News alert: Shell shelving plans for $12.5 billion GTL facility in Capital Region
In a stunning setback for Louisiana's string of investment successes, Shell has announced it is shelving plans to build a massive gas-to-liquids (GTL) complex near Sorrento in Ascension Parish. Initial estimates were that the project represented a $12.5 billion investment for the multinational energy giant in the state. “Shell's abrupt decision to cancel its North American GTL project just 10 weeks after concluding a multi-year site-selection process is obviously very disappointing news,” says LED Secretary Stephen Moret in a statement to Daily Report. Saying that the state and its economic development apparatus did everything it could to secure the Shell investment, Moret acknowledges, “Shell appears to have determined that a U.S. GTL project is not as certain to be as profitable for their shareholders as other opportunities.” In a separate press release, Shell CEO Peter Voser credits “the Governor of Louisiana, his staff, Parish officials, regulators and the community” for their assistance during the site-selection process, adding that “the company looks forward to continuing a long, successful relationship with the state.” Moret added that there are billions in other construction projects still on the boards for Louisiana, “so Louisiana's economic outlook remains very bright.” Read Daily Report PM today for further details. —Staff report
Financiers say Tuscaloosa shale to be defined in next few years
The Tuscaloosa Marine Shale oil play has several factors in its favor, says David Simpson, managing director of the energy markets division with Australia-based Macquarie Bank. Crude oil prices are pretty strong, the region has an existing pipeline infrastructure, and its geology is similar to the productive Eagle Ford play in Texas. But the early results mostly are inconclusive, he says, and a couple dozen or so wells drilled so far represent a small sample size. "The big question is going to be, is it repeatable?" Simpson says. "That's what's going to have to be defined over the next year or two." Simpson was in Baton Rouge this week for a conference about the TMS. He says there's currently a market glut of the light, sweet crude produced in the play. Blaine Waugh, national sales manager with Riviera Finance, says the relatively high cost of TMS wells—about $10 million to $12 million each—is slowing development. But Waugh still sounds positive about the play's potential. "It's not a question of 'if,' it's a question of 'when,'" he says. Ragan Dickens, communications director for the Louisiana Oil & Gas Association, says LOGA is trying to manage expectations. He says some landowners frustrated by the Tuscaloosa's slow development as compared to the Haynesville Shale don't understand the difference between a "reasonable-to-reach" dry natural gas play like Haynesville and a deeper oil formation like the TMS. —David Jacobs
Heck contemplates career change
Metro Council member Ryan Heck, who was recently named among Business Report's Forty Under 40 2013 class, recently filed papers with the Louisiana Secretary of State to form RE Heck Construction LLC, indicating he may be contemplating a new career. Heck has a bachelor's degree in construction management and a master’s of business administration and worked as a senior procurement specialist at Albemarle Corp. for the past two-and-a-half years. The councilman confirms he no longer works at Albemarle, but declined this morning to discuss the details surrounding his departure from the firm. Albemarle recently announced layoffs it will make at the end of November. Heck says he does not yet have definitive plans to go into contracting and is still exploring his options. —Rachel Alexander
Thomas: EBR can't afford to make a mistake with planning director hire
In a guest column featured in the current issue of Business Report, Center for Planning Excellence Executive Director Elizabeth "Boo" Thomas says East Baton Rouge Parish has a big choice that it can't afford to make lightly. She's referring to the city-parish's selection of its next Planning Commission director, following the recent retirement of Troy Bunch. Ryan Holcomb, the city-parish planning project coordinator, is serving as interim director, and more than 60 people have reportedly applied for the post. "This is a huge decision—and a rare opportunity. Residents of East Baton Rouge ought to be aware of how important this position is to our collective quality of life and future," says Thomas. "The search committee appointed by Planning Commission Chair Tara Wicker needs to have a full appreciation of the progress this new leader should support and a shared understanding of the skills and qualities the position requires." Thomas says the search committee should place a high priority on vision, leadership, an ability to foster creative partnerships among departments and across sectors, and a demonstrated track record of success. "The current job posting is not going to attract this caliber of candidate. It specifies only four years of experience, and no certifications are needed," Thomas says. "Minimum required qualifications should include certification by the American Planning Association and seven to 10 years of senior-level experience managing the intricacies of a comprehensive plan." Read the full column.
Editor's note: If you have a guest column that you'd like Daily Report to consider for publication, please email it to email@example.com. Business Report editors will make all decisions on publication, and reserve the right to edit for content or clarity.
'225 Weekender': Run for a good cause in the 225K
225 Weekender reminds you to get your running shoes ready for the Woman's Half Marathon & 10K. The event kicks off Sunday at 7 a.m. and will take local runners on a scenic course through downtown and the LSU area, while the 225K Fun Run offers a lighter option for runners and walkers who'd prefer a shorter distance. Pick up goodie bags from sponsors, and entertainment will be provided after the race. Get the full experience and join the Pink Patrol to raise money for Woman's Hospital as you tackle the run. Get all the registration details and find out about more events on tap this weekend in the Capital Region in the new 225 Weekender e-newsletter.
BP pushes technical limits to tap extreme fields in Gulf
BP's strategy after the Deepwater Horizon tragedy: Go deeper. The Associated Press reports BP is leading an industrywide push to develop technology that can retrieve oil from formations that are so deep under the sea floor and under such high pressure and temperature that conventional equipment would melt or be crushed by the conditions. One BP field in the Gulf of Mexico, called Tiber, makes the Macondo field that the Deepwater Horizon rig was probing look like a simple puddle of oil. It is thought to hold 20 times as much oil as Macondo. At 35,000 feet below the seafloor—6.6 miles into the earth's crust—it is about twice as deep. There's an extraordinary amount of oil in similar discoveries around the world, several of which are controlled by BP. But BP first must figure out how to get it. New equipment, including blowout preventers far stronger than the one that failed on the Deepwater Horizon, must be developed. Then BP must convince regulators it can tap this oil safely. Another disaster could threaten BP's existence, but success could restore the company's fortunes—and perhaps its reputation. "There's 10 to 20 billion barrels of oil just for BP in this," says Kevin Kennelly, who runs BP's global technology operations. At today's prices, that's worth up to $2 trillion. Three years after the Deepwater Horizon exploded, there are a record 39 rigs drilling in the deep waters of the Gulf of Mexico, according to IHS Petrodata, as drillers probe enormous troves of oil in untapped formations—some of which are under especially high temperature and pressure. And it is BP, of all companies, that is pioneering the push to exploit the most difficult of them. Read the full story.
Nomination period for 2014 Business Awards and Hall of Fame drawing to a close
There's less than two weeks left to make your nominations for the 2014 Business Awards and Hall of Fame, presented by Business Report and Junior Achievement. The awards annually honor a Business Hall of Fame laureate for a lifetime of achievement; two Companies of the Year, with one award going to a business with 100 employees or more and another going to one with fewer than 100 employees; a Young Businessperson of the Year, which goes to someone 40 or younger; and a Businessperson of the Year. You can nominate your company, yourself, a client, a vendor or a friend online. Nominations will close at 5 p.m., Tuesday, Dec. 17. Winners will be profiled in the March 4 issue of Business Report and honored at a March 27 banquet sponsored by Franklin and Capital One Bank. See a list of previous winners. —Staff report
Students in Asian nations dominate global exam results
American students once again lag behind many of their Asian and European peers on a global exam, a continuing trend that often is blamed on child poverty and a diverse population in U.S. schools. Education Secretary Arne Duncan calls the results a "picture of educational stagnation," as U.S. students showed little improvement over three years, failing to score in the top 20 on math, reading or science. Students in Shanghai, China's largest city, had the top scores in all subjects, and Singapore, South Korea, Japan and Hong Kong students weren't far behind. Even Vietnam, which had its students participate for the first time, had a higher average score in math and science than the United States. These results again raise the question of whether the United States is consistently outperformed because of the widely varied backgrounds of its students. Some are from low-income households, for example. Others don't have English as their primary language. But some countries that outperform the United States also experience such challenges. "Americans have got a thousand reasons that one country after another is surpassing our achievement, and I have yet to find a good excuse," says Marc Tucker, president of the National Center on Education and the Economy. About half a million students in 65 nations and educational systems took part in the 2012 Program for International Student Assessment, or PISA, which is coordinated by the Paris-based Organization for Economic Cooperation and Development, or OECD. Read the full story from The Associated Press, and access the complete PISA report.
News roundup: Treasury chief to declare big gains in financial reform … U.S. economy grew at 3.6% rate in Q3 … 'Crowdfunding' gets state-level test run in Georgia
Making his case: Treasury Secretary Jacob J. Lew will assert today that the Obama administration's vast overhaul of the financial system is close to accomplishing its goal of shielding society from potential dangers posed by giant banks. The New York Times reports that Lew is set to give a broad policy speech intended to signal the administration's views on financial regulations. He will also make it clear that more measures may be needed to strengthen the global financial system. In comments that will most likely upset foreign governments, he will call on overseas regulators to make their rules tougher. Read the full story.
Beating the estimates: The U.S. economy grew at a 3.6% annual rate from July through September, the fastest since early 2012. But nearly half the growth came from a buildup in business stockpiles, a trend that could reverse in the current quarter and hold back growth. The Commerce Department's second estimate of third-quarter growth released this morning is sharply higher than the initial 2.8% rate reported last month. And it is well above the 2.5% growth rate for the April-June quarter. Many economists believe that overall growth will be around 2% in the current October-December period, reports The Associated Press, which has more details from the report.
With a little help from their friends: Entrepreneur Adam Lee and his brother couldn't get a bank loan. Then they learned that Georgia state officials had taken steps that might make it easier for their startup, Bohemian Guitars LLC, of Marietta, Ga., to raise the funds it needs. The pair, who make and sell oilcan guitars priced at $250 and up, are among a small but growing number of entrepreneurs taking part in a sort of test run for new federal rules: Officials in nearly a dozen states, including Georgia, Alabama, Kansas and Wisconsin, have enacted or proposed new laws—or tweaked existing policies—to make it possible for resident entrepreneurs to secure financing from everyday local investors, also known as "equity crowdfunding," according to the North American Securities Administrators Association. The Wall Street Journal has the full story.
Today's poll question: The U.S. still imports 60% of the oil it uses each day, despite a huge increase in domestic production. What do you think the country should do to reduce its oil imports?