering in Baton Rouge—has taken a

10/12 INDUSTRY REPORT • FIRST QUARTER 2017

leadership role in the development and marketing of the technology. And we introduce you to CEI founder George Lockhart, who has created a family business out of industrial waste transit. Our Focus section begins on page 46. CARBON CAPTURE Louisiana has moved closer to becoming the site of what will be the world’s largest manufacturing carbon capture facility. The U.S. Energy Department in December announced it was conditionally guaranteeing up to $2 billion in federal loans to Lake Charles Methanol. The funding, which remains subject to certain terms, will go toward construction of a novel methanol production facility in Lake Charles able to capture carbon that could be utilized for enhanced oil recovery in Texas. Read more about it on page 22. NEW AT THE HELM The Port of New Orleans has a new leader. Brandy Christian has taken over as president and CEO, replacing Gary LaGrange, a 40-year veteran of the maritime industry who has run the operation since 2001. She’s taking over at a profitable time for the port. Its revenues set a record for the fourth consecutive year in 2015, exceeded the half-million container mark for the first time and welcomed 1 million cruise passengers for the second year in a row. (At press time, 2016 statistics were not available.) Christian brought a record of success when she joined the port in 2015. During her tenure as the Port of San Diego’s vice president of strategy and business development, she salvaged the port’s floundering cruise ship industry and secured a crucial lease with Dole Fresh Foods. Read about her plans for New Orleans beginning on page 34. TALK TO US We want your ideas and company news. Send them to editor@1012industryreport.com. If you’d like to receive this free publication, you can sign up at 1012industryreport.com/signup.

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RANGE ROVER

EXCEEDINGLY CAPABLE. EXCEPTIONALLY REFINED.

With its classic lines, floating roofline and distinctive silhouette, the unmistakable Range Rover is an icon of automotive design. Exceedingly capable and at the same time beautifully refined, the Range Rover conveys confidence and sophistication.

OWN THE

ADVENTURE SALES EVENT

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10/12 INDUSTRY REPORT • FIRST QUARTER 2017

LAUNCH ICYMI

LNG plans roll on GOV. JOHN BEL EDWARDS and Venture Global LNG executives announced in December the company will invest $8.5 billion to develop a natural gas liquefaction facility and LNG export terminal in Plaquemines Parish. Plaquemines LNG will be Venture Global’s second major natural gas liquefaction and export project in Louisiana, joining the $4.5 billion Calcasieu Pass project that was announced in Cameron Parish in December 2014 and is under development. Plaquemines LNG will create 250 new direct jobs, and Louisiana Economic Development estimates that the project will result in an additional 728 new indirect jobs. The project also is expected to generate 2,200 construction jobs. “GNO Inc. is thrilled to welcome Venture Global, a project represent-

ing close to 1,000 new well-paying jobs and major capital investment, to Plaquemines Parish,” Greater New Orleans Inc. President and CEO Michael Hecht said. “Venture Global will strengthen our region’s economy and send a strong signal that Louisiana remains one of the best choices for business because of its friendly business climate and unparalleled logistics.” Hecht said the news likely represents one of the largest economic development announcements in the U.S. for 2016. In partnership with state, port and local officials, GNO Inc. helped provide support for project site location, incentives, permitting and communications. Plaquemines LNG will be built to an export capacity of 20 million metric tons per year. The complex will be located on the west bank

WHEN SUPPLY CHAINS GET TRUMPED “WHILE WE ARE STILL a long way from having a clear picture of the new administration,” notes analyst Kevin O’Marah, “we can draw some conclusions about what it may mean for supply network design, manufacturing strategy and resource planning, taking some of Trump’s stated policies [in quotes] as a starting point.” O’Marah is chief content officer for SCM World and a research fellow at the Stanford Graduate School of Business. Here are a few highlights from his December article on Trump and the supply chain. The full column can be found at industryweek.com. For more on the potential impact of the Trump administration, see pages 42-43.

of the Mississippi River near Mile Marker 55, downriver of Myrtle Grove. The 632-acre site—about 30 miles south of New Orleans—includes 7,000 feet of river frontage and is owned by the Plaquemines Port Harbor and Terminal District. LED began discussions with Venture Global about the Plaquemines Parish project after the company’s announcement of the Calcasieu Pass LNG project in late 2014. The company is expected to utilize the state’s Quality Jobs and Industrial Tax Exemption programs. Construction is expected to begin in 2018, once the project is authorized by the Federal Energy Regulatory Commission. Full operations are projected for 2022. Despite a significant slump in prevailing LNG prices, LNG export projects on the Gulf Coast con-

TRADE “Withdraw from the Trans Pacific Partnership.” “Label China a currency manipulator.” “Renegotiate NAFTA.” For hundreds of companies whose manufacturing and assembly is in either China or Mexico, this promises trouble. The cost of sourcing from these regions is likely to rise substantially, while finished goods and parts could be stranded overseas.

TAXES “Lower the business tax rate from 35% to 15%.” This change, if it takes place, could allow businesses to choose their location based on fitting customer markets and key personnel, rather than on tax optimization. The change could simplify network design for functions such as planning, sourcing and product development.

tinue to roll forward. The Greater Lafourche Port Commission and tenant Energy World USA announced Jan. 31 the proposed development of a mid-scale LNG production and export facility at Port Fourchon. The proposed $800 million facility would produce up to 2 million tons of LNG per year for export, as well as operate a separate smaller scale liquefaction plant geared toward providing LNG to fuel offshore supply vessels (OSVs) operating in the Gulf. In December Qatar Petroleum International Ltd. and ExxonMobil won approval from the FERC to build the $10 billion Golden Pass natural gas export plant in Sabine Pass, Texas. The agency also authorized a pipeline designed to bring 2.5 bcf/day of gas to the facility.

—Staff report

IMMIGRATION “Begin working on an impenetrable physical wall on the southern border.” “End sanctuary cities.” “All immigration laws will be enforced.” For industries with a dependence on low-cost, imported (and occasionally illegal) labor, including agriculture and food processing, this will raise costs. Downstream buyers, including consumer packaged goods, will need to pass along price increases initially and then work with suppliers to use automation in order to lower costs.

—IndustryWeek

10/12 INDUSTRY REPORT • FIRST QUARTER 2017

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COURTESY TEEKAY

+9.3% BOUND FOR JAPAN CHENIERE ENERGY BECAME the first U.S. company to export LNG to Japan when the carrier Oak Spirit reached the island nation in early January following a one-month journey from Cheniere’s Sabine Pass facility south of Lake Charles. Jera, a joint company of Tepco and Chubu Electric, announced the LNG carrier had safely docked at Chubu Electric’s Joetsu LNG terminal. Jera has agreed to buy the LNG cargo from Cheniere in the first of what looks to be many transactions with U.S. exporters. In a statement,

Jera says buying U.S. LNG will likely “contribute to a stable energy supply in Japan through the diversification of procurement regions and LNG price indices.” Oak Spirit’s landmark trip was made possible by the June opening of the expanded Panama Canal, which enabled the canal to accommodate LNG tankers. Above: The Oak Spirit passes through the Panama Canal loaded with LNG from Sabine Pass. —LNG World News

IN SO MANY WORDS

By the end of 2017 you’re going to hear about contractors failing, losses on fixed costs, the inability to man jobs, wages rising and per diems rising. —TONY SALEMME, Industrial Information Resources, on the impact of this year’s expected maintenance boom. See our cover story, pages 26-33, for details.

NUMBERS

Louisiana’s ranking in quality of business environment for commercial and industrial construction contractors, according to the latest scorecard from Associated Builders and Contractors Source: ABC

surge in U.S. oil and gas drilling in December, to a level still 10.5% below December 2015. Source: Federal Reserve Industrial Production index

PORTS GEAR UP FOR PETCHEM EXPORTS THE WORLD’S SECOND-LARGEST petrochemical port in Houston may command 75% of all U.S. polyethylene exports, but expected growth in international shipments as a slew of new ethane crackers and associated derivative units start coming online this year has U.S. ports a thousand miles or more away gearing up to nab a piece of the action. Last month Georgia’s Port of Savannah increased its ship-to-shore crane total to 26 with the arrival of four new post-Panamax cranes that cost about $15 million each. Resin packagers and distributors, such as New Jersey-based A&R Bulk-Pak and Mobile, Alabama-based SeaPac Inc., are setting up operations at or near the Port of Charleston in South Carolina. The Port of New Orleans also is adding post-Panamax cranes and resin-packaging capacity and taking empty containers from Memphis shipped via barge on the Mississippi River to add loading capacity for exporters. Resin is a “huge part of our conversations” about growth, Port of New Orleans director of marketing Janine Mansour said at a recent energy conference in Houston. Traffic has already increased. U.S. PE exports rose 22.6% in 2015 compared to 2014, according to American Chemistry Council data, and 2016 is expected to surpass 2015’s total. According to U.S. Customs, the Port of Houston handled 75% of all waterborne polyethylene exports in 2015. Los Angeles/Long Beach came in second at 10%, followed by New Orleans at 7%, and the rest in Freeport, Texas, New York, and elsewhere. —The Barrel/Platts

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10/12 INDUSTRY REPORT • FIRST QUARTER 2017

COURTESY PORT OF NEW ORLEANS

LAUNCH: ICYMI IN SO MANY WORDS

I’m not expecting $80 oil. If we can get to $60 and stay there for the year, that would be really positive. —GIFFORD BRIGGS, Acting President, Louisiana Oil & Gas Association, speaking as the new year began

ENTERGY PLANT COMING TO ST. CHARLES PASSAGE TO ASIA MARSEILLES, FRANCE-BASED CMA CGM has begun a new direct weekly container service to Asia from the Port of New Orleans Napoleon Avenue Container Terminal. Part of the company’s PEX3 service, the inaugural vessel was scheduled to arrive Jan. 31 for service by terminal operator Ports America. “CMA CGM is proud to be expanding our presence in New Orleans, further showing our commitment to the Gulf region, and Louisiana specifically. We look forward to continued growth in the region, and are pleased to be contributing to the evolution and development of this vital hub,” said Marc Bourdon, CMA CGM America LLC president. The faster

NUMBERS

9,400 jobs lost in metro Lafayette from October 2015 to October 2016, most in the nation Source: 24/7WallSt.

transit times provided by the new direct service enhance the Port of New Orleans’ reach for shippers. The new service offers a 26-day transit time from Asia to New Orleans, which positions the port to grow the recently opened Mississippi River Intermodal Terminal’s service to key markets such as Memphis, Chicago, Detroit and Toronto, which are all serviced daily by CN Railroad. The direct service also adds capacity and reliability for exporters and is strategically timed to serve the surge in resin exports in 2017. —Staff report

ALL SYSTEMS GO AT MONSANTO MONSANTO OFFICIALS SAY construction of a $975 million herbicide plant in Luling is ramping up, with more than 800 construction workers expected by October and as many as 1,000 by mid 2018. Rennie Growl, construction coordinator, and Amy Price, project engineering technical lead, told members of the Greater New Orleans Business Roundtable Jan. 26 that current work at the site is aimed at building roads to improve traffic flow and developing material laydown areas, while civil work and steel erection will begin this spring and summer. Jacobs Engineering Group in Baton Rouge is designing and building the plant on available acreage within the confines of Monsanto’s existing facilities. Once fully operational in early 2020, the plant will produce 25 to 35% of market demand for dicamba herbicide, a key component in Monsanto’s Roundup Ready Xtend Crop System. A significant amount of new rail will also be constructed in support of the plant.

ENTERGY CORP. has received approval from the Louisiana Public Service Commission to construct a natural gas-fired, combined-cycle power plant in St. Charles Parish. Entergy Louisiana broke ground in January for construction of the 980-megawatt unit in Montz, around 30 miles from New Orleans. The plant is scheduled to begin commercial operations by June 2019. The cost of building the plant, including transmission and other project-related expenses, is approximately $869 million. According to a company statement, the St. Charles Power Station is expected to facilitate sustainable reliability of the electric grid and to be one of the cleanest fossil fuel-fired units in Entergy Louisiana’s generation fleet. Throughout the expected 30-year life of the unit, customers are projected to save over $1.3 billion. Entergy says customer savings are projected to exceed the project’s construction cost in less than 10 years. “A modern, efficient unit like the St. Charles Power Station is needed in the southeast Louisiana region to maintain reliability as our existing generation fleet ages,” said President and CEO Phillip May. According to an analysis by economist Loren Scott, the plant’s construction phase will generate an estimated 2,000 direct and indirect jobs annually across the state. —Staff report

—Sam Barnes

10/12 INDUSTRY REPORT • FIRST QUARTER 2017

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“

SPECIALTY WELDING AND PIPING HEATER SERVICES BOILERS

Quality matters, Safety matters, Team matters, Our word matters. – JOHNNY HOLIFIELD

EXCHANGERS, TOWERS, AND DRUMS ASME & NBIC CODE REPAIRS

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PRESIDENT

Jimmy Quick, VICE PRESIDENT

LAUNCH: ICYMI

COURTESY WESTLAKE

IN SO MANY WORDS

WESTLAKE TOPS SAFE LIST THE LOUISIANA CHEMICAL ASSOCIATION announced that six of the state’s chemical plants earned the association’s highest honor as winners of the “Best in Louisiana” SAFE Award for 2016. Seventy facilities employing 19,263 chemical workers from 48 companies took part in the SAFE Project last year. Honors are competitively awarded in each of four employee-size classes. Winners were:

CLASS 4 (OVER 400 EMPLOYEES) WESTLAKE CHEMICAL CORP. (pictured) Sulphur, Calcasieu Parish Wayne Ahrens, Plant Manager

In Louisiana, the impact of federal regulation on our industries is 74% higher than the impact on the nation overall— making it the most regulated state in the country. —U.S. REP. GARRET GRAVES

BRIDGE TO SOMEWHERE REPRESENTATIVES FROM BIG INDUSTRY faced off against environmentalists Jan. 12 at a public hearing in Baton Rouge over the proposed 162-mile Bayou Bridge Pipeline, which, if approved, will run from Lake Charles through the Atchafalaya Basin to St. James Parish. The $750 million project is being jointly pursued by subsidiaries of Phillips 66, Sunoco Logistics and Energy Transfer Partners, and is an extension of an existing pipeline that transports crude oil from Nederland, Texas, to Lake Charles. Advocates of the project argue that pipelines are the safest, most environmentally friendly and cost-effective way to transport oil. Local industry executives also made the case that the project is good for Louisiana’s economy. John Stupp, CEO of Baton Rouge-based Stupp Corp., noted that his company has been able to keep 250 employees on its payroll manufacturing 30,000 tons of pipe for the project. Stupp has already completed the work, for which it billed $35 million. “Pipelining is the safest and most environmentally sound way to move things around, and we as a state and as a nation should be embracing the best way to do things,” Stupp said. “If we’re going to continue to use fossil fuels we ought to transport it the safest way possible.” While an online petition against the pipeline has garnered over 107,000 signatures, supporters of the project were buoyed by President Donald Trump’s Jan. 24 executive order to move forward on the Keystone XL and Dakota Access pipelines. A second hearing was set for Feb. 8 for a permit needed from the Louisiana DNR. —Staff report

CLASS 3 (201-400 EMPLOYEES) GRACE

A BREATH OF FRESH AIR

Sulphur, Calcasieu Parish David Rentrop, Plant Manager

THE ENVIRONMENTAL PROTECTION AGENCY released its annual Toxics Release Inventory National Analysis, which shows releases of toxic chemicals into the air fell 56% from 2005-2015 at industrial facilities submitting data to the TRI program. The report shows an 8% decrease from 2014 to 2015 at facilities reporting to the program contributed to the 10-year decline. “Today’s report shows action by EPA, state and tribal regulators, and the regulated community has helped dramatically lower toxic air emissions over the past 10 years,” said Jim Jones, EPA assistant administrator for the Office of Chemical Safety and Pollution Prevention. “The TRI report provides citizens access to information about what toxic chemicals are being released in their neighborhoods and what companies are doing to prevent pollution.” Hydrochloric acid, sulfuric acid, toluene and mercury were among chemicals with significantly lower air releases at TRI-covered facilities. Coal- and oil-fired electric utilities accounted for more than 90% of nationwide reductions in air releases of hydrochloric acid, sulfuric acid and mercury from 2005 to 2015 in facilities reporting to the program.

CLASS 2 (101-200 EMPLOYEES) OLIN Plaquemine, Iberville Parish Steve Ledoux, Louisiana Operations Site Leader

CLASS 1 (100 OR FEWER EMPLOYEES) 3-way tie AIR LIQUIDE Norco, St. Charles Parish Nicholas Frasier, Plant Manager

CHEMTRADE REFINERY SERVICES

—Staff report

Shreveport, Caddo Parish Gus Tonding, Plant Manager

BUSINESS TICKER

RAIN CII CARBON Gramercy, St. James Parish Kent Louque, Plant Manager

• BP is moving ahead with a $9 billion oil project in the Gulf after a cost-cutting redesign. The UK-based oil giant announced it would continue with the second phase of its Mad Dog project off the Louisiana coast.

MOST IMPROVED AIR LIQUIDE – GEISMAR ASU Ascension Parish

• Taiwanese media reported that Formosa Plastics plans to expand its plant in Texas. The company expects to invest $3.3 billion to construct a third olefins unit at the Point Comfort plant, with full operations starting in 2019.

PCS NITROGEN Ascension Parish

OCCIDENTAL CHEMICAL CORP. Ascension Parish

NORAND ALUMINA LLC St. James Parish —LCA

• Chevron has set its 2017 capital and exploratory budget at $19.8 billion, marking its fourth straight year of spending reductions.

• Praxair Inc. of the U.S. agreed to buy Linde AG for about 33.9 billion euros ($35.1 billion) to create the world’s largest supplier of industrial gases. • Dow Chemical’s new 1.5 million mt/year cracker in Freeport, Texas, is 85% mechanically complete and remains on track to begin startup in mid-2017. • Williams Companies expects to decide by the end of Q1 2017 whether to sell its 88.5% share of its olefins complex in Geismar or forge a long-term, fee-based deal to operate it while a partner buys all the output and assumes all the commodity risk. —Wire services, FuelFix, The Barrel/Platts

10/12 INDUSTRY REPORT • FIRST QUARTER 2017

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COURTESY LAGCOE

your partner in

pr gress DEMCO gives your business the power to grow.

LAGCOE UPDATE FOR THE FOURTH TIME in the exposition’s existence, LAGCOE will host the New Technology Showcase program, a dedicated technical session recognizing exhibitors’ best forward-thinking solutions by giving them an opportunity to present a brief overview of a recent innovation or technological advancement. This forum will allow companies a chance to showcase new technology to the scores of industry leaders and LAGCOE attendees assembled for this one compact time slot. All LAGCOE 2017 exhibitors and select sponsors are eligible to participate in the program. LAGCOE 2017 New Technology Showcase applications will be available February 2017 on LAGCOE.com. Videos from the LAGCOE 2015 New Technology Showcase forum are also available on that page. The New Technology Showcase program is sponsored by Drilling Contractor. LAGCOE 2017 is set for Oct. 24-26 at the Cajundome & Convention Center in Lafayette. —Staff report

NUMBERS

54.7

Institute for Supply Management’s manufacturing index for December, marking the fourth straight monthly advance. Readings above 50 indicate growth.

Issue Date: 1Q 2017 Ad1 proof #3

• Please respond by e-mail or fax with your demco.org approval or minor revisions. /DEMCOLouisiana • AD WILL RUN AS IS unless approval or final revisions are received by the close of business today. • Additional revisions must be requested and may be subject to production fees. Carefully check this ad for: CORRECT ADDRESS • CORRECT PHONE NUMBER • ANY TYPOS This ad design © Louisiana Business, Inc. 2016. All rights reserved. Phone 225-928-1700 • Fax 225-926-1329

Source: ISM

Geotechnical Engineers

DEEP IMPACT THE MISSISSIPPI RIVER should be dredged to let three southeast Louisiana ports accept the enormous cargo ships built to take advantage of the Panama Canal’s expansion, the Army Corps of Engineers says. Many other U.S. ports either already have completed similar projects or are trying to get them approved. Parts of the shipping channel from just south of Baton Rouge to the Gulf are now about 42 to 45 feet deep. The plan calls for increasing that depth to 50 feet, with initial dredging as deep as 54 feet to increase the time between maintenance dredging. The Louisiana Department of Transportation and Development would pay $45.7 million of the estimated $88.9 million cost of the proposed deepening project. The corps rejected proposals that would have opened the Port of Greater Baton Rouge to deeper-draft ships. The current proposal would allow such access at the ports of Plaquemines, New Orleans and South Louisiana.

WHATEVER YOU DREAM

OF BUILDING…

—The Associated Press

CORRECTION In the story “2017 Industry Outlook: Chemical industry cautiously optimistic as the price of oil slowly rises” in our fourth-quarter issue, we inaccurately attributed a statement about CF Industries. The information should have been attributed to the company’s most recent earnings report. 10/12 Industry Report regrets the error.

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Build Upon Our Solid Reputation ARDAMAN.COM

316 Highlandia Dr., Baton Rouge • 225.752.4790

10/12 INDUSTRY REPORT • FIRST QUARTER 2017

LAUNCH: THE BIG PICTURE

10/12 INDUSTRY REPORT • FIRST QUARTER 2017

FROM THE WORLD’S GREATEST CAPACITY

MAJOR INVESTMENT

ALL ABOUT ALPHA OLEFINS

This image from November might appear to be mere piles of pipes, beams and other building materials. But in roughly the next two years, those piles will climb high into the sky to form a facility that will give Shell Chemical’s Geismar plant the greatest alpha olefins-producing capacity in the world. It will be the fourth alpha olefins production plant on the 800-acre site, where Shell has operated since 1967.

Shell has invested some $717 million at its Geismar plant to boost its alpha olefins production to 425 kilotons per year, which would put the facility at the top of the world in that category. The project is expected to create 20 new direct jobs at the Geismar plant, with an average salary of $104,000 plus benefits.

Alpha olefins are an intermediate specialty chemical that is crucial for a variety of consumer and industrial products, including packaging plastics, synthetic lubricants, drilling fluids and household detergents.

1012industryreport.com

GROUND UP DUE DATE

DON KADAIR

Construction began in late 2015, and it’s expected to wrap up by mid-2018, says Rhoman Hardy, Shell Geismar general manager. Baton Rouge-based Turner Industries is the general construction contractor for the project, which is expected to generate some 1,500 construction jobs. “Not only is it providing products that people want, you get to provide long-term jobs,” Hardy says. “It’s really satisfying to see.”

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10/12 INDUSTRY REPORT • FIRST QUARTER 2017

LAUNCH: INTELLIGENCE

TRENDSPOTTER

GREGORY

BOWSER

President, Louisiana Chemical Association/ Louisiana Chemical Industry Alliance

—David Jacobs

EXPANSION We’re seeing in Louisiana some really historic growth in the petrochemical industry. We see possibilities for it to continue. The issue becomes the overall business climate in Louisiana. Fracking has lowered natural gas prices and made natural gas available in many different places, so the competition for those new projects increases. REGULATION [Note: The Toxic Substances Control Act has just been updated for the first time in 40 years.] We’ll be able to put in place different standards, just because of the science that has developed over the years. We’re going to be looking at what the EPA does, with respect to things that are science-based, as opposed to things that 18

10/12 INDUSTRY REPORT • FIRST QUARTER 2017

are emotional from an industry perspective or the general public. The big thing is going to be what happens now with this new presidential administration. We hope that [TSCA implementation] doesn’t change a lot from what Congress passed. STATE TAX REFORM We would like to see a flatter, fairer tax base. But instead of reforming our total tax system, along with budget reforms, everything has been focused on just raising revenue. Our recent experience shows that there are not going to be very many taxes on individuals. We want to shift all of that to business interests. When you do that, it puts a damper on the overall business climate of the state. INDUSTRIAL TAX EXEMPTION We’re really struggling with the recent changes. You have all these local government bodies that you have to negotiate with. And then once you come to an agreement, it has to come back to the state. It makes it cumbersome. You want to make it easier for people to do business, not more difficult. And you want to have certainty, not uncertainty. INFRASTRUCTURE As we expand, we’ve got to make sure we can move employees back and forth. When you start recruiting people to come to work in Louisiana, they look at the traffic hassle they’re going to have to deal with. The issue is going to be funding. I think they’re proposing a gas tax to fund many of those needed projects. There is going to be a lot of money at the federal level, but a lot of the federal money is going to require a state match, so the state’s going to have to generate some additional revenue just to draw down the federal dollars.

DON KADAIR

ack in October, the Louisiana Chemical Association and the Louisiana Chemical Industry Alliance announced that Gregory Bowser would be the next president of the two organizations. Bowser is the first black leader of a Louisiana statewide business trade association, according to the announcement. He replaces Dan Borné, who is retiring after leading the groups for 28 years. Bowser joined the organizations in 1991 and had been executive vice president for LCA and LCIA since 2011. The Baldwin native was former Gov. Buddy Roemer’s assistant chief of staff from 1988-1990 and was on the staff of former U.S. Rep. Jimmy Hayes from 1986-87. The youngest of 15 children, he is a 1983 graduate of LSU, where he lettered for four years as a football defensive lineman. Here are his takes on five key issues the petrochemical industry faces.

Interview edited and condensed.

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10/12 INDUSTRY REPORT • FIRST QUARTER 2017

LAUNCH: MARKET WATCH

Insiders identify critical issues for Louisiana industry.

ISTOCK

BY SAM BARNES

THE FUTURE OF ITEP All eyes are on the future of the state’s Industrial Tax Exemption, which came under fire in June 2016 when Gov. John Bel Edwards placed restrictions on the program by way of an executive order. Panelists fear the order created the perception of instability and thereby jeopardized billions of dollars in future state industrial projects. ITEP is a state incentive program that offers an attractive tax incentive for manufacturers by abating local property taxes for up to 10 years on new investment and annual capitalized additions. The governor’s order gives local governing bodies a seat at the table when tax exemption decisions are made, and forces companies applying for those exemptions to demonstrate job creation or job retention—or both—to merit an exemption. Panel members say the move fails to recognize those additional jobs created by businesses that support the industrial commu20

nity, and essentially places future projects in jeopardy by creating uncertainty about the program. Scott questions the logic behind tampering with the successful program. “It has zero impact on the state budget, so why do we go there? It’s just a mystery,” Scott says. “The projects that we’re seeing today are because in a board room 15 years ago someone was talking about the 10-year industrial tax exemption in Louisiana,” Toups says. “If you’re contemplating a $10 million expansion and you’re trying to figure out where to put it, and you don’t like volatility and you want predictability, then Louisiana is not the place to put your project [right now].” This is particularly important when as much as $60 billion in projects are currently in the engineering stage and not yet going vertical. “Can the pencil be sharpened [on the ITEP Program]? Probably so,” Toups says. “The problem is the instability that this has created.”

10/12 INDUSTRY REPORT • FIRST QUARTER 2017

president of Boh Bros. Construction in New Orleans; Steve Carville, chairman of Milton J. Womack Inc. in Baton Rouge; Sean Sullivan, senior partner at DSLD Homes in Baton Rouge; and Stevie Toups, executive vice president of Turner Industries in Baton Rouge. Economist Loren Scott of Loren C. Scott & Associates in Baton Rouge chaired the panel. Here are the key issues they identified for 2017.

GOING VERTICAL? Despite billions of dollars in announced industrial projects across the state, an inability to get many of these projects out of the frontend engineering-design (FEED) stage has been a primary concern. Most impactful to the future of those projects is the price of oil, which has fortunately been inching upward in recent months. Combined with an expected relaxation of environmental regulations under the Trump administration, optimism is growing that more of these projects will break ground. “I think a movement of oil prices and change in regulations will move these projects waiting for a final investment decision,” Toups says. “We’re beginning to see these things freed up.” He expects Turner’s manpower needs to peak in 2018 at a level 12 to 15% higher than 2016. “Will every project that’s being predicted go forward? No. Will we see a fraction of what’s predicted go forward? Yes, but it’s still more than we see on a normal basis.

Therefore, 2017 is going to be much better than 2016. 2018 better than that.” Four Louisiana parishes in particular—St. James, St. John, Calcasieu and Ascension—have the most to gain from projects announced since 2012, since more than 80% of the projects in the FEED stage are located there. “It’s gotten better in the last three months,” Boh says. “It could turn into a lot of work for us fairly soon if they start.” Pushing projects down the calendar isn’t necessarily a bad thing, given the current labor shortage in areas such as Calcasieu Parish. The Lake Charles area might actually benefit from a slight delay in projects going vertical, as it struggles to keep up with workforce demand. The area’s manpower needs are continuing their upward trajectory, and the Southwest Louisiana Construction Users Council forecasts manpower demand for its membership to peak at nearly 14,000 in March 2017 and remain near those levels through the fall.

ISTOCK

The big four

o identify and discuss issues they feel will be most impactful, a four-member panel convened last fall at L’Auberge Casino in Baton Rouge during the annual South Louisiana Construction Economic Forum, sponsored by the Construction Financial Management Association and Associated Builders and Contractors, Pelican Chapter. The panel was a diverse group of construction leaders, and included Robert Boh,

1012industryreport.com

ISTOCK

INTEREST RATES TO RISE? Panelists fear that an expected rise in interest rates, deemed necessary by the Federal Reserve to cool down an overheating economy, could dampen growth by increasing material prices and negatively impacting the cost of doing business. They add that the low interest rates of the last eight years have played a significant role in helping the U.S. economy rebound from the recession. “I’m afraid that once things heat up a little the Federal Reserve’s ability to manage things might not be as good as they think,” Boh says. “If that happens you could get a spiking of rates over a short period of time, which would be disruptive. My personal opinion is that if rates move up in an orderly way over the next year or two, it’s not going to kill that much of our work because

it won’t affect the economics of the projects as much. However, if things move up from 2.5 or 3% to 6% over an 18-month period, that would have an [adverse] effect.” Carville agrees. “That could make a difference on a project,” he says. “Any rise in the rate concerns us because we don’t want that to slow down the business. I just hope that it continues to remain low and keeps business growing and thriving.” Scott says President Trump’s proposed restrictions on trade would likely have negative repercussions on interest rates. “If he really follows through on this and starts restricting trade, the prices of goods and services will naturally go up. Inflation will go up, and if that happens so will interest rates. You’ve got to figure that into it. That’s one of the pieces I sure hope he doesn’t implement.”

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GETTY IMAGES

INFRASTRUCTURE INVESTMENT Conference panelists feel that an increase in the state fuel tax, recently proposed by the Governor’s Task Force for Transportation Infrastructure Investment, would adequately finance Louisiana’s future infrastructure needs and thereby make the state more attractive to industry. Doubling the current state tax rate from 20 to 40 cents per gallon would generate up to $600 million per year, enabling the state to address its annual needs and set aside money for a 10-year bond program. The panelists say, however, that getting the necessary votes in the state Legislature would be an uphill battle. “Any tax increase would require a 2/3 vote in both houses of the Legislature,” Boh says. “It’s going to take a lot of political courage to vote for that if it comes to it.” Something needs to be done, the panelists say, since a substandard infrastructure is making it difficult for Louisiana to attract and retain industry. “We need to do something to move traffic,” Carville says. “In this community, we’re choking ourselves to death. You can’t move, especially on the interstate system. We’ve got a lot of fixing to do, and the only way to do that is to raise revenue.” Turner’s Toups says the state needs to more effectively communicate how the money will be used and prove that it will manage the money competently. Still, he admits that any tax increase is “going to be tough to pass.” 10/12 INDUSTRY REPORT • FIRST QUARTER 2017

LAUNCH: TECHNOLOGY

Advanced energy Novel carbon capture project in Lake Charles takes a major step forward.

ouisiana has moved closer to becoming the site of what will be the world’s largest manufacturing carbon capture facility. The U.S. Energy Department in December announced it was conditionally guaranteeing up to $2 billion in federal loans to Lake Charles Methanol. The deal, which remains subject to terms, will allow for lower borrowing costs for the plant under the advanced energy program. The company still must raise $1.8 billion in equity. The company proposes to build a novel methanol production facility in Lake Charles able to capture carbon that could be utilized for enhanced oil recovery in Texas. If built, the project will not only be the first methanol facility to employ carbon capture technology; it will be the first petcoke-to-methanol facility in the U.S. By using petcoke as the feedstock and employing carbon capture while producing methanol, hydrogen and other industrial gases and chemical products, the facility is expected to reduce emissions of carbon dioxide that otherwise would be released into the atmosphere. “Essentially what we’re doing is decarbonizing oil,” Lake Charles Methanol attorney

10/12 INDUSTRY REPORT • FIRST QUARTER 2017

Hunter Johnston told The Washington Post. “We’re lowering the carbon impact of oil, because we’re taking a part of the refinining process that would otherwise be associated with CO2 emissions and we’re capturing that to produce more oil. So there’s this huge benefit of domestic production as a result while improving the environment.” The captured carbon would be compressed for commercial pipeline transport to oilfields in Texas, resulting in sequestration of 4.2 million metric tons of carbon dioxide annually. According to the Energy Department, the project is estimated to capture 77% of carbon dioxide produced by the facility, reducing greenhouse gas emissions by 36% as compared to typical methanol facilities. The cost of the facility is projected at $3.8 billion. Leucadia Energy launched plans for the facility in 2012—initially only for petcoke production—but it was canceled two years later. Houston businessman Don Maley, a former Leucadia executive, formed Lake Charles Methanol in 2015, developing its facility on the same site as the defunct Leucadia project.

—Staff report

Rendering of Lake Charles Methanol

WHY IT MATTERS Energy Department Advanced Fossil Energy Project under the Title XVII program

largest industrial manufacturing carbon capture facility in the world

methanol facility to employ carbon capture technology in the world

petcoke-tomethanol facility in the U.S.

Source: U.S. Energy Department 1012industryreport.com

• AD WILL RUN AS IS unless approval or final revisions are received by the close of business today. • Additional revisions must be requested and may be subject to production fees. Carefully check this ad for: CORRECT ADDRESS • CORRECT PHONE NUMBER • ANY TYPOS This ad design © Louisiana Business, Inc. 2017. All rights reserved. Phone 225-928-1700 • Fax 225-926-1329

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10/12 INDUSTRY REPORT • FIRST QUARTER 2017

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LAUNCH: PEOPLE

Executive Profile: Craig Romero

raig Romero got his start in politics. He served as Iberia Parish president from 1984 to 1992, when he was elected to the Louisiana Senate, where he remained until 2008. He was recruited to manage and grow the Port of Iberia in 2014. “Having helped the port secure millions of state and federal dollars to make infrastructure improvements in my capacity as parish president and state senator,” Romero says, “the Port Commission felt I could help them maintain the momentum that they had going through the years.”

NAME

Craig Romero POSITION

Executive Director COMPANY

Port of Iberia District AGE

62 HOMETOWN

New Iberia EDUCATION

B.A., Political Science, University of Southwestern Louisiana

—Erin Z. Bass

I manage and promote the port in every way possible to maintain and create new jobs for Acadiana. The Port Commission owns and operates over 750 acres of waterfront property that has over 100 businesses with over 5,000 employees when we are at our best. What is your secret to leadership and advancing in your field?

Surrounding yourself with good people is a good start to making sure you get the job done regardless of what you do in life. Networking with my counterparts in the Ports Association of Louisiana helps tremendously in moving the Port of Iberia forward. There is no real secret to leadership—just be persistent and polite to everyone that can help you. What are your day-to-day responsibilities like?

I try to get in all my tenants’ coffee rooms at least once a month to check out their heartbeat and to see if I can help in any way. Prospects will also come to look at what we 1012industryreport.com

TERRI FENSEL

What are your responsibilities at the Port of Iberia?

have available to lease, which also gets your heart rate up. What is one thing about your job people don’t expect or don’t know and hear about?

Our promotional efforts to always try to attract new tenants at our port goes after a lot of potential clients. We go after a lot of prospects that for one reason or another decide that they are not ready to make the commitment to locate at the port. We continue to work with these prospects, never knowing if and when they will locate here, but we never give up and don’t publicize that we are even courting them. What are some of the biggest challenges that come with working in your industry?

Exploration is occurring out in deeper water in the Gulf of Mexico, so, as a result, the structures being built for that work are so much larger that it requires deeper water at the construction sites in order

to float the finished platforms and structures out into the Gulf. Maintaining maximum water depths in and out of our ports is the biggest challenge in our industry. What do you see for the future of your industry?

The oil and gas industry will definitely experience a transformation for the better, simply because the regulatory side of the business will now see “common sense” come into play at the federal level. Recent announcements by President-elect Donald Trump of [appointments of ] very accomplished and successful businesspeople who operate on a basis of common sense rather than “fearmongering” will encourage oil and gas companies to make investments once again. These companies will no longer be fearful of their own government. What are your next goals both professionally and personally?

My next goal is to get the Acadiana Gulf of Mexico Access Channel

under construction so that Acadiana can prosper economically in terms of expanded job opportunities for our families. Personally, I just want our economy to get back on track so that our quality of life can improve. What other leadership roles do you hold in the community and/or what volunteer efforts do you support?

I helped in starting the South Louisiana Community College out at the Acadiana Regional Airport and also serve on the board of directors for Community First Bank in New Iberia. What is your most satisfying professional accomplishment?

Serving in the Louisiana State Senate from 1992 until 2008, when “term limits” went into effect. To be one of only 39 senators, and representing Iberia and St. Martin, as well as parts of Lafayette and Vermilion, was the greatest honor given to me in my lifetime.

10/12 INDUSTRY REPORT • FIRST QUARTER 2017

COVER STORY

COURTESY SHELL CHEMICAL

THE BIG TURNAROUND: In Baton Rouge, maintenance turnarounds are either planned or underway at Shell Chemical [pictured], Dow Chemical, ExxonMobil, Georgia-Pacific, Motiva Enterprises, Rubicon and Total Petrochemicals.

10/12 INDUSTRY REPORT â&#x20AC;¢ FIRST QUARTER 2017

1012industryreport.com

The maintenance

BOOM Amid intense capital expansion, industry braces for a surge of another kind in 2017—turnarounds. BY SAM BARNES

n expected surge in planned maintenance turnarounds across south Louisiana and the Gulf Coast in 2017 could have a minimal impact on manpower needs—or a massive one, depending upon when and if certain capital projects are mobilized. It’s all in the timing. Industrial Information Resources, a market intelligence firm in Sugar Land, Texas, estimates turnarounds and shutdowns are expected to increase by 5.4%, to $10.43 billion across all U.S. industrial markets in 2017, with the petroleum refining industry seeing the biggest increase. Refiners are projected to increase planned maintenance spending by 38.5%, to $1.26 billion. Additionally, the chemical sector will see a 4% increase—to $1.81 billion—and the power sector a 9.3% increase, to $3.54 billion. Deferred turnaround work is the culprit. Some 7,000 additional craftsmen might be needed to handle pent-up demand for maintenance turnarounds in the first quarter alone, according to IIR. Much of that will be felt along the Gulf Coast. The reason for the maintenance deferrals? Before their margins fell in mid2016, refineries were coming off a year of uninterrupted production. “During that 12-month period, they

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didn’t take anything down,” says Tony Salemme, IIR’s vice president of labor risk assessment. “They delayed and postponed all their maintenance, except, of course, for the unplanned maintenance. They now have a lot of pent-up demand for turnarounds.” IIR performs direct market research and labor forecasting by surveying industrial owners about future budgets, both for capital and maintenance work. Salemme says the level of work in the Gulf Coast region—maintenance and capital projects combined—is unprecedented. “If you look back at 2001 to 2007, we were looking at about $30 billion a year being spent in the 11 metropolitan areas of what we call the Gulf Coast. Then, that exploded to about $65 billion in 2015, and it’s really climbing now.” IIR predicts another 40% increase in man hours from 2016 to 2017 in the Gulf Coast region, most of which will occur in the first quarter of this year. LOUISIANA’S HIGH GROWTH AREAS Areas in Louisiana to see the biggest increase will be Baton Rouge and Lake Charles. In Baton Rouge, IIR is tracking maintenance turnarounds—either planned or underway—at Dow Chemical, ExxonMobil, Georgia-Pacific, Motiva Enterprises, Rubicon, Shell Chemical and Total Petrochemicals. “Throughout the

10/12 INDUSTRY REPORT • FIRST QUARTER 2017

COVER STORY

LONG-RANGE PLANNING: ExxonMobil plans up to three years ahead of its turnarounds, eliminating workforce concerns.

year, there are some 86 unit maintenance events (across the greater Baton Rouge area),” Salemme says. While New Orleans is expecting a similar peak in 2017, Lake Charles is the “big gorilla in the room,” he adds. “We see an estimated 40% growth in man hours, both capital and maintenance, between 2016 and 2017 in Lake Charles.” While a large portion of that will 28

be caused by the ramp-up of capital projects, those investments come at a time when some large maintenance turnarounds are also scheduled. When combined with Lake Charles’ relatively small worker base, a simultaneous uptick in both capital and maintenance work could cause problems. Dale Logan, executive director of the Southwest Louisiana Construc-

10/12 INDUSTRY REPORT • FIRST QUARTER 2017

tion Users Council, says Phillips 66 and Citgo Refining in Lake Charles have significant turnarounds scheduled in the first half of the year. Once a month, SLCUC receives an 18-month look ahead from its 24 member companies. “We’re showing a peak in turnarounds this spring,” Logan says. “Just among our members, the projections are for a manpower demand

of 14,000 to 15,000 in March, and there were rumors of 20,000 at one time. It’s not because of megaprojects. They’ve flat-lined for my members. The thing that’s varying is the turnaround work.” Fortunately, he says, capital projects have been pushed down the calendar far enough to minimize the impact on local manpower. While Turner Industries of Baton 1012industryreport.com

SAM BARNES

maintenance and turnaround work. That’s a huge job impact. Those are not fly-by-night jobs or short term.”

TIM MUELLER

“They delayed and postponed all their maintenance, except, of course, for the unplanned maintenance. They now have a lot of pent-up demand for turnarounds.”

Rouge is the “big fish” in terms of maintenance manpower, there’s plenty of other work to go around in the Lake Charles area. EXCEL Group of Baton Rouge recently announced that it had been awarded a general maintenance contract by Phillips 66 to support maintenance services for the company’s Midstream Gulf Coast Division. EXCEL acquired Ron Williams Construction in Sul1012industryreport.com

—TONY SALEMME, vice president, Industrial Information Resources

phur in April 2016, and the company says a previous working relationship between RWC and Phillips 66 was instrumental in the award of the contract. In Baton Rouge, Connie Fabré, executive director of the Greater Baton Rouge Industry Alliance, says her area will see similar spikes in turnaround activity in early 2017. “I think maintenance and turn-

arounds are going to be strong,” Fabré says. “That’s what I’m hearing.” Many plants, she adds, had reached a point where it made good financial sense to perform necessary maintenance. Fabré says the impact of maintenance employment on the Baton Rouge area should not be underestimated. “There are some 15,628 contract employees. That’s a mix of

PREPARING FOR TURNAROUNDS IIR’s Salemme offers a dire scenario for the Gulf Coast region, saying this year’s upsurge in manpower demand could adversely impact productivity and overall construction costs. “Many of the larger contractors will begin increasing wages,” he says. “They did everything they could to hold off on raising wages and per diems because they wanted to capture market share and capture the bulk of the work.” Salemme notes this will negatively impact some contractors’ bottom lines, since many contracts were negotiated at fixed cost. “By the end of 2017,” he says, “you’re going

10/12 INDUSTRY REPORT • FIRST QUARTER 2017

COVER STORY

3.5

$800

3.0 2.5

$600

$676 $455

2.0 $324

1.5 1.0

$700

$637

$437 $335

$455

$294

$500

$567

$400

$314

$287

$289

$283

$254

$353

$300 $200

$282

0.5 0

MILLIONS

LABOR HOURS (MILLIONS)

LOUISIANA & TEXAS MAINTENANCE TURNAROUNDS

$100 1.80

3.06

1.31

1.30

2.21

1.34

0.95

1.64

1.29

1.87

1.36

1.92

3.27

2.62

1.00

1.14

1Q14

2Q14

3Q14

4Q14

1Q15

2Q15

3Q15

4Q15

1Q16

2Q16

3Q16

4Q16

1Q17

2Q17

3Q17

4Q17

Recent schedule deferrals of maintenance turnaround activity is building up in the first and second quarters of 2017, which will add to the challenges plant owners in the Gulf of Mexico are having with maintaining work crews on large capital projects and daily maintenance work. The first quarter of 2017 could require up to 7,000 additional craftsmen to undertake planned turnaround work.

Issue Date: 10/12 Ad proof #2

• Please respond by e-mail or fax with your approval or minor revisions. • AD WILL RUN AS IS unless approval or final revisions are received by the close of business today. • Additional revisions must be requested and may be subject to production fees.

Source: 2016, Industrial Information Resources, Inc.

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a 40/60 ratio of turnarounds to dayto-day maintenance contracts. While he expects to hire an additional 200 workers for this spring’s turnarounds, he says Triad can handle the additional demand, despite ongoing capital projects in the region. “They’re decent-sized turnarounds, but the megaprojects that everyone’s been talking about in Lake Charles—that’s all slowed way down,” Campbell says. “They’re not really full speed ahead, as they were. I think with the timing of those megaprojects and those turnarounds, it will work out.” “We’ve got a pretty big database of people that come and go from proj-

ect to project,” he adds. “A lot of the construction workers, they go where the work is. Once we start calling, those guys will start filtering back this way. It usually works out.” Campbell says his company is consistently involved in making Associated Builders and Contractors and SOWELA Technical Community College aware of future workforce needs. “We’ve been talking about manpower and keeping manpower for the last six to eight years,” he says. “Fortunately, some of those peaks have kind of leveled out. We’ve got a few resources that are turning out quite a few students. ABC has really increased the num-

“We’ve added 2,000 maintenance employees in less than a year.” —ANDY DUPUY, CEO, Brown & Root Industrial Services in Baton Rouge

ber of students they’ve been turning out every year. They started offering an accelerated course where they go straight through the summer.” Triad plays a leading role in guiding ABC’s planning for workforce needs. “We all sit down and we review the training manpower, what they’re turning out, what crafts they’re training, and we’ve got input so they can try to increase and recruit different classes,” Campbell says. “If there’s a need for millwrights or pipefitters, we’ll raise that need, then they’ll try to recruit those crafts and train for those specific needs.” Triad also leans heavily on technology to manage internal manpower needs. Managers use the Neutron Group Control System, a cloudbased program that can be accessed remotely at all jobsites, allowing for real-time tracking of projects. By using the system, Triad can efficiently forecast manpower demand and

DON KADAIR

to hear about contractors failing, losses on fixed costs, the inability to man jobs, wages rising and per diems rising.” Despite such drastic predictions, some contractors in south Louisiana welcome an uptick in maintenance turnarounds, saying it fills a gap caused by capital projects that have been slow to break ground. Still, just how much strain is felt by Louisiana’s construction industry depends upon how well industrial owners— and contractors —have prepared to meet their manpower needs. Danny Campbell, assistant general manager of Triad Electric & Controls in Westlake, says his company will be directly involved with the planned turnarounds at Phillips 66 and Citgo this spring, while other crews are embedded in half a dozen other area facilities performing routine maintenance. The electrical/ instrumentation company maintains

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10/12 INDUSTRY REPORT • FIRST QUARTER 2017

COVER STORY

U.S. PLANNED MAINTENANCE Three major markets are upping their maintenance turnaround/ shutdown activity in 2017, with the petroleum refining industry expecting the largest spending increase.

PETROLEUM REFINING

$1.26 billion (+38.5%) POWER INDUSTRY

$3.54 billion (+9.3%) CHEMICAL PROCESSING

$1.81 billion (+4.0%) ALL OTHER*

$3.82 billion (-4.7%) *Includes pipelines, production, alternative fuels, metals and minerals, pulp and paper, food and beverage, industrial manufacturing and pharmaceutical.

adjust resources as needed. Brown and Root Industrial Services CEO Andy Dupuy says his Baton Rouge-based maintenance company is ideally positioned to handle a surge in maintenance activity. The company is already experiencing an increase in demand—more than half of Brown & Root’s current workload is classified as industrial maintenance, with about 20% engaged in maintenance turnarounds. At present, Dupuy says Brown & Root can find the manpower it needs. “We’ve added 2,000 maintenance employees in less than a year,” Dupuy says. “Maintenance has been on the uptick. Since things have been so tight, owners are shopping their maintenance contracts, so we’re seeing a good bit more of that than we had in the past.” Brown & Root strives to be verti-

by the economy of scale afforded by the arrangement. “For example, if you have a company that’s got 9,000 employees, you’re able to buy insurance much cheaper,” he says. “This brings our costs down.” PLANNING IS KEY Erskine Frison, mechanical manager at ExxonMobil’s Baton Rouge Complex, isn’t concerned that a worker shortage might impact ExxonMobil’s maintenance schedule. He says that manpower concerns can be virtually eliminated through better planning and execution. After all, ExxonMobil plans up to three years ahead of most of its turnarounds. “We rarely have to adjust the schedule based upon workforce availability,” Frison says. “That speaks to our long-range planning. If you

“I think with the timing of those megaprojects and those turnarounds, it will work out.” —DANNY CAMPBELL, assistant general manager, Triad Electric & Controls in Westlake

LEE CELANO

Source: Industrial Information Resources, Inc.

cally integrated to gain a competitive advantage as a “one-stop-shop” contractor. The firm recently purchased industrial specialty contractor Petrin Corp. in Port Allen and fabrication contractor MEI in White Castle to expand its portfolio. “We want to be a total plant services company,” Dupuy says. “If a plant needs something done, or an existing operating facility needs something done, we want to be the guys to do it, from a turnaround to building scaffolding. We want to be everything to them.” Recently, Brown & Root obtained a security license to provide that service, and has managed cafeterias. “We’ve got one job down in Mexico where we actually run a zoo for the plant,” Dupuy says, “and we have a guy that feeds an alligator.” Dupuy says owners are attracted

10/12 INDUSTRY REPORT • FIRST QUARTER 2017

1012industryreport.com

prevalent lately. With certain crafts, they’re having problems because you need them now,” he says. “The thing is, they’re in demand, and they travel, so when you’re trying to get local scaffold builders they’re gone.” To take up the slack, some industrial owners will slow down capital work and “roll” workers from a capital project into a turnaround. “That’s a challenge for the owners who are trying to execute short-term projects of 15, 30 or 60 days that need manpower quickly,” Salemme says. “Every day of downtime can equate to a tremendous loss in revenue.” Frison says ExxonMobil balances its manpower needs by integrating the planning processes for both maintenance and capital projects. “They work in parallel with one another, but they are integrated,” he notes. “When we get into a peak period when we have significant turnaround activity, we will plan our capital project workload so that we are managing the resource balance across our entire complex.” ExxonMobil currently has about 5,500 construction workers on site—a number it has maintained, on average, since 2012 due to scheduled maintenance activity. The refinery expects that to continue through 2017. Unplanned maintenance is rarely an issue for ExxonMobil; Frison estimates as much as 95% of his plant’s maintenance work is planned. “We focus on being effective and efficient so that independent of the market we’re going to be the most competitive player out there,” he says. “When the market is good we’re not going to overreact one way or another; the same goes for when the market is bad.” DON KADAIR

get into a situation where you have to do that, your GEARING UP: EXCEL long-range planning Group of Baton Rouge, owned by CEO David broke down on you.” Roberts, recently ExxonMobil engages announced that it had been awarded a general contractors early in the maintenance contract process to discuss their by Phillips 66 to support maintenance services for capabilities and resources. the company’s Midstream “We work with all of Gulf Coast Division. them well in advance of downtimes to help them understand our requirements from a manpower perspective,” he says. “We’ll have contractors— who ultimately will be supporting a turnaround two years down the line—to work collaboratively with us during the planning stage.” The life cycle between turnarounds can range from two to 15 years, depending upon the unit’s wear patterns, severity of the operation and various time- and risk-based factors. Once scheduled, the turnaround’s scope and timeline are mapped out by a collaborative team from ExxonMobil’s engineering, operations and maintenance departments. From his days working at a Lake Charles area refinery, SLCUC’s Logan learned that early preparation is essential to a successful maintenance project, particularly as it pertains to manpower needs. “We started early—18 to 24 months out—in discussing with people their availability automatically come down with it, and whether they would have the which increases the scope of work,” necessary workforce,” Logan says. Logan says. “All plants are different “A lot of times we would visit with from that standpoint in how they’re two, three or four companies. We put together, how they’re piped up appreciated it when they were honand how they’re wired.” est with us. They were the ones that While large-scale, planned were going to have to get the fitters, turnarounds have a direct impact boilermakers and welders.” on an owner’s bottom line, the Early planning is particularly real danger—from a financial and important, Logan adds, since the manpower perspective—comes from financial impact of downtime can be unplanned maintenance activity. significant, depending upon the unit IIR’s Salemme says scheduled mainor area of the plant. “When a cattenance turnarounds, industrywide, cracker comes down, other units just comprise just 25% of maintenance

downtime. “In the real world, 75 percent of maintenance downtime is unplanned turnarounds, outages and shutdowns,” he says, and is therefore impossible to predict. “You can’t forecast that,” he adds. “There’s no planning for an unplanned event. It’s usually due to an explosion, tornado, hurricane, ice, or mechanical failure, so there’s no way to know. They may have to call in 100 scaffold builders. This is where the problem lies.” In such a situation, certain crafts can be hard to come by. “That’s been

10/12 INDUSTRY REPORT • FIRST QUARTER 2017

NEWS TRANSPORTATION

New port of call

BY SAM BARNES

CHERYL GERBER

Brandy Christian brings tenacity, strategic mindset to the top spot at the Port of New Orleans.

uring her tenure as the Port of San Diego’s vice president of strategy and business development, Brandy Christian proved she had that unique combination of analytical and soft skills to land the “big fish,” namely by salvaging the port’s floundering cruise ship industry and securing a crucial lease with Dole Fresh Foods. Ultimately, it was her tenacity that persuaded the Port of New Orleans to appoint Christian as COO in 2015, with plans to groom her as the

next president and CEO. She was officially named to that position at the beginning of this year, following the retirement of maritime veteran Gary LaGrange. A big believer in strategic planning and organizational processes, Christian has already begun instituting an ongoing strategic planning initiative to enable the port to swiftly refocus and reprioritize in response to changing market conditions. “I tend to be a dreamer in terms of looking at the long view and having big goals,” Christian says. “I’m also very practical. I can focus on strategy

10/12 INDUSTRY REPORT • FIRST QUARTER 2017

and be cognizant of the details.” She’s no stranger to challenges along the way. While she was in San Diego, a downturn in the cruise business caused by rising crime levels in Cabo, Mazatlán and the Mexican Riviera made for some tough times for the West Coast cruise industry. In the midst of the downturn, one of Christian’s primary objectives was to secure Disney Cruise Line as the company considered competing ports in San Diego and Los Angeles. In the end, she was successful in landing the mega cruise line.

“Customer service was a big thing. For a line such as Disney, that’s very important,” she says. “A lot went into getting feedback from them and from other lines about how we could improve our service and the customer experience, then following up by making those improvements in the facility, our staffing, our partnerships, etc.” Through that experience, Christian learned the inherent value of collaboration between public and private entities, something she carried with her to New Orleans. Securing big business makes her 1012industryreport.com

most proud, wherever she’s working. “It’s much like securing a new airline service for a city,” she says. “You’ll have the city, mayor, economic development people, police, tourism officials, etc., all come to the table. The port is a critical factor because we deliver the infrastructure to make it happen.” Michael Hecht, president and CEO of regional economic development agency GNO Inc., has worked closely with Christian on multiple economic development projects in the past year, and says she’s the right person at the right time. “I think that as the port considers its next stage of growth, she’ll be an outstanding leader because she combines experience in the industry with a strategic mindset and an already demonstrated ability to move projects forward,” Hecht says. “Under Brandy’s leadership, it’s our expectation that the relationship with the port, which was already strong, is only going to become more dynamic.” As evidence of this strong bond, incoming GNO Inc. Board Chairman Tara Hernandez was recently appointed to the port’s board of commissioners. PORT MASTER PLAN TAKES SHAPE One of Christian’s most immediate tasks will be the continued development of the port’s master plan, Port NOLA 2025, which seeks to identify those projects necessary to meet port needs in the next decade, as determined by market forecasts and demand analysis. In 2016, the port reached out to current customers and communities across its jurisdiction to begin the process of gathering input and identifying challenges and weaknesses. “As a next step, we’ll dig down and ask some key questions: Can our existing facilities handle the demand? What would we need in the way of new facilities?” she says. “That’s the nuts and bolts of it over the next six months … understanding and prioritizing.” Ultimately, the projects that make the final cut will be those that provide the most bang for the buck. One such opportunity involves securing direct liner service on an international scale, which has seen some recent successes. In Decem1012industryreport.com

ber, France-based CMA CGM announced a new direct weekly container service to Asia from the Napoleon Avenue Container Terminal. The faster transit times provided by the new direct service enhances the port’s reach for shippers, as well as strengthens its overall competitive advantage. It also helps both the region and state by serving as a catalyst to attract new business. Input from Louisiana’s petrochemical industry has been essential to the development of Port NOLA 2025. “The petrochemical, oil and gas industries have provided a great catalyst in terms of our cargo growth,” Christian says. “I think it’s important that we look beyond our footprint and look where we’re adding value. That gives the state the opportunity to say, ‘We’ve got these ports to be able to provide a service to move your goods.’” Most recently, the port has begun exploring new purposes for the shuttered Avondale shipyard. Now two years after the facility closed, the port is hopeful that the site will soon be resurrected. The shipyard, with its nearly 200 acres and more than 7,900 feet of riverfront access, was once one of the state’s biggest employers. Hecht says GNO Inc. has been

heavily involved in finding prospective investors at Avondale. “For the next year, we plan to focus on value-added manufacturing at the site,” he adds. “It’s a very exciting prospect. As a region, we haven’t done a good job in that area; we’ve been mostly commodity based. Avondale gives us a chance to take those commodities and add value here. For example, that could mean taking rubber shipped to the port and turning it into tires, or taking pellets and manufacturing plastic products.” Christian and other port officials have spoken with potential private sector partners to determine market demand and examine the feasibility of using the facility based upon existing site conditions. “If you look at the New Orleans port, we usually rank in the top three for major things such as rubber and steel,” she says. “However, a lot of that product is coming in and out across our docks, then gets shipped off to another state to be made into a tire. Avondale has some great manufacturing warehouses and equipment—could we take some of those products and create new cargo or new demand?” Topping the list of potential value-added products is steel pipe fabrication for the offshore oil indus-

“I tend to be a dreamer in terms of looking at the long view and having big goals.” —BRANDY CHRISTIAN, president and CEO, Port of New Orleans

THE PORT OF NEW ORLEANS BY THE NUMBERS TOTAL PORTWIDE CARGO (SHORT TONS)

TON

2015: 33,576,064 2014: 31,050,437 TOTAL GENERAL CARGO/BREAKBULK AND CONTAINER (SHORT TONS) 2015: 9,541,260 2014: 9,149,978

CRUISE PASSENGERS 2015: 1,023,700 2014: 1,014,325 Source: Port of New Orleans

try, given that a significant amount of steel is currently shipped into the port, yet goes elsewhere for fabrication. A STREAMLINED APPROACH Improved operational efficiency has been another goal for Christian in her first weeks as CEO. The result has been a complete restructuring of administrative departments, with a focus on streamlining port processes. “What I’ve tried to do is take departments that are like-focused and help them synergize their efforts,” she adds. “For the most part, it’s about aligning them toward a strategy. In some cases, it involved taking current executives and giving them more responsibilities, responsibilities for things that would help them get their jobs done better.” In the process, Christian has leaned heavily upon her strengths. While in San Diego she was the driving force behind streamlining the port’s operational processes, reducing costs, securing major accounts and negotiating leases. “I come from a quality management background,” she says. “In previous positions, my job was to look at process operations: How do we fine tune? How do we streamline? I led several IT implementations. What’s important to me is building a culture of excellence. I feel it’s important as a public agency that we are not just the most efficient, but the most effective that we can be.” The port is also investing in automation across multiple departments, such as finance, human resources and procurement. Procurement will perhaps be most affected—Christian is spearheading an effort to not only automate the procurement process, but “think through how we open up opportunity. How do we make the broader community know that there’s an opportunity to work with the port?” Christian notes procurement used to be a de-centralized process. “Now, we actually have a director of procurement with a background in small business outreach to actually go out to the communities and start building these programs,” she says. In the end, Christian hopes that more customer-port interactions will be conducted online rather than via paperwork.

10/12 INDUSTRY REPORT • FIRST QUARTER 2017

NEWS: COMPANY INSIGHTS

Built for the long term

BY DAVID JACOBS

70-year-old Danos is an institution in the oilfield services industry.

COURTESY DANOS

FABRICATION FOCUS: The Danos integrated services complex in Amelia.

t’s about 1960 or so, and Hank Danos—not even 13 years old—is piloting an oil rig crew boat for his father’s service company down a Lafourche Parish canal. His grandfather, who taught him how to drive it, sits behind him with the rest of the men. “He said, ‘We probably don’t need to tell your daddy this,’” Danos recalls. “They all played cards, and nobody seemed to be worried that an 11- or 12-year-old kid is driving this boat.” Young Hank was exposed to every aspect of the business. As a teenager, he had a summer job helping to maintain boats. He wore a coat and tie to accompany his father on sales calls in New Orleans, but dressed informally when visiting work sites in Morgan City or Leeville. In 1970 Allen Danos Sr. died, 36

leaving his portion of Danos and Curole, the company he co-founded, to his sons. Hank, then 21, and 24-year-old Allen Danos Jr. decided to buy out the Curole family. “We were pretty confident that we knew how to run the business,” Hank Danos says. “Maybe naïve and innocent, but that probably worked to our advantage. We weren’t too scared to try. And once we tried, we were too scared to fail.” That business, which shortened its name to Danos in 2012, celebrates its 70th anniversary this year, with Hank as CEO and his sons as vice presidents. The company has worked through several industry downturns and a safety revolution, growing from a small south Louisiana tugboat company to employing as many as 2,000 people serving oil and gas operators around the globe. In mid-January, Danos secured

10/12 INDUSTRY REPORT • FIRST QUARTER 2017

a new offshore contract to perform welding and other services for the Hess oil company’s Stampede tension-leg platform in the Gulf. More than 100 employees at various locations will spend the next year on the project. HUMBLE BEGINNINGS In 1947, Allen Danos Sr. borrowed $2,000 to start Danos and Curole with his brother-in-law, Syriaque Curole. They purchased their first vessel, the Yoyo, and contracted with their first customer, Gulf Oil. Their wives kept the books, and they conducted business from the Curole kitchen table. During the 1950s, Danos and Curole added crew boats to their tugboat inventory and began providing labor gangs. Curole died in 1957, leaving Danos Sr. to lead the company. During the 1960s, the firm

added a new customer, Tenneco Oil Co., and began providing coatings and shore-based labor. Danos Sr. was only 49 when he died from bone marrow cancer in 1970, Hank says. He was sick for 18 months, so there was time for many conversations about the future. “For the first year or so, you’re in denial,” Hank says of his father’s illness. “The last six months were pretty tough.” Among Allen Sr.’s various business interests, Danos and Curole—which at the time employed about 150 to 200 people—represented the best opportunity for the next generation. Allen Jr. dropped out of law school to shadow his father for a year. “It was kind of like, ‘This is our father’s legacy, and it’s up to us to carry on,’” Hank says. “It was a successful business, so there were competitors who were trying to take us out.” 1012industryreport.com

GOING INTERNATIONAL Danos performed a variety of oilfield service work in the following international locations: 1. NIGERIA Provided lift boats and consultants 2. VENEZUELA Provided lift boats

8 2

3. FALKLAND ISLANDS Construction work

4. EQUATORIAL GUINEA Production operations support, construction, and materials and logistics support

4 9

5. SOUTH AFRICA Provided consultants 6. CAMEROON Provided consultants 7. TRINIDAD Provided consultants, materials management and logistics support

5 8. CHINA Provided consultants 9. ANGOLA Provided consultants

3 Source: Danos

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10/12 INDUSTRY REPORT â&#x20AC;¢ FIRST QUARTER 2017

NEWS: COMPANY INSIGHTS

The Danos brothers had a handful of loyal staff employees and customers willing to give them a chance. They faced an early test when, in the space of a year, their three main clients audited their business relationships, including contracts, employee compensation and entertainment expenses. “[The auditors] insinuated that we were doing things wrong,” Hank says. “‘You get a lot of business from our company, so you must be doing something unethical to get all this business.’” No wrongdoing was discovered. But while they didn’t fail any audits or lose any jobs, it was a “great ethics lesson,” he says, and a reminder about the importance of doing things the right way. The brothers improved their record-keeping, reviewed their policies, and resolved to make sure the company never did anything that could jeopardize the business or sully the family name. During the 1970s and 80s, they acquired new customers, including Shell, the Louisiana Offshore Oil Port and Esso. They also added two 38

additional service lines—construction and fabrication— and built the first self-elevating lift boat. Up until the late 1970s, the industry had a cavalier, macho attitude toward safety. It was taken for granted that oil and gas production is a dangerous business and injuries come with the territory. “You learned the hard way,” Hank says. “Once you get hurt, you never do that again.” But the oil and gas companies began to demand better, from themselves and their contractors. Danos and Curole hired its first dedicated full-time safety representative and committed to proper employee safety training. In 1979, the first year the company began tracking its “total recordable incident rate” per 200,000 man hours, the number was above 30. Today, its TRIR is 0.08, which Paul Danos, Hank’s son and an executive vice president with the company, says is lower than some of their customers’ rates, even though Danos is taking on some of the riskiest work. The 1990s brought international

10/12 INDUSTRY REPORT • FIRST QUARTER 2017

COURTESY HESS CORPORATION

COURTESY DANOS

LOADING UP: An out-of-deck extension that Danos fabricated at its integrated services complex in Amelia is loaded onto a barge for transport. Below: In January, Danos secured a contract to perform mechanical hook-up and commissioning support services for the Hess Stampede tension leg platform [pictured] in the Gulf of Mexico.

expansion, as the company deployed a fleet of lift boats for Chevron in West Africa and sent production operators to work for Arco China in the South China Sea. “It was an opportunity that crossed paths with some difficult economic times,” Hank Danos says. “If things were going great in the Gulf of Mexico [during the early 1990s], we might not have been thinking about expanding internationally.” THE THIRD GENERATION Allen Danos Jr. retired in 2000, although he continued to serve on the board of directors. He died in 2015. Hank’s sons, Eric, Paul and Mark, now work for the company. They say their father never pressured them about being involved in the business. But if they wanted a place in the

company, they first had to go out and get an education and experience elsewhere. Growing up, Eric says, one of them often went to the office with Dad. He says the employees chatted and played with the boys, and young Eric didn’t make much of a mental distinction between his actual family and the extended workplace family. All three sons graduated from LSU, and Eric and Paul have Stanford MBAs. Eric worked in corporate finance and private equity, and with ExxonMobil as a financial analyst. He was the first member of the third generation to enter the family business, coming aboard in 2004, and was promoted to executive vice president of operations, financial planning, safety, accounting and human resources in 2010. 1012industryreport.com

• AD WILL RUN AS IS unless approval or final revisions are received by the close of business today. • Additional revisions must be requested and may be subject to production fees. Carefully check this ad for: CORRECT ADDRESS • CORRECT PHONE NUMBER • ANY TYPOS This ad design © Louisiana Business, Inc. 2017. All rights reserved. Phone 225-928-1700 • Fax 225-926-1329

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NEWS: COMPANY INSIGHTS

COURTESY DANOS

MARKET FLUX: After peaking at 2,000 workers in 2014, the Danos workforce is now at 1,600 employees.

DANOS: TOP 10 GAME-CHANGING PROJECTS, BY CUSTOMER 1. CHEVRON: JACK/ST. MALO HOOK-UP (2014) Danos’ largest Gulf of Mexico new platform mechanical completion, or “hook-up” project, to date. 2. NOBLE: ALEN HOOK-UP (2013) Danos’ first overseas hook-up in Equatorial Guinea, West Africa. Alen is a liquid-rich gas condensate field owned by Noble Energy. 3. WILLIAMS: DISCOVERY COOLING TOWER EXPANSION (2012) A large project that converted the plant from a water-cooled to an air-cooled system, made necessary by saltwater intrusion. 4. BP: MACONDO CLEANUP (2010) Danos played a critical response role, managing the beach cleanup from Florida to Louisiana, and thereafter began offering environmental services to other customers. 5. MARATHON E.G.P.L.: PLANT TURNAROUND (2015) Danos’ first and largest turnaround performed overseas, deploying a 40-man crew in Equatorial Guinea, West Africa.

6. BP: DEEPWATER OPERATIONS AND MAINTENANCE CONTRACT (2009) Danos secured the contract to provide all contract operations and maintenance personnel for BP deepwater, deploying 170 people. 7. SHELL: FRANKLIN MATERIALS MANAGEMENT (2016) Danos’ first major materials management contract at its Amelia integrated services complex. 8. SHELL: APPOMATTOX BOARDING VALVE SKID (2015) Danos’ first major fabrication project in the Amelia integrated services complex. 9. LIFTBOATS OPERATING IN NIGERIA AND VENEZUELA (1992) Danos’ first international work. 10. OXY: MIDLAND PRODUCTION WORKFORCE (2011) Danos was awarded all the contract operations and maintenance personnel for Oxy’s Midland business unit, the company’s first major land production services project.

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Eric wasn’t always sure he wanted to join his father’s company, and says making that decision was a gradual process. “I wanted to operate in a business that was in Louisiana,” he says. “I wanted to raise my kids here. And I wanted to work at an executive level at some point in my career.” By the time he graduated from LSU, Paul Danos knew he wanted to work for the family business. He did consulting in Houston, serving clients in the energy sector, and worked for a pipeline company before earning his MBA and returning home to join his father and brother in 2005. Today, he is an executive vice president overseeing strategic planning and direction, business development, marketing and sales initiatives. “There was never any pressure from my dad [to work in the family business], but we knew we would have that opportunity,” Paul says. Mark Danos, the youngest of the three, didn’t think he wanted to come back; he preferred to forge his own path. After college, he spent almost a decade with ExxonMobil, including a stint supervising the company’s subsea work in Angola, before transferring to Baton Rouge. “Once I was back and in the area, and reconnected with family and food and hunting and fishing and all

those good things, I realized what I was missing,” Mark says. Mark joined Danos in 2013 and was named vice president of project services in 2015. He oversees engineering, construction and fabrication, much as he did with Exxon, and his experience on the customers’ side of the fence helps inform his work as a contractor, he says. David Hernandez manages maintenance, reliability, turnarounds and brownfield projects for Shell Exploration & Production in New Orleans, a major Danos customer. He says Eric, Paul and Mark each bring a distinct set of perspectives and experiences to the table, and says their roles and responsibilities seem to be clearly defined. “I think the recipe works well,” Hernandez says. PLANNING THE FUTURE Shell likes to establish long-term relationships with Gulf of Mexico contractors that share its values, Hernandez says. He says Danos has a great safety record, and is diligent about instilling safe habits in its employees. “We truly look for companies that we can have honest conversations with,” he adds. “We don’t necessarily want companies that are just telling us what we want to hear.” 1012industryreport.com

DON KADAIR

FAMILY BUSINESS: Today, the Danos executive team includes, from left, Paul, Mark, Hank and Eric Danos.

Conversations between contractors and their customers can get pretty testy during a down cycle, as is the case with the industry now. Hernandez says the business is cyclical, and there are “brighter days ahead,” but concessions sometimes must be made to get there. “I think a company like Danos understands that,” he says. “They’re willing to work with us.” After peaking at 2,000 workers in 2014, Danos is down to about 1,600 employees. While downturns are painful, Hank Danos says, they provide opportunities to review priorities and processes, and find ways to provide value at competitive prices. “If we just hunker down and focus on cost containment and super-efficiency, that might not be enough,” Paul Danos says, noting that the inland shale revolution is changing the geography of the business. “We are very much thinking strategically about how we might need to change what we do and how we do it to remain relevant.” The transition from the second to the third generation often is where

family businesses lose their way. As early as the 1990s, Hank and Allen Jr. consulted experts about succession planning. The company has a strategic plan that articulates company and family values, including a process to resolve any conflicts between the two, and works to follow other established best practices for family businesses. “Communication is important in any business,” Paul Danos says. “It’s more difficult at times in a family business.” Before the downturn, Danos set a goal to grow the business by 150% in five years. That timeline no longer can be met, but the ambition remains. The company also has a 20-year “vision description” document that it does not share with the public. Goals include winning “great place to work” awards and having customers willing to delay projects if that’s what it takes to make sure Danos does the work, Paul Danos says. “The last line says we intend to remain a family-owned business,” he adds.

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10/12 INDUSTRY REPORT • FIRST QUARTER 2017

ASSOCIATED PRESS

NEWS: POLITICS

Tempered optimism

BY SAM BARNES

Industry confidence is buoyed by expectations of a business-friendly Trump administration.

n odd mixture of apprehension and anticipation permeates the industrial market in the wake of Donald Trump’s election, as leaders wait to see just how a Trump presidency will impact their business models in 2017 and beyond. While optimism is the prevailing mood, primarily due to an expected relaxation of environmental regulations and a more favorable tax structure, it is somewhat tempered by concerns over Trump’s tough stands on immigration and international trade. David Dismukes, executive director of LSU’s Center for Energy Studies, expects that Trump will allow market forces to regulate the 42

economy more so than the previous administration. “What I see is them reducing a lot of environmental uncertainty, regulatory uncertainty and tax uncertainty on industry that we had to face in a Democratic administration,” Dismukes says. “I think this is going to be a great administration for putting in a pipeline. I think they’re going to be an early winner in all of this.” That doesn’t necessarily mean that all pending environmental initiatives will fall by the wayside. On the contrary, it might actually eliminate some of the roadblocks to implementation that existed in the past. “It wouldn’t surprise me to see a lot of people saying, ‘Hey, why don’t we deal with this problem the way we want it done and get it done

10/12 INDUSTRY REPORT • FIRST QUARTER 2017

while we’ve got all three branches of government,” Dismukes says. “That way, we remove this uncertainty.” Greg Bowser, president of the Louisiana Chemical Association, says his members are generally optimistic about a Trump presidency, mostly because of Trump’s environmental stance. “The Obama administration had proposed a lot of stuff that was causing some problems for us. We do expect it to be different.” He says the EPA will likely back off its Clean Power Plan timeline, which currently calls for electrical generators to cut CO2 emissions by 30% by 2030. Twenty-nine states— including Louisiana—sued the EPA following the plan’s promulgation, prompting the U.S. Supreme Court to issue a stay in 2016.

Bowser has said in the past that the Clean Power Plan would be problematic for industry because of the higher utility rates that would result. “However, with things changing in Washington, I don’t think [the lawsuit] is going to be necessary,” he says. “I think the new administration will probably have a different mindset.” He says the power industry’s conversion to natural gas will likely continue, although at a more favorable pace. “It gives [power plants] more time to adapt, and allows technology to catch up.” Gifford Briggs, interim president of the Louisiana Oil and Gas Association, says his membership’s optimism is more tangible than it has been in months, if not years, due 1012industryreport.com

A CATALYST FOR INVESTMENT? Some state prognosticators are hopeful that changes brought about by a Trump presidency, combined with steadily rising oil prices, will prompt industrial owners to move Louisiana’s $24 billion in announced industrial projects out of the FEED (front-end engineering-design) stage and into construction. In November a panel of industry leaders at the Construction Financial Management Association’s South Louisiana Construction Industry Economic Forum shared their thoughts on the Trump presidency’s expected impacts. “I think the gushing of regulations out of Washington has a chance to stop,” says panel member Stevie Toups, senior vice president of Turner Industries in Baton Rouge. “I think our businesses are going to have a fighting chance with a new National Labor Relations Board, new Supreme Court and new OSHA. I think Mr. Trump is going to be good [for us]. “The headlines after the election were that oil drillers, natural gas and pipeline companies are going to be the beneficiaries of this administration, and I think this industry and 1012industryreport.com

this state are lined up well for that.” Panel member Robert Boh, president of Boh Bros. Construction in New Orleans, says regulations on business had gone too far under the previous administration. “I don’t think enough attention has been given over the last six or eight years to the dampening effect of regulation on a business’s ability to hire people,” Boh says. “It seems like in the regulatory world you have to be really big to have the overhead necessary to deal with the regulations. If some of that gets changed that could have a huge effect.” Boh says he’s also encouraged by Trump’s emphasis on infrastructure investment, another area of need for Louisiana’s industrial market. Some panelists at the conference warned of potential negative impacts from Trump proposals that target immigration and international trade, fearing a clampdown on immigration in particular would adversely affect an already overburdened labor market. However, panelist Steve Carville, chairman of Milton J. Womack Inc. in Baton Rouge, downplayed immigration concerns. “I think the administration is going to back off some of the things they said. I don’t think we’ll see a big deportation of illegals here,” Carville

says. “I think we’ll most likely see a path for citizenship, work visas or those types of things.” Economist Loren Scott of Loren C. Scott & Associates, who chaired the panel discussion, says Trump’s proposed restrictions on trade would likely have negative repercussions on business if implemented. “If he really follows through on this and starts restricting trade, the prices of goods and services will naturally go up. Inflation will go up, and if that happens so will interest rates. You’ve got to figure that into it. That’s one of the pieces I sure hope he doesn’t implement.” Dismukes has similar apprehensions. “The concern is going to be how our trade policies evolve over the next couple of years and how other countries retaliate.” A DASH OF REALITY LOGA’s Briggs predicts that oil prices, while higher, will remain volatile and unpredictable, something that a new president can do little to prevent. “The only thing a new administration can do is lower the overall tax burden so that you can operate at lower prices, which means that maybe the pain won’t be as bad, or as soon, as it would’ve been,” he says.

Therefore, a certain amount of market risk will continue for U.S. producers. “The concern is that if prices hit $60 a barrel and stabilize, then U.S. production is going to increase to offset the Saudis’ decrease,” Briggs says. “In that scenario, supply stays the same, demand doesn’t change and we have a downward pressure on pricing. The result of that ends up being this roller-coaster effect where you have $30 to $60, $25 to $60 a barrel oil.” Dismukes also downplayed Trump’s ultimate impact. “People are thinking he’s going to come in and entirely clean house and change things, etc.,” he says. “If they go in and start just burning the earth, and do essentially the same thing the Obama administration did, just in the other direction, they’re going to get kicked out of office during the mid-term elections in two years.” LCA’s Bowser says he’s decidedly more concerned about instability at the state level these days. “While we’re optimistic about what’s going to happen on a federal level, we’re a little apprehensive about what’s going on with our state economy because of the uncertainty. We’re going to try to work with the administration as best we can to see if we can resolve some of that uncertainty.”

LOOKING UP: Local industry watchers anticipate the Environmental Protection Agency to back off the Clean Power Plan timeline under the administration of President Donald Trump.

ISTOCK

to the convergence of rising oil prices and a new administration. “Until now, we’ve had a president and an administration who are not fans of the oil and gas industry,” Briggs says. “Now, the feeling is that we’re going to have an administration that wants to empower the industry to drive the economy.” Even though investment decisions are primarily a function of market dynamics, a lighter regulatory burden and more favorable tax environment could improve profit margins and thereby make investments more profitable in a low- or average-oil environment. It was a much different feeling at the beginning of the last administration, LSU’s Dismukes says. “In the first Obama administration, they were coming after the oil and gas business with a vengeance on the tax issues. They wanted to eliminate a whole bunch of provisions in the tax code that impact oil and gas, such as how intangible drilling costs are treated, depletion allowances, amortizations of costs, etc.”

10/12 INDUSTRY REPORT • FIRST QUARTER 2017

NEWS: MANAGEMENT

Mind and body Mental health programs for employees are becoming commonplace in the industrial workplace. BY DAVID JACOBS

or an industrial contractor like Turner Industries, safety is paramount. But ensuring safety takes more than sound equipment and well-trained workers. People with mental health issues like depression or substance abuse can lose their focus on the job site, putting themselves and their co-workers in jeopardy, says Dan Burke, Turner’s director of corporate benefits. So in January of 2014 the company put in place an employee assistance program to help its workers address potential issues before those issues get out of hand. Such programs are becoming more commonplace, providers say, although many employees aren’t taking full advantage of them. Turner employees have access to five free visits with a counselor per year, Burke says. The EAP also provides “critical incident support.” If there’s a serious and potentially traumatic accident, the provider sends a professional to talk with anyone who witnessed it or was involved. Despite the company’s efforts to promote it, Burke says, the program is underutilized. Turner’s workers are spread out at various job sites across the region, so it’s hard to get materials describing the program into everyone’s hands. But he suspects culture also plays a role. “In the industrial construction business, there may be a stigma attached to making use of mental health counseling,” Burke says. While the program is completely confidential, “there’s a macho culture that may prevent folks from making use of the services.” Turner and many of its workers are based in the Baton Rouge area, which suffered devastating floods

in August. But even a historic catastrophe didn’t lead to an uptick in Turner’s EAP usage. Burke hopes to get workers to take better advantage of the mental health and wellness programs available to them by establishing the connection to safety performance, which is already ingrained in the corporate culture. “If you can make the correlation between health and wellness, mental wellness and safety, you can really have a bigger impact,” he says. BASF maintains a “very robust” EAP, says Al Bailie, HR director for the company’s Capital Region plants. It’s part of the company’s “holistic approach” to help employees meet their physical, mental and emotional needs. BASF also brought in additional resources to help employees deal with mental health issues potentially brought on by last year’s flood. As the company learned which employees were affected, BASF offered to set them up with a counselor. The company also brought counselors to the worksites to meet with employees and help managers and supervisors recognize when employees were having issues. Fatigue was an obvious concern, given that some people were spending their off hours gutting their homes. BASF also hosted an “information fair,” featuring representatives of FEMA, the state and other organizations, where employees and their families could get their questions answered, hopefully alleviating the stress that goes along with confusion. “We saw all levels of the organization and all backgrounds of the organization utilizing the services,”

10/12 INDUSTRY REPORT • FIRST QUARTER 2017

Bailie says. “Even types of folks who traditionally may not have accessed these types of services I think were very appreciative of the opportunity to take advantage of them.” A HIGH-RISK PROFESSION Major depressive disorder affects about 16 million Americans and costs the economy about $210.5 billion a year, according to a study reported by the Partnership for Workplace Mental Health. Almost half of those costs are associated with workplace impacts such as absenteeism and lost productivity. About 40,000 suicides were reported in the United States in 2012, making it the 10th-leading reported cause of death among people 16 or older, according to the Centers for Disease Control, which says the suicide rate among that age group increased 21.1% from 2000 to 2012. A CDC survey of 17 states found that people who work in “construction and extraction” accounted for the largest percentage of suicides (10.8%), while the occupation had the second-highest rate of suicides per 100,000 people (53.3). “Construction workers might be

at higher risk [of suicide] because of financial and interpersonal concerns related to lack of steady employment, and fragmented community or isolation,” the CDC says. Most people who suffer from temporary mental health issues will never have major depression or consider suicide. Steve Bayliss, client liaison with EAP provider Hidalgo Health Associates, doesn’t even like to use the term “mental health”— partly because it doesn’t cover the full range of services his program offers and partly because of the stigma associated with the term. “When [people] say, ‘mental health,’ you think ‘they’re crazy,’ ” he says. “Occupational stress, anxiety, we’re all dealing with that every single day, [and] these things can make you sick.” Bayliss says the forerunners of today’s EAPs were established during the 1970s by companies such as DuPont that wanted to address drug and alcohol issues among their workers. But it basically consisted of a reformed alcoholic who had an office on site where employees could pop in and have a talk, which obviously doesn’t provide much privacy. 1012industryreport.com

Today’s EAPs stress confidentiality and offer a wide variety of different services along with mental health counseling, including smoking cessation and other wellness programs and even legal advice. Insurance brokers and human resources consultants can help business owners and executives sort through their options. There are three main ways employees get connected with an EAP. Many simply call a toll-free number provided on a company brochure. The person on the other end should be able to refer callers to certified counselors in their area. An employee might also be referred informally by a co-worker or manager. Or a supervisor who has noticed a problem with an employee’s work productivity might make a formal referral. An employee can’t be fired for refusing to utilize the EAP, Bayliss says, but they can be fired for not doing their jobs. Leslie Austin of HR Solutions, a human resource consulting firm in Baton Rouge, says such programs often are underused. Employees may not even know free help is available, and older workers may be more reticent to use counseling than younger ones. Bayliss says heavily male and

blue collar workplaces also may be slow to embrace EAPs. But Jeff Davis, an employee assistance program account executive with New Directions Behavioral Health, says one of his clients, an industrial manufacturer with a 92% male workforce, has a usage rate about three times higher than average. And that’s not because they have three times as many problems as the average company, he says. “This organization has made the EAP part of their culture,” Davis says. “They pushed the EAP from the top down, and they trained their managers on identification of a troubled employee, what that looks like, and how to have that conversation.” When dealing with macho cultures, Davis turns the tough-guy aversion to seeking help on its head. Staying stuck in a rut, afraid to try something different, is a sign of weakness, he argues, while it takes strength and courage to change course. “You want to, as a leader and a company, really promote a culture where people understand that this is a [company] benefit and this is OK,” Austin says. “I always say: Life happens.”

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HOW TO SPOT MENTAL HEALTH ISSUES It’s hard to know for sure when an employee is suffering from depression, substance abuse or other mental health issues, but there are signs to look out for, including: • STARK CHANGES IN BEHAVIOR OR PERSONALITY

• FREQUENT ACCIDENTS OR ERRORS

• WILD MOOD SWINGS

• HOSTILITY WITH COWORKERS

• DETERIORATION OF PHYSICAL APPEARANCE AND/OR HYGIENE

• FATIGUE

• BLOODSHOT EYES; DILATED OR CONSTRICTED PUPILS

• MEMORY PROBLEMS

• POOR COORDINATION

• INABILITY TO CONCENTRATE

• IRRITABILITY • EASILY STARTLED OR JUMPY

• SLURRED SPEECH

• DIFFICULTY CONCENTRATING

• REPEATED ABSENTEEISM • DECREASED PRODUCTIVITY

• ANXIETY • INDECISION

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• TENDENCY TO OVERWORK OR UNDERWORK SOURCE: Turner Industries Health & Safety Field Guide, Hidalgo Health Associates

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10/12 INDUSTRY REPORT • FIRST QUARTER 2017

FOCUS: Safety net Precision, detail are the keys to effective emergency response.

ENVIRONMENTAL SERVICES

FILLING THE GAP: Helping companies maneuver through emergency and post-emergency compliance is a niche market for L&M Environmental Response in Belle Chasse, says company vice president Lee Lemond.

BY SAM BARNES

10/12 INDUSTRY REPORT • FIRST QUARTER 2017

CHERYL GERBER

hile industrial owners are experts at doing what they do, many have learned that partnerships with outside service providers are essential to tackling the countless issues that follow a spill or other emergency. Over the last few decades, regulations handed down by the Environmental Protection Agency and other federal and state entities have significantly increased, making it nearly impossible for owners to maintain the staff necessary to sufficiently handle emergencies and the ensuing paperwork. As a result companies skilled in 24/7 emergency response, planning and training are now scattered across the Gulf Coast. Patrick Bergeron Jr., a Nicholls State University graduate, worked his way through various jobs with the Louisiana Department of Environmental Quality and as an HS&E manager before creating Forefront Emergency Management with Kevin Voisin and former high school classmate Trey Boucvalt. Today, the Houma-headquartered company provides emergency response and planning services across the U.S. Bergeron says the importance of relationships and experience has set a high bar for entry into the emergency response market. “Our business is based upon trust and relationships, and it’s a service that a client is not going to change very quickly based upon a pricing dynamic,” he adds. “While it’s tough to get a new client, it usually results in a long-term business relationship.” L&M Environmental Response in Belle Chasse is equally cognizant that relationships are vital. “We’ve spent several years in government working with federal on-scene coordinators, state agencies, state police, HAZMAT units, etc., and have great relationships with the fire departments, local emergency preparedness directors and parishes,” says Lee Lemond, L&M’s vice president. “That’s really our niche—we help companies maneuver through the various hurdles of both the emergency and post-emergency compliance, as well as the meetings with those agencies to get things back into check.” L&M’s owners joined the mix of Louisiana-based emergency responders in February 2016 after working several years for DEQ. “With the experience from the state and in responding to incidents following Hurricane Isaac in 2012, we noticed a big gap in emergency response,” Lemond says. “We bring an extra compo1012industryreport.com

LEE CELANO

MARITIME RESPONSE: Environmental Response Services Inc. in Lake Charles does the “dirty work” of cleaning up spills.

nent to emergency response—where we not only respond but actually help fix compliance issues.” The company targets midsized companies that are too small to have a full-time environmental manager on site, providing basic consulting work, emergency incident management and air monitoring for all typical releases. BEFORE DISASTER STRIKES For many firms, emergency response only scratches the surface of what they provide—they also help plan and develop a variety of response documents, including Spill Prevention and Control Countermeasure, EPA facility response and U.S. Coast Guard response. Additionally, they perform periodic testing, drills and training to comply with various agency requirements. In a typical year, Forefront writes about 2,000 sets of response plans, as well as assists with periodic testing, mandated drills and exercises. “We are responsible for ensuring that every requirement of the drill and exercise program is met,” 1012industryreport.com

Bergeron adds. “It’s the only way that the responsible parties can truly sit down, test, review their emergency response procedures and make sure everyone understands what they’re responsible for should an emergency occur.” While he says the petrochemical industry is “way ahead of the game” in its proactive approach to emergency response, L&M’s Lemond feels outside help in plan preparation serves a vital purpose: Ensuring that everyone tied to the response team understands what needs to be done in an emergency. Lemond says a lack of site-specific planning is the most common mistake made by owners. Many plants have generic corporatewide plans that don’t take individual site variables into account. He feels that was one of the reasons behind a release at Stolthaven’s petroleum and chemical terminal after Hurricane Isaac in 2012. During the event, an estimated 191,000 gallons of chemicals were released by the Braithwaite-based terminal, according to a report filed by the company

with the U.S. Coast Guard National Response Center. Lemond, who worked the Stolthaven site as a DEQ inspector, suspects the facility’s response plan wasn’t adequate for the site. “I’ve seen that as an inspector at DEQ—a lot of companies simply print a different address on the cover of their plans,” he says. “That’s the pitfall, because each site has different needs, personnel and requirements. An oil and gas facility that’s in the marsh, for example, is going to need to make sure they can have a response company that can get a boat there within an hour.” Developing an adequate site-specific plan typically involves a variety of units at a plant site, and involves unit and HS&E managers throughout its formulation. Along the way, the team should address the needs and requirements for all necessary agencies. AFTER DISASTER STRIKES The intensely controlled and regulated nature of emergency response requires that the process following

a spill or other disaster be painstakingly precise. Forefront’s Bergeron says his emergency responders are skilled in swiftly responding to emergencies in accordance with a host of federal and state regulations. While Forefront maintains a permanent, full-time staff of 70, it participates in a large network of about 300 emergency response professionals who are always on call. While a release can occur anywhere, he says the most common ones are found at river docks, caused by a collision or the transfer of product, or on plant property due to a tank overflow or other breach. In either situation, a command post is set up and the plant’s emergency response team is mobilized. “You’ll typically see eight to 10 of our folks working in a command post, along with another 10 to 15 working in the field, implementing the plan that has been written and approved at the command post,” Bergeron says. Initially, containment is typically the highest priority as the team strives to prevent an impact to new areas. The containment process

10/12 INDUSTRY REPORT • FIRST QUARTER 2017

FOCUS: ENVIRONMENTAL SERVICES

• Additional revisions must be requested and may be subject to production fees. Carefully check this ad for: CORRECT ADDRESS • CORRECT PHONE NUMBER • ANY TYPOS

the “dirty work” of cleaning up spills. “The spill management companies bring in people with laptops and do spill trajectories. They sit down at a table and tell us, ‘Look, 3 miles over there we’ve got some oil, etc. We go clean it up.” A former firefighter, Clark began working for an environmental company in south Florida in the wake of Hurricane Andrew, then eventually began training, consulting and developing response plans. “We had a contract with Citgo, and we went around all the Citgo dock locations and trained everyone on OPA 90.” In the process, Clark became acquainted with the Lake Charles area, and ultimately decided its location was ideally situated for his business. “The I-10 corridor has more tractor-trailer traffic carrying chemicals from one plant to another than anywhere in the country, and along with that a risk of rollover LEE CELANO

typically takes from one to three days, in conjunction with the recovery of the spilled product. “All the while, you’re developing strategies to protect water intakes, because if something else is contaminated it leads to other issues that need to be worked out,” Bergeron says. “It can get out of control.” When working a water release, Forefront often relies upon a network of certified Oil Spill Removal Organizations, which have the appropriate equipment and personnel to recover spilled “It’s a relationship business. product based upon Oil Pollution Those guys know me. We know Act of 1990 requirements. The entire containment and cleanup them. We know the boats.” process could last up to 30 days, —NEIL CLARK, owner, Environmental Response Services depending upon the volume and impact of the discharge. Forefront has recently seen quirements to include large inland Chicago. an uptick in marine emergency tugboats. As a result the company In Lake Charles, Environmental response actions, due toIndustry the U.S. Ad proof currently Response Services Inc. has found a Issue Date: 10/12 #3 has about 90 river-bound • Please Guard’ respond by e-mail or fax with approval or minor revisions. Coast s expansion of your Nonvessel company clients that navisimilar niche in maritime response. • Ad will run as is unless approval or final revisions tank Vessel Response Plan regate U.S. waterways as far north as Owner Neil Clark says his crews do are received by the close of business today. This ad design © Louisiana Business, Inc. 2014. All rights reserved. Phone 225-928-1700 • Fax 225-926-1329

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on the interstate, barge collisions on the intracoastal waterway, ships overflowing, tanks overflowing, etc.,” Clark says. Over the years, most of his relationships have been in the maritime industry. “It’s a relationship business,” Clark says. “Those guys know me. We know them. We know the boats.” As an off-shoot of his primary business, ERS also captures used oil from ship engines—as much as 500 to 1,000 gallons at a time— then re-sells the oil after removing water and contaminants.

CHRIS HELLER

NATIONAL PROVIDER: Patrick Bergeron Jr. formed Forefront Emergency Management with two partners—one of them a high school classmate. Today, the Houma-headquartered company provides services across the country.

TALKING TECH Recognizing the potential of new technology in the field of emergency response, some companies are actively searching for millennials to fill new positions. Forefront has made a concentrated effort in the last five years to recruit college graduates. “If you have an environmental science background or emergency management background, that’s certainly a plus,” Bergeron says. “To do what we do, you need to have good verbal communication and writing skills,

as well as an ability to maintain and generate enormous amounts of data, should an incident be litigated. Everything we do, we’re saving data.” L&M recently developed a data management program for leak detection and repair while taking part in Idea Village, a New Orleans business incubator that identifies, supports and retains entrepreneurial talent. “The program manages data and develops workflow processes based upon a company’s unique requirements, component types, valve types, etc.,” Lemond says. “That’s a big project of ours that we just finished.” Drones also have great potential from a technological standpoint, and Forefront has two. “They are a great new asset that’s cost effective,” Bergeron says. “Prior to drones, whenever we had an initial assessment of an event that’s in a remote area, we had to put somebody in a fixed wing plane or helicopter to get a visual. Now, with drones, we get very high-end quality data coming back, with still photographs and video.”

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FOCUS: ENVIRONMENTAL SERVICES

On the emissions trail

BY SAM BARNES

Infrared cameras detect leaks at industrial sites across the Gulf South. Will they gain EPA acceptance?

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DON KADAIR

hanks to the ingenuity of some early visionaries, the use of infrared technology for leak detection is gaining a foothold at industrial sites in the Gulf South. Originally developed for the military, the technology was adapted for industrial use by some opportunistic entrepreneurs who saw a need for a more efficient means of locating “fugitive emissions.” ExxonMobil in Baton Rouge has long been an advocate of IR technology. In the early 2000s, officials at its Baton Rouge complex were introduced to it by Texas inventor David Furry. At the time, Furry’s company, Leak Surveys Inc., used a helicopter-mounted IR camera to aerially detect emissions from a variety of industrial sources. Robert Berg, ExxonMobil’s state regulatory advisor, was attracted to the technology’s industrywide potential. “We had some people from [the Louisiana Department of Environmental Quality] come out for a demonstration, and [with a hand-held IR camera] we were able to show them a leak that couldn’t be seen, heard or smelled with visual or olfactory senses,” Berg says. Over the years, DEQ has purchased three hand-held IR cameras for its own use. Mike Algero, DEQ Surveillance Division administrator in Baton Rouge, says the devices are invaluable. “They are extremely useful when we’re performing compliance inspections of tank farms and refineries, because we can climb up on the ladders and view the roofs of those tanks and can actually see leaks without climbing down on the roof,” Algero says. “You can cover large areas in just a few minutes.” Furthermore, data from an IR camera is difficult to dispute, enabling DEQ inspectors to accurately convey where repairs need to be made. Algero hopes to one day secure more of the devices to expand coverage across the state. Hand-held IR devices have im-

R&D: Providence Photonics CEO Yousheng Zeng has worked closely with industry to develop a variety of new product offerings.

proved in recent years from simply detecting leaks to quantifying their severity. The technology has provided industrial owners with a valuable tool for detecting hydrocarbon emissions at the plants, particularly during turnarounds. More recently, IR cameras have helped oil and gas producers comply with new EPA regulations requiring

the monitoring and repair of methane leaks. A LOCAL LEADER Baton Rouge-based Providence Engineering has taken a leadership role in the development and marketing of infrared technology, and under the guidance of Yousheng Zeng has worked closely with industry

to develop a variety of new product offerings. In 2013, the explosive growth in IR technology prompted Providence to spin off a separate company, Providence Photonics, naming Zeng as its CEO. Using patented technology, advanced computer vision techniques and infrared single and multispectral imagers, Providence delivers solutions for many applications, including leak quantification, leak survey validation, autonomous remote leak detection and flare combustion efficiency monitoring. Since 2009, Providence has worked to develop a fixed infrared camera system to take the place of a human observer, and the result—the Intellired Autonomous Leak Detection System—became commercially available in 2014. “You can’t rely upon someone to do that on a 24/7 basis,” Zeng says, “so we developed a system that can be mounted in a fixed position within a plant that uses artificial intelligence to recognize a vapor plume.” Developed in collaboration with ExxonMobil’s Upstream Research Co., the Intellired technology utilizes optical gas imagers and advanced computer vision algorithms to enable remote autonomous hydrocarbon leak detection and provides continuous surveillance for hydrocarbon leaks at distances of 1,500 feet or more. Custom optics can extend the reach of the optical gas imager and enhance detection limits. Additionally, user adjustable sensitivity settings and a variety of alarming options allow for integration into existing security or process control networks. “Basically, once deployed you will see just like a security camera,” Zeng says. “Instead of recognizing a person through facial recognition, we use an algorithm to recognize a plume. If it finds a plume, it will automatically send a notification to an operator, either by email, text or smartphone … whatever method is specified.

10/12 INDUSTRY REPORT • FIRST QUARTER 2017

industrywide applications is a necessary step toward getting EPA acceptance. While the EPA currently allows for IR cameras, they must be used in conjunction with other established processes. ExxonMobil currently relies upon as many as 25 workers to monitor for fugitive emissions daily—a number Berg hopes to reduce to as few as four with the use of the IR cameras. “It also offers some significant safety advantages,” he adds. “Tank leaks, for example, can be monitored from a distance rather than having someone walk around the tank rim. That’s much better from a safety standpoint.” By encouraging widespread use of IR technology, Providence’s Zeng hopes that the EPA will adopt the cameras as an acceptable alternative to more cumbersome detection methods. DON KADAIR

“It will also send a still picture to show you where it’s leaking.” Providence partnered with manufacturer FLIR Systems Inc. in Portland, Oregon, for various components of the Intellired system but performed design and manufacturing at its Baton Rouge facility. FLIR Business Development Manager Mark Boccella EARLY ADOPTER: At ExxonMobil, which has been using infrared technology says his company’s since the early 2000s, Tim Crockett checks for potential leaks. partnership with Providence has evolved over the last them to the next level for someone integrate,” Boccella says. “Thermal decade. who has a unique request.” imaging has followed a similar tra“We’ve developed a relationship FLIR was one of the original trailjectory to GPS technology. It started where they’ve been everything blazers of IR technology, initially out as a very protected U.S. governfrom a value-added retailer to an developing thermal imaging appliment technology and evolved into integrator of our imaging sensors cations for government and military something that is now commercially into larger solutions,” Boccella adds. use. available.” “They have some core competencies “Our core business was born out that allow them to take our sensors of military contracts in the U.S., SEEKING EPA ACCEPTANCE and customize them for a variety and it spurred us to develop new ExxonMobil’s view is that the of applications, or maybe even take technologies in a move to vertically promotion of the technology for

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“Complying with the EPA Leak Detection and Repair Program is a very tedious, labor-intensive process,” Zeng adds. “Basically, you’re going through every flange using a ‘sniffer’ to check if there’s a leak. It’s very labor intensive, and then you have to plug the results into an equation to predict the number of pounds per hour.” Providence unveiled a new handheld product—the QL100—in April 2016 that quantifies emissions at a lower detection limit, thereby eliminating one of EPA’s primary objections to the device. The QL100 works with existing FLIR handheld imagers, enabling operators to remotely quantify hydrocarbon leaks, including those from difficult to monitor areas and storage tanks. The portable product provides both an immediate result in the field and an archive of the measurement for reporting or analysis purposes. By using the QL100, an owner can accurately measure emissions from a safe distance.

FUTURE OPPORTUNITIES Leak Survey Inc.’s Furry expects the use of drone-mounted cameras to be the next big wave in the infrared market. His company built its first drone-mounted camera in late 2016 and is currently testing the product. Called Nitros, Furry’s drone can be equipped with a variety of camera types. “Our plan is to see if we can get an exception [from EPA] to use the drones to monitor the difficult-to-reach areas of a refinery,” Furry says. “We’re going to take it up to a gas processing plant and get some footage of what it looks like once we get this other camera to communicate with the monitor.” He’s most excited about the drone’s potential for monitoring vessels in difficult locations, such as refinery distillation towers. In the past, it would have taken hours for a worker to climb a tower with detection equipment. “We’ll be able to just fly up to the edge of it, and go straight up and over. We’ll be able to check it all with the drone instead of having to go up there—if we can get

approved by the EPA.” Providence Photonics’ Zeng says another of his company’s recent developments is a multispectral imager—the Flare Efficiency Monitoring System—that will monitor combustion efficiency in industrial flares. The product has nine spectral bands, as opposed to a single band in other IR cameras. “Recent studies have found that combustion efficiencies [in flares] can be as poor as 70%, meaning a significant amount of pollutants are being released without any way of measuring it,” Zeng says. “We have a patent and an EPA Small Business Innovation Research grant to develop this technology. We plan to make that commercially available sometime in 2017.” The technology exploits absorption bands in the midwave infrared to determine the relative concentrations of unburned hydrocarbons, carbon dioxide and carbon monoxide. The entire flame and plume is captured in the field of view, eliminating the need for aiming and enabling fully autonomous monitor-

ing. Having access to real-time data will enable plant owners to make necessary adjustments to optimize flare performance. Looking ahead, ExxonMobil’s Berg sees a significant opportunity for third-party use of infrared technology, since many plants can’t justify the camera’s high price tag. “This is a chance for a consulting firm or a company that performs leak detection and repair to train their employees to provide that service to some of the smaller plants,” he says. “There is a particular need for this following a turnaround, to make sure everything’s buttoned up tight before they start the plant back up.” To further promote the technology, Tim Crockett, head of ExxonMobil security in Baton Rouge, champions infrared monitoring at various technology conferences throughout the year. Zeng says Providence is developing new designs and working with suppliers to make the camera more affordable. While the hand-held has been on the market for 10 years, the cost is still relatively high at about $90,000.

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10/12 INDUSTRY REPORT • FIRST QUARTER 2017

FOCUS: ENVIRONMENTAL SERVICES

The family business

BY DAVID JACOBS

For three decades, George Lockhart has found profit in industrial waste transit.

private equity firm that manages more than $1.25 billion in committed capital. Kinderhook, which targets management-led recapitalizations of entrepreneur-owned companies, bought CEI and combined it with two other companies under the CEI name. Today, George and Derk Lockhart manage the company’s Gulf Coast division. CONSTANT CHANGE Only about 10% to 20% of the waste being transported nowadays is considered hazardous, a much lower proportion than in Lockhart’s early years. Hazardous waste is expensive to dispose of and carries potential legal liability. “When you haul a load of hazardous waste to a landfill or an incinerator, I’ve always said there’s 10 or 20 people in the background trying to

10/12 INDUSTRY REPORT • FIRST QUARTER 2017

figure out how not to ship the next one,” Lockhart says. “If you don’t generate it, you don’t have to ship it.” There’s still plenty of waste to be hauled, however. CEI’s clients include plants along the Mississippi River industrial corridor from Baton Rouge to New Orleans, and the company runs trucks from an office in Lake Charles. It also handles municipal waste in Louisiana, Mississippi and Alabama. As with most companies in the heavy industrial sector, workforce is a big concern for CEI, specifically, hiring and retaining qualified drivers. CEI only hires experienced drivers, and competition for them is fierce. Last year CEI installed electronic logs and cameras in the trucks, which Lockhart says led to the departure of some drivers who con-

sider the new technology an invasion of their privacy. The Federal Motor Carrier Safety Administration will require electronic logging by late 2017 in hopes of preventing hoursof-service violations and improving safety by ensuring commercial drivers have adequate rest. “It’s all issues that are going to be completely mandatory next year,” he says. “We just chose to go to them early, and it has cost us some employees.” While he’s still in the business of transporting waste, Lockhart has diversified in recent years. He’s involved in a construction and demolition debris landfill business in Carencro that Hootie manages.

FOUNDING FATHER: Livingston Parish businessman George Lockhart founded Custom Ecology Inc., better known as CEI, and ran it with his two sons, Derk and Hootie, before selling the company.

DON KADAIR

or more than three decades now, George Lockhart’s business has been transporting industrial waste. The Livingston Parish businessman can remember when it was a niche business. He faces a lot more competition these days. Lockhart got into the business in 1984, when he bought POCO Environmental and moved it from north Louisiana to Baton Rouge. He says the company worked all over the country, doing remediation, digging out waste and hauling it to landfills. Along with his business partner and cousin, John Ellis Lockhart, he sold POCO to All Waste Services of Houston in 1990. It wasn’t a cash deal; the partners received stock and employment contracts with All Waste. “It took a while to get our money back,” George Lockhart says of the sale. “Within three months, the stock had lost 75% of its value. … It did recover after about seven years.” He worked for All Waste for five years. While he prefers not to go into detail about why the relationship ended, Lockhart says it became clear that it was time to move on. “The CEO is a very good person,” he says. “We just felt it was best that if I was the problem, I needed to leave. I’m not saying I was, but I can say it was just best I go on down the road.” Lockhart stuck with what he knew. In January 1996 he formed Custom Ecology Inc., better known as CEI, with two business partners. During the 1980s and 1990s, there were only three or four companies in the area that did the same kind of work. “Industrial waste hauling was a niche business back in those days,” he says. “There’s no telling how many do it now.” By 2011 Lockhart had bought out his partners and turned CEI into a family business, running it with his sons Derk and John (better known as “Hootie”). It was then that they were contacted by Kinderhook Industries, the New York City-based

EXPANDING INTO GOLF The Lockhart family made news in 2013 when it bought the Greystone Golf & Country Club development in Denham Springs. Derk Lockhart says the property, which had 90 homes when they purchased it, has room for 250 to 300 additional home sites. He says 21 new lots are ready, and work is about to begin on 70 more. And while many golf courses are struggling, Derk says the Greystone course is making money. “We didn’t know anything about golf or country clubs,” he says. “None of us are even good at golf.” Derk attributes the success to changes made at Greystone, including going from selling hot dogs, hamburgers and pizza to building a new clubhouse with a comfortable lounge and restaurant serving Cajun cuisine. He describes the golf course as “semi-private.” The family hopes to make it fully private once they can attract enough members. While George Lockhart remains president of the CEI Gulf Coast division and has a seat on the board of directors, Derk manages most of the day-to-day affairs. It doesn’t sound like he’s in a hurry to retire from the business he’s been involved in since the 1980s. “I imagine I’ll be here in some capacity,” he says. 1012industryreport.com

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INSIGHT O

DAVID DISMUKES

n Nov. 30, OPEC heralded a new agreement to reduce the cartel’s collective production, in concert with many other large producing, non-OPEC states, by as much as 1.8 million barrels per day (“MMBbls/d”). The agreement is important for several reasons. First, it shows that the cartel can, if pushed, herd its unruly members into a concerted production strategy, despite their differing interests. Second, the OPEC agreement is a de facto white flag of surrender recognizing crude markets are contestable and U.S. unconventional production is not going away. Crude oil prices are now between $55 and $60 per barrel and the question on everyone’s mind is: Where do we go from here? The likely answer: Probably not very far. Prices have stabilized at levels that reflect underlying fundamentals, even though the conventional wisdom’s interpretation of these fundamentals may be right for all the wrong reasons. The first fundamental to consider is the credibility of the OPEC agreement itself. Everyone knows that cheating will arise. In fact, the conventional wisdom appears to be discounting the cartel’s commitment to a range of 70% to 80% of the announced reduction. If this holds, then the conventional wisdom may prove to be correct, at least in the near term. The problem is that historic experience shows these agreements do not hold for long, and when they do fall apart, prices will start to fall. So while the conventional wisdom is likely wrong about the strength of the curtailment commitment, it’s hard to know by just how much— and when this commitment will start to unravel. The second fundamental rests

10/12 INDUSTRY REPORT • FIRST QUARTER 2017

with U.S. production resiliency. of which is leading to a post-election Here, conventional wisdom may equity market run-up. prove to be very wrong, since it The Federal Reserve’s signal of discounts U.S. producers’ ability future interest rate increases underto quickly bring production to the scores this near-term optimism. This market—even though prior to the could mean that changes in U.S. OPEC agreement, U.S. crude oil energy demand will attract a level of activity was rebounding. Since Sept. attention that trumps what has been 30, the U.S. has seen (1) the largest an exclusive focus on Asia and the oil rig additions since early 2014; developing world. and (2) a 100,000 Bbls/d increase So, all things considered, crude oil in domestic crude oil production prices are in a goldilocks position: turning up from its overall 8.4 one high enough to revive oil and MMBbls/d trough. gas activity, but not so high as to Conventional wisdom expects a stifle economic growth. However, U.S. crude oil production response the information needed to ascertain of a tepid 200,000 to 400,000 whether the market is, or is not, in Bbls/d. This could prove to be a balance will be slow in materializing, significant underestimate, given the leading to daily swings in prices as recent surge in drilling rigs and the analysts and pundits read the tea fact that there are over 5,200 “drilled leaves of each new data point. but uncompleted wells” that require While slightly higher prices very little additional investment to appear supportable, at least for the bring online. early part of the year, volatility will The last fundamental is energy remain. demand, and here the conventional David E. Dismukes is a professor wisdom may be right for all the and the executive director of the wrong reasons. China has been Center for Energy Studies at the in a state of “relative” malaise for Louisiana State University. He holds the better part of the last year, but a joint academic appointment in the recent economic data has improved. department of environmental sciences Unfortunately, this improvement, where he regularly teaches a course on particularly in manufacturing, is energy and the environment. being driven by recent government fiscal policies that drive up debt, leading to new monetary challenges that may undermine any revival in energy demand, contrary to the conventional wisdom. What is less appreciated by the conventional wisdom is the changing fortune of the U.S. economy. Consumer confidence is up, manufacturing activity has been on a roll for several months, employment is reaching TRUE COMMITMENT?: Iraqi Minister of Oil Jabar Ali al-Luaibi speaks at the Atlantic Council Global Energy Forum in Abu levels consider optimal, Dhabi in January. Questions remain as to whether OPEC will wages are increasing—all abide by an agreement to cut production to boost oil prices. 1012industryreport.com

THE ASSOCIATED PRESS

Reading the tea leaves

New Year’s resolutions

GIFFORD BRIGGS

t’s that time of year again, where we all make plans to enrich our lives—to become healthier, wealthier and wiser. For some, it may be just as simple as wanting to shed a couple of those holiday pounds added around the belt. Regardless of the resolution, the emergence of the New Year is time for a fresh start and an opportunity to make positive changes in our own lives. Along with our personal resolutions and new beginnings, we, the American people, voted for a fresh start and a determination to “Make America Great Again.” Like it or not, this resolution includes plans to peel back the layers of red tape that have choked out the American dream, repeal and replace the Affordable Care Act, build a wall to secure our southern border, and unleash America’s energy industry to relieve us of our energy dependence. But what about Louisiana? What will we do to ensure that our state is in a better posture than previous years? What should be our New Year’s resolution for Louisiana’s oil and gas industry? The first resolution that Louisiana and its leaders must make is to put an end to the abuse of its judicial system—more specifically, to put a stop to the coastal and legacy lawsuits. These lawsuits are discouraging future investment in the state, subjecting many past and present

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energy producers to significant and unnecessary legal obstacles. These lawsuits—unheard of in other states—have turned Louisiana into a litigious hell-hole. The abuse is costing many hardworking men and women their jobs and ultimately making it harder for our citizens to keep the lights on. Secondly, both our federal and state elected leaders must prioritize Louisiana’s exporting sector. Louisiana is strategically positioned to become the outright leader in the United States for energy exportations. With the expansion of the Sabine Pass and the first phase of construction of Port Cameron set to be completed later this year, it is a resolution and goal that can and must be achieved for Louisiana’s ultimate benefit. Lastly, we must reverse new regulations released from the Bureau of Ocean Energy Management, requiring that all exploration and production companies in a lease must have 100% of the cash to plug, abandon and decommission gas projects on the U.S. outer continental shelf. If low and volatile global prices weren’t enough of a burden on these small independent companies, the administration comes down with another layer of red tape before they leave office. This rule will not only be detrimental to Louisiana, but also the entire country. Our federal leaders must hold this next administration accountable to stopping the unnecessary and harmful regulations killing our industry. If you live in Louisiana, no matter what your profession, you are tied to the oil and gas industry one way or another. These New Year’s resolutions will help our state get off on the right foot, paving the way for continued growth and improvement. It is critical that we fight for our industry, and this New Year is the perfect time to start. Gifford Briggs is the acting president of the Louisiana Oil and Gas Association.

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10/12 INDUSTRY REPORT • FIRST QUARTER 2017

INSIGHT

Keeping Louisiana competitive

JIM PATTERSON

ouisiana’s erratic tax system places us at a perennial disadvantage when in competition to attract business investment and development. For decades now, the Legislature has haphazardly patched our state’s tax structure with “fixes” in efforts to balance it against the better systems of our competitors, but these “fixes” have come at a cost. Now, thanks to a continually expanding global marketplace, technological advancements and a vastly unstable tax system, manufacturers in Louisiana are reevaluating their investment. This past year, Louisiana’s manufacturing sector was hit hard by bills enacted to raise hundreds of millions annually in business taxes. As if that was not bad enough, the situation only worsened when the governor acted immediately after the final special session of 2016 to restrict the state’s key economic

development tool known as the Industrial Property Tax Exemption program. The IPTE program exists to attract manufacturing facilities to our state and to encourage them to remain and expand their operations after locating here. Attracting these manufacturers is critical to growing productivity in our economy. They take raw materials and turn them into marketable products, which ultimately increases Louisiana’s economic vitality. The impact goes well beyond the high-paying jobs it provides directly. Thousands of contractor jobs associated with manufacturing capital projects are a significant part of the local and state economies. Merchants and service providers, as well as federal, state and local governments, feed off manufacturer-generated revenues. They recirculate those dollars, adding to the multiplier effect of the activity created by manufacturers.

Furthermore, once a facility is established, it generates a wide variety of tax revenue that would otherwise have never been available to the parish or the state. The company’s income is taxed, its sales are taxed, its purchases are taxed, payroll is taxed, and any entities that are part of the multiplier effect are also taxed. Larger manufacturers can represent significant percentages of a parish’s revenue stream, which ultimately enhances the well-being of those within the parish and in the surrounding region over the long term. This significant revenue stream is clearly evident when considering the condition of parishes with facilities receiving the IPTE and those parishes without manufacturers. These benefits of manufacturing are exactly why states aggressively compete for investment. Three-quarters of all states have industrial exemption programs similar to Louisiana’s current program. These

Cracking down on misclassification, payroll fraud

SHERAL KELLER

he year 2017 presents a rare opportunity for the Fraud Unit of the Office of Workers’ Compensation Administration and the Office of Unemployment Insurance, to work together in the pursuit of employer misclassification and payroll fraud. These illegal business practices deprive Louisiana employees and taxpaying citizens of lawful rights and legal protections. They also afford unscrupulous employers a competitive advantage at the expense of businesses that play by the rules, while divesting the state and general public of millions of dollars of tax revenues. Taking many forms, employers misclassify employees as independent contractors, as well as pay their

10/12 INDUSTRY REPORT • FIRST QUARTER 2017

employees off the books or in cash to avoid paying unemployment taxes, payroll taxes and workers’ compensation insurance and making Medicare and Social Security contributions. This is in addition to employers misclassifying the character of their employees to avoid paying higher insurance premiums for high-risk occupations. As it stands, the OWCA Fraud Unit focuses primarily on employee and employer fraud. If fraud is found, the Fraud Unit refers employers for civil prosecution in workers’ compensation court for failure to have compulsory workers’ compensation insurance. Simultaneously, the Fraud Unit conducts independent investigations of employer and employee deliberate misrepresentations, for the purpose of obtaining

or defeating a benefit or for the purpose of diminishing or delaying a workers’ compensation insurance payment. These investigative reports are subsequently referred to the Attorney General’s Office for criminal prosecution. In 2016, the Fraud Unit investigated 790 allegations of fraud, with 20 having been referred to the Attorney General’s Office. Successful criminal prosecutions resulted in restitution of $1,233,875 from nine employers and $391,018 from 11 employees. While these numbers are impressive, they represent only the tip of the iceberg of the fraud committed in our state, mostly by employer misclassification. In 2015, audits of 1,068 companies by UI identified approximately 19,956 people misclassified as inde1012industryreport.com

states not only have tax incentives, but they also have a strong workforce, ample available land, better transportation infrastructure and local governments eager for new investment. The attributes in other states, coupled with the tremendous uncertainty surrounding the application of new rules regarding Louisiana’s IPTE program, simply make our state less competitive for jobs and investment both nationally and globally. With today’s technologies, it is easy to locate almost anywhere on the planet and conduct business across the globe. While state and local tax structures are certainly not the only factors considered when a manufacturer is determining where to locate its facilities, these policies are significant and often the deciding factor. There are tax features unique to Louisiana, which make it a challenge for businesses to operate here. These challenges diminish the attraction and we should not assume that manufacturers must be here. Certainly, Louisiana’s natural resources must be harvested here, but

they do not have to be manufactured into goods here. A viable IPTE program is necessary for a healthy business climate in Louisiana. This economic development incentive brings many longterm, significant benefits to the state and its parishes through direct jobs, indirect jobs, and the ongoing need for support services and supplies. Any new capital investment helps retain those jobs and necessitates the robust hiring of new graduates from our state’s universities and colleges. Louisiana’s economy is extremely vulnerable at this time. Let’s hope that state leaders carefully consider their actions with the IPTE program as they develop rules to govern it going forward. Louisiana cannot afford to risk further injury to its economy. Jim Patterson is the vice president of governmental relations for the Louisiana Association of Business and Industry, coordinating the day-to-day activities of the organization’s lobbying team at the State Capitol. He is also executive director of the Louisiana Right-to-Work Committee.

Supplying the pulse of Louisiana since 1922

Promoting a culture of safety to help build safer workplaces and communities. pendent contractors rather than as employees (2016 numbers were not available at press time). Consequently, the agency billed $1,496,778 in unemployment insurance taxes that employers owed based on the underreporting of $100,818,591 in taxable wages. Neither the existing personnel resources of UI nor those of OWCA alone are sufficient to audit and investigate the numbers of Louisiana employers that engage in illegal business practices. But working together, these units can create a singular group of investigators and auditors that can identify and pursue more employers than either one of the two units can do alone. Only proactive efforts will reduce the number of recalcitrant employers who continually thwart federal 1012industryreport.com

and state laws with impunity. The collective work of UI and OWCA will be a visible deterrent in the business community in the year to come. With the consolidation of resources, collaboration of efforts among relevant state and federal agencies, community outreach and employee training, the new and improved UI and OWCA units will effectively bolster enforcement initiatives without increasing the size of government or unduly burdening Louisiana businesses. Sheral Kellar is the director of the Office of Workers’ Compensation Administration. She has served at the Louisiana Workforce Commission as a workers’ compensation judge since 1991 and as chief judge since May 1999.

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10/12 INDUSTRY REPORT • FIRST QUARTER 2017

CLOSING NOTES EXECUTIVE MOVES

ANDERS

JOLLY

ADAMS RESOURCES & ENERGY Adams Resources & Energy Inc. announced the election of Josh C. Anders as executive vice president, chief financial officer and treasurer effective Dec. 15, 2016. Anders served as vice president, controller and principal accounting officer for Southwestern Energy Co. from 2012 through 2016 and held various finance and accounting positions of increasing responsibility from 2010 through 2012 with Southwestern Energy. Anders holds a B.S. in finance from Louisiana State University, a master’s in accountancy from the University of Houston and an executive master’s of business administration from Texas A&M. He is a CPA. ENTERGY Bill Mohl, president of Entergy Wholesale Commodities and a corporate officer, will retire after more than 35 years in the energy business effective Feb. 28. Mohl’s planned retirement comes as the company is executing its strategy to exit from the merchant power business, operated by EWC, and focusing on the growth of its regulated utility business. Mohl’s tenure in the energy industry, including 15 years with Entergy, spans multiple companies, and the regulated utility and unregulated energy businesses, including power, natural gas and gas liquids. Mohl joined Entergy in 2002 as the director of special projects responsible for developing the procurement process for long-term resources for all of the regulated utility operating companies. In his career with the company, he held multiple leadership roles before being named chairman, president and chief executive officer of 60

CHRISTIAN

CARTER

the former Entergy Louisiana LLC and Entergy Gulf States Louisiana LLC utilities. KBR KBR Inc. announced that Mark Sopp will join the company as chief financial officer in the first quarter of 2017. Current CFO Brian Ferraioli has decided to retire to spend more time with family. Ferraioli and Sopp will work closely together to ensure a managed and smooth transition for KBR’s financial organization, the company said. Sopp brings many years of financial leadership experience to KBR. From 2005 to 2015, he served as CFO and executive vice president for Leidos Holdings, previously called SAIC, which is one of the largest publicly traded government contractors in the U.S. PETROQUEST PetroQuest Energy Inc. announced that J. Gerard Jolly, CPA, has been appointed to serve as a director and the chairman of the Audit Committee. Jolly was a longtime partner in the nationally recognized accounting firm of KPMG until his retirement in 2012. Jolly holds a B.S. in accounting from Louisiana State University. He is a member of the E.J. Ourso College of Business Hall of Distinction at LSU and the chairman of the Pennington Biomedical Research Foundation. PORT OF NEW ORLEANS The Port of New Orleans announced that, effective Jan. 1, Brandy D. Christian has begun service as the port’s president and chief executive officer following her twoyear tenure as its chief operating officer. Christian’s credentials include

10/12 INDUSTRY REPORT • FIRST QUARTER 2017

HELMS

broad maritime experience encompassing cargo and cruise operations. Prior to her service as COO with the Port of New Orleans, she held leadership positions with the Port of San Diego for 14 years, culminating in her role as vice president, strategy and business development. Christian is the first woman president and CEO in Port NOLA’s 120-year history and one of the few women port directors in the country. TURNER INDUSTRIES Russell Carter has joined Turner Industries Group LLC in business development for industrial maintenance services in the Greater Houston Region after a 15-year career in sourcing and procurement. Prior to joining Turner, Carter managed the procurement of skilled craft and plant maintenance services for industrial plants across North America. He is a certified professional in supply management (CPSM) and a certified purchasing manager (CPM) through the Institute for Supply Management. Carter also takes with him a decade of community service and nonprofit leadership to the Houston region, having served on numerous community committees and boards as president of Baton Rouge’s Forum 35. Lillian T. Helms assumed the responsibilities of business development representative for Turner for the Corpus Christi/ South Texas area. Helms has over 24 years of progressive sales and business development experience, much of which has been in the downstream oil and petrochemical industry. A graduate of the University of Houston, she attended Our Lady of The Lake for her master’s studies. Most recently,

SMITH

ANDERSON

Helms was a business development/ account manager with the Industrial Construction Division for Dynamic Industries, where she was responsible for business-to-business development for major construction projects and maintenance services to plants, refineries and offshore platforms. GBRIA The Greater Baton Rouge Industry Alliance has appointed Brandon Smith as its new manager of safety, health and security. Smith facilitates GBRIA’s Safety, Health and Security Committee, GBRIA’s Quarterly Safety, Health and Security Technology Exchanges, Quarterly Community Awareness and Emergency Response (CAER) Best Practices Exchanges, and GBRIA’s Contractor Safety and Health Evaluation Program. He graduated from Southeastern Louisiana University with a B.S. in occupational safety, health and environment. KEAN MILLER Sarah Weissman Anderson has been elected partner at Kean Miller’s Baton Rouge office. Anderson joined the firm in 2011 and practices in the litigation and toxic tort groups. She focuses her practice on assisting petrochemical companies in cases involving premises liability, products liability, personal injury involving chemical exposures, pipeline expropriation, and property acquisition litigation for expansion. You can submit items for Executive Moves by emailing a press release and a high-resolution headshot to editor@1012industryreport.com. Executive Moves is limited to senior management and board positions only. 1012industryreport.com

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10/12 INDUSTRY REPORT • FIRST QUARTER 2017

COURTESY CITGO

BASF UPS MDI CAPACITY BASF has started engineering for a stepwise capacity increase of its methylene diphenyl diisocyanate (MDI) production facilities at the company’s Verbund site in Geismar. Capacity will be increased incrementally from 300,000 metric tons per year to around 600,000 metric tons per year. “The engineering for the capacity increase of the MDI synthesis has already started. In subsequent steps, which will be implemented in alignment with business development, the MDI precursor units in Geismar will be expanded accordingly,” said Stefano Pigozzi, president of BASF’s Monomers division. “The usage of the latest proprietary technologies will ensure best-in-class productiv- TOP SITE: Situated on 2,500 acres and including 22 production units, the Geismar site is the largest BASF manufacturing site in North America. ity and energy efficiency.” MDI is an important component employees throughout the Gulf ment in Louisiana in excess of $600 than 40 new jobs in the region. The for polyurethanes, a versatile plastics Coast region, MEI is a provider of million. The Moss Adams study conexpansion also will generate 80 conmaterial. turnaround, specialty and construccluded the project should generate a struction jobs. The two phases of the tion-related services to the refinery, direct economic impact over 30 years project include the installation of a DANOS MAKES PIECES petrochemical and fertilizer markets. of about $1.05 billion in Louisiana. modern press section on the facility’s FOR APPOMATTOX With the acquisition of MEI, Brown H1 paper machine and a recycling Danos completed the fabrication & Root Industrial Services will grow ST. FRANCISVILLE MILL plant for reuse of old corrugated of three boarding valve skids and one to more than 8,500 employees across IN LINE FOR UPGRADE containers. service line skid for Shell Offshore 31 locations nationwide. Terms of Hood Container of Louisiana will Inc.’s deepwater Appomattox facility. the transaction were not disclosed. make a capital investment in two CITGO LAUNCHES Requiring approximately 12 months Brown and Root Industrial Services phases and install new equipment STEM INITIATIVE to complete, the project engaged four is a joint venture between KBR and at its St. Francisville-based paper To increase access to educational Danos service lines, including project Bernhard Capital Partners. manufacturing facility. As part of the opportunities in science, technology, management, fabrication, coatings upgrades, Hood Container will retain engineering and math (STEM), and automation. “Delivery of this NEW TRANSMISSION 237 jobs held by Louisiana residents Citgo Petroleum Corp. is launching project marks Danos’ entry into the LINE’S IMPACT TOUTED at the St. Francisville facility and the CITGO STEM Talent Pipeline module fabrication market,” said Pattern Development reported in create 10 new direct jobs with an avfor students enrolled in elementary Mark Danos, vice president of project December its proposed Southern erage salary of $51,450, plus benefits. school through postsecondary eduservices. “We are proud that Shell Cross Transmission project would Louisiana Economic Development cation—and beyond. Citgo is kicking chose us as their contractor for this provide significant economic benefits estimates the project will result in 30 off the STEM Talent Pipeline with critical component of the Appomatto the project areas within Louisiana new indirect jobs, for a total of more a series of grants for schools and tox project.” The skids, weighing in and Mississippi, including $3.9 bilat approximately 160 tons each, were lion in total direct, indirect, induced fabricated at Danos’ 120,000-squareand fiscal economic impact, according foot facility in Amelia. to a study conducted by Moss Adams LLP. The Southern Cross TransBROWN AND ROOT EXPANDS mission project is a ±500-kilovolt TURNAROUND SERVICES high-voltage direct current (HVDC) KBR Inc. announced in November transmission line with a base load that its subsidiary, Brown & Root capacity of 2,000 megawatts that will Industrial Services, a provider of cross northern Louisiana and link engineering, construction and reliwind energy in Texas to the transability-driven maintenance solutions, mission grid and customers in the has acquired the MEI Group LLC, a Southeast. The project is expected to full-service turnaround specialist for start construction in 2018 and begin industrial facilities. Headquartered in delivering power in 2021. Pattern SCIENCE AND INDUSTRY: Teachers attend a STEM workshop hosted by White Castle, with more than 1,300 Development estimates a total investCITGO as a way to enhance the STEM curriculum used in schools.

COURTESY BASF

CLOSING NOTES: COMPANY NEWS

COURTESY DANOS

CLOSING NOTES: COMPANY NEWS

SAFETY PROS: Danos’ fabrication service team, above, achieved an important safety milestone last year: 1 million man-hours without an OSHA-recordable incident. Danos’ Larose fabrication facility has been incident-free for seven years. The company’s Amelia facility has been incident-free since opening its doors in 2014.

educational organizations near its operational areas, including Houston (where its corporate headquarters is located) and its three refineries, in Lake Charles; Corpus Christi, Texas; and Lemont, Illinois. The company is also providing scholarships for students pursuing higher degrees in STEM fields. Citgo plans to utilize the experience of its own employees through mentoring efforts, as well. In the Lake Charles region, Citgo is supporting an engineering summer program for high school students at McNeese State University, providing the curriculum for the “Engineering is Elementary” program for the Calcasieu Parish School Board, and providing a grant and scholarships at SOWELA Technical Community College. A Citgo grant is allowing the college to provide math classes to targeted high schoolers in the Calcasieu Parish School System and award competitive scholarships to participants who enroll in a STEM-related program at the community college. Citgo is also enabling SOWELA to create iCamp, a five-day summer

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10/12 INDUSTRY REPORT • FIRST QUARTER 2017

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program designed to promote and spur interest in STEM programs among Calcasieu Parish high school students. Participants will be exposed to process technology, drafting, lab analyst and electrical/instrumentation programs. INNOPHOS SETTLES WITH EPA, PAYS FINE Innophos Holdings Inc. has entered into a settlement with the Environmental Protection Agency and the Louisiana Department of Environmental Quality to address concerns regarding disposal of waste products from manufacturing processes at its Geismar purified phosphoric acid (PPA) facility. Innophos will implement “Deep Well Injection,” a customary process approved by the government parties by which Innophos would dispose of a separated co-product (referred to as “raffinate”). This solution allows the company to continue its current PPA operation in Geismar while satisfying the outstanding environmental concerns raised in 2008 by EPA and DEQ. Innophos recently received a permit from the Louisiana Department of Natural Resources to begin construction of its Deep Well Injection System, which began in late 2016 and is expected to be completed by early 2018. The company estimates the capital expenditure for the system will be $16 million. Innophos also agreed to pay a penalty of $1.4 million for what the government agencies viewed as previous noncompliance. ACQUISITION UPGRADES GREENWELL’S SERVICES Greenwell Energy Solutions, an independent specialty provider of completion and production services for the upstream energy industry, has acquired Exclusive Energy Services. Exclusive provides highly automated, data acquisition system (DAS) mixing plants that enable optimal chemical mixing and delivery for coil tubing, work-over and frac jobs. “We’re combining Exclusive’s DAS mixing plants with our chemical portfolio to bring down costs for customers,” said James Kiser, president of Greenwell. “The DAS systems more accurately dose specialty chemicals, using the right quantities, at the right time. And we test well fluids in our in1012industryreport.com

house laboratory so we know ahead of time the most effective chemicals to use. Customers use lower chemical volumes, more effective chemicals and have quality data to make better decisions.” Exclusive’s DAS mixing plants are technology-driven and use data acquisition to continuously improve job performance, Greenwell noted in a press release. The units ‘learn’ different well complexities and their associated chemicals and injection rates, improving chemical programs for future jobs. NUCOR EXPANDS PIPE & TUBE PRESENCE Nucor Corp. announced in December that it has agreed to acquire Republic Conduit, a North American manufacturer of steel electrical conduit, from Luxembourg-based Tenaris S.A. for $335 million, or approximately six times the average of its 2015 and projected 2016 EBITDA. Republic Conduit’s annual shipment volume over this period averaged approximately 146,000 tons. “The purchase of Republic Conduit complements our recent expansion of Nucor’s presence in the pipe and tube market and gives us a new line of value-added products to offer our customers,” said John Ferriola, chairman, CEO and president of Nucor, which operates a direct reduced iron production facility in St. James Parish. STONE FILES CHAPTER 11 RESTRUCTURING PLAN Lafayette-based Stone Energy Corp. and its domestic subsidiaries announced Dec. 14 that they had filed voluntary petitions under Chapter 11 in the United States Bankruptcy Court for the Southern District of Texas to pursue a pre-packaged plan of reorganization in accordance with its previously announced compre-

hensive balance sheet restructuring efforts. The plan includes the sale of approximately 86,000 acres in the Appalachia regions of Pennsylvania and West Virginia for $350 million. In a press release, the company said it expects to eliminate approximately $1.2 billion in principal amount of outstanding debt assuming implementation of the restructuring plan, and that Stone believes it has “adequate liquidity to maintain its operations in the ordinary course.” KBR WINS BP ENGINEERING WORK KBR has been awarded two global agreements by BP International Limited—one for the provision of conceptual engineering services and another for the provision of pre-front end engineering-design (FEED) and FEED engineering services. Each agreement has a contractual duration of three years with an option on each to extend for two additional years. The global agreements are for reimbursable global engineering services provided by KBR and KBR subsidiaries Granherne, GVA Consultants and Energo. The scope of services identified within both global agreements covers onshore, offshore, subsea, drilling, greenfield and brownfield upstream engineering services in Alaska, Angola, Azerbaijan, the Gulf of Mexico, Indonesia, Oman, Trinidad and the United Kingdom. GOODRICH TO SPEND $40M IN HAYNESVILLE Goodrich Petroleum Corp. has approved a preliminary capital expenditure budget for 2017 of $40 million, which will be concentrated in the core of the Haynesville Shale play in north Louisiana. The company’s budget, which will be monitored quarterly and subject to change, contemplates 12-16 gross (3-4 net) wells utilizing what it calls “new completion techniques that are generating superior results.” Goodrich Petroleum is an independent oil and gas exploration and production company headquartered in Houston, with assets in the Haynesville Shale, Eagle Ford Shale and Tuscaloosa Marine Shale. PIPELINE TO SEND GAS TO SABINE The Kinder Morgan Louisiana Pipeline has applied for authorization

to add bidirectional capacity to send gas to the Sabine Pass LNG export terminal starting in 2019, when a fifth liquefaction train comes on line at the terminal. The proposed $151 million Sabine Pass Expansion would provide 580mn cf/d of firm north-to-south capacity on KMLP, which extends 132 miles from the Sabine Pass terminal in Cameron Parish to connections with various other pipelines in south-central Louisiana. Houston-based Cheniere Energy, which owns Sabine Pass, has contracted for the planned southward capacity. The expansion would allow Sabine Pass to receive gas from the Columbia Gulf Transmission, ANR and Texas Gas interstate pipeline systems, as well as from the Pine Prairie salt-cavern gas storage facility in Evangeline Parish. Gas could come from producing basins throughout the country, as major trunk pipelines such as Columbia and ANR are installing bidirectional services to send gas from the Marcellus shale field centered in Pennsylvania to the Gulf Coast. (Argus Media) NRG COMPLETES COAL-TO-GAS CONVERSIONS NRG Energy, Inc. has achieved an important milestone in its fleet optimization strategy, completing coal-to-gas projects at four power plants across NRG’s fleet. The successful introduction of natural gas, replacing coal as the primary fuel, allows these units to continue meeting customer needs while complying with current environmental standards and supporting NRG’s wider decarbonization efforts, the company said in a release. The four plants are located in New Roads, Louisiana; Joliet, Illinois; Shawville, Pennsylvania; and New Castle, Pennsylvania. Generation facilities that had units modified to use natural gas included the Big Cajun II generating station in New Roads, located approximately 30 miles northwest of Baton Rouge, where one 540-MW unit was converted, generating enough power for more than 425,000 average households. AN EPIC OPENING IN LIVINGSTON Gov. John Bel Edwards and Epic Piping Chief Operating Officer Remi Bonnecaze dedicated the company’s new advanced pipe fabrication facility in Livingston Parish in November.

10/12 INDUSTRY REPORT • FIRST QUARTER 2017

CLOSING NOTES: COMPANY NEWS The $45.3 million complex features advanced robotic equipment to optimize pipe fabrication for a host of industries across the U.S. The project will create 560 new direct jobs with an average annual salary of $56,600, plus benefits. Epic’s 268,000-squarefoot facility is located on a 70-acre site immediately southwest of the Interstate 12 interchange at La. 63. In conjunction with affiliated manufacturing locations in San Marcos, Texas, and the United Arab Emirates, Epic Piping is creating what the company forecasts will become the global leader in industrial pipe fabrication. TEXTRON TESTS NAVY CRAFT ON LAKE PONCHARTRAIN Textron Systems Unmanned Systems, a Textron Inc. business, began on-water testing in January for the fourth-generation Common Unmanned Surface Vehicle (CUSV™), supporting the U.S. Navy’s Unmanned Influence Sweep System (UISS) program. Textron Systems completed the design, build and component test phases of the UISS program in November 2016. Following component testing, Textron Systems began the systems level integration and test (I&T) phase, culminating in dockside and on-water testing in Lake Pontchartrain near

its Marine & Land Systems facility in Louisiana. The I&T phase includes functional testing of the system’s integrated generators, engines, datalinks, as well as on-water maneuverability testing. Textron Systems will move into builders’ trials upon completion of I&T and then formal testing to validate system functionality with the U.S. Navy later this year. PSL HOSTS LEGISLATIVE BRIEFING The Port of South Louisiana held a briefing in November for the Southern Legislative Conference, a collective of legislators from 15 member states. It is one of four regional groups operating under The Council of State Governments, an organization that encourages intergovernmental cooperation among its member states. Interested in gathering information about port policies, the visiting delegation was comprised of Sens. Jeff Mullis and Steve Gooch from Georgia, Sen. Paul Wieland from Missouri, Sen. Dave Marsden from Virginia, and Sujit CanagaRetna, SLC’s fiscal policy manager. The purpose of their visit was to learn more about operations at the Port of South Louisiana, particularly the expansion of cargo facilities, the enhancement of intermodal capacities, preparations related to the expansion

of the Panama Canal, working with the U.S. Army Corps of Engineers, and funding of port expansion.

Supply LLC of Louisiana. Green Arc will have exclusive distribution rights for certain regions of Louisiana and Texas with non-exclusive distribution rights in remaining regions of Louisiana and Texas and all of Arkansas, Mississippi and Oklahoma. MagneGas owns a patented process that converts various renewables and liquid wastes into MagneGas fuels, which can be used as an alternative to natural gas or for metal cutting.

MAGNOLIA LNG WINS DOE EXPORT APPROVAL The U.S. Department of Energy has granted Magnolia LNG authorization to export 1.08 billion cubic feet of liquefied natural gas daily to non-free trade agreement countries from its proposed Lake Charles facility. In a news release, U.S. Sen. Bill Cassidy praised the decision. “This approval will bring investment and good high-paying jobs to Louisiana,” Cassidy said. “There is a tremendous global demand for American natural gas. U.S. LNG should be freely available to our allies around the globe without administrative hurdles. Congress should take action to remove barriers for U.S. LNG deliveries around the globe.”

DENHAM HIGH WELDING GETS SUPPLY DONATIONS Students in the Denham Springs High School welding program are now equipped to get back to work, thanks to sizable donations to the school from the American Welding Society, WESCO Gas and Welding Supply Inc., and Airgas Inc. Airgas, which is the nation’s leading single-source supplier of gases, welding and safety products, gave the school nearly $30,000 worth of welding supplies. The items included helmets, gloves, coveralls, face shields, safety glasses, grip pliers, channel locks, wire brushes, an assortment of rods and a plasma cutting machine. At the same time, the American Welding Society’s Mobile, Alabama, section and WESCO Gas and Welding Supply Inc., which has 11 store locations throughout Alabama, Florida, Louisiana and Mississippi, donated another $7,000 worth of supplies.

CLEAN GAS SYSTEM TO BE DISTRIBUTED IN LOUISIANA MagneGas Corp., a clean-technology company in the renewable resources and environmental solutions industries, has received the final contracted progress payment and has successfully shipped the Plasma-Arc Gasification system. The company has sold the first system to Green Arc

COURTESY DSHS

DEEP DIVE: Port of South Louisiana Executive Director Paul Aucoin, third from right, showed a group of Southern legislators around the Port of South Louisiana in November.

COURTESY PORT OF SOUTH LOUISIANA

Donated welding items from Airgas were presented to faculty and students at Denham Springs High School on Jan. 20.

10/12 INDUSTRY REPORT • FIRST QUARTER 2017

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10/12 INDUSTRY REPORT â&#x20AC;¢ FIRST QUARTER 2017

CLAIBORNE

CLOSING NOTES: PROJECT MAPS

Project by project

BOSSIER

WEBSTER

CADDO

($25M-$250M)

BIENVILLE

Louisiana industrial projects announced or proposed since Jan.1, 2014, with projected capital investment of $25 million-$250 million. Second line shows projected capital investment and direct new jobs. List is representative, not complete; project statuses change frequently. 1 First Bauxite $200M | 100 jobs Location: St. John the Baptist Parish Status: announced June 2015 2 Entergy $187M | N/A Location: Cameron, Calcasieu parishes Status: permitting 3 Indorama Ventures $175M | 125 jobs Location: Calcasieu Parish Status: commercial startup projected before end of 2017 4 Tennessee Gas Pipeline Co. (Kinder Morgan) $170M | N/A Location: Northeast Louisiana to southwest Louisiana Status: Construction to begin late 2016 5 NOLA Oil Terminal $162M | 54 jobs Location: Plaquemines Parish Status: under construction 6 Kinder Morgan La. Pipeline expansion $151M | 0 jobs Location: Southwest La. Status: permitting 7 Occidental Chemical $145M | 12 jobs Location: Ascension Parish Status: construction May 2016-late 2017 8 Regency Energy Services $144M | 6 jobs Location: Webster Parish Status: under construction 9 Bunge North America $140M | N/A Location: St.Charles Parish Status: under construction 66

10 Matheson Gas $130M | 40 jobs Location: Calcasieu Parish Status: under construction 11 Advanced Refining Technologies $135M | 325 jobs Location: Calcasieu Parish Status: completion of expansion projected for 2018 12 Praxair $100M+ | N/A Location: Ascension Parish Status: completion expected second half of 2018 13 Cleco/Cabot Corp. $80M | 20 jobs Location: St. Mary Parish Status: broke ground October 2016 14 Florida Fuel Connection, LLC $75M | 50 jobs Location: East Feliciana Parish Status: completion projected for Q1 2017 15 Southwest Louisiana Bioenergy $69.3M | 41 jobs Location: Allen Parish Status: under construction 16 Momentive Specialty Chemicals, Inc. $66M | 68 jobs Location: St. Charles Parish and Ascension Parish Status: expected to begin construction in 2016 17 Hunting Energy Services $62M | 123 jobs Location: Terrebonne Parish Status: announced March 2015 18 Stepan Company $60M | 33 jobs Location: Ascension Parish Status: hiring to begin as early as 2017

10/12 INDUSTRY REPORT â&#x20AC;¢ FIRST QUARTER 2017

RED RIVER

DESOTO

19 Virdia $60M | 81 jobs Location: Lafourche Parish Status: completion projected for end of 2016

NATCHITOCHES SABINE

20 Epic Piping $45.3M | 566 jobs Location: Livingston Parish Status: complete

21 Boise Cascade $43M | 400 jobs Location: Sabine Parish Status: completion projected for 2017

VERNON

22 Graphic Packaging International $41.5M | 1,340 jobs Location: Ouachita Parish Status: under construction 23 Balchem and Taminco $40M | 110 jobs Location: Iberville Parish Status: expected to begin construction in 2015

BEAUREGARD

24 PCS Nitrogen $40M | 0 jobs Location: Ascension Parish Status: permitting 25 Bayou Cos. $39M | 15-20 jobs Location: Iberia Parish Status: complete

CALCASIEU

26 TCI Plastics $36.5M | 280 jobs Direct jobs: 280 Location: Orleans Parish Status: under construction 27 SB International $32.5M | 134 jobs Location: Bossier Parish Status: under construction, completion projected for 2017

2 CAMERON

BLUE = NEW PROJECT ADDED SINCE LAST EDITION

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UNION

MOREHOUSE

WEST CARROLL EAST CARROLL

LINCOLN

OUACHITA

RICHLAND

MADISON

JACKSON