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Drought adaption: Agriculture economy shifts to petroleum

By: Brian Brus – Journal Record

The typical economic impact of long-term drought is easy enough to predict, said economist Dave Shideler, as the ripple effects from agriculture shut down and move to greener pastures.
Typically, tractors would stop running, trucks and trains would stop hauling livestock and grains, small downtown businesses would close and the rural community tax base would collapse, dragging school districts with it.

Typically, that would be true, said Shideler, a professor of agricultural economics at Oklahoma State University.“However,” he said, “because of oil exploration and drilling, what seems to be happening is these historically farm-dependent towns are now seeing booms with four-story hotels going up and new restaurants opening every day. You’re seeing large increases in sales and use taxes.”For the 30 years preceding 2012, the biggest commodity shipped out of western Oklahoma by rail was wheat. Drought ended that trend and silos stood empty, he said.Now sand is the No. 1 commodity being brought in and the No. 1 commodity shipping out is oil, Shideler said.

“A lot of people started converting the ag infrastructure to support another industry instead: oil extraction,” he said. “Some grain silos started being used as sand storage for hydro-fracturing, for example.

“A lot of ag communities are looking better than before the drought,” Shideler said. “If drought had unfolded in absence of the mining, none of that would be going on. Oklahoma is very adaptable.”

Oklahomans have been forced to adapt quickly as drought has plagued the region for more than three years. According to the latest data from the Oklahoma Mesonet, January ended with a statewide average of less than a third of an inch of precipitation, 1.16 inches below normal and ranking as one of the top 10 driest Januarys since 1895.

Nearly half of the state was covered by at least moderate drought by the end of January, according to the U.S. Drought Monitor, most intensely felt across the southwest and Panhandle.

Cattle producers have responded by selling off their herds instead of watching the livestock go without water or feed. The National Agricultural Statistics Service reported that the U.S. inventory of all cattle and calves totaled 87.7 million head at the beginning of January, down by about 1.6 million cattle compared with the same time a year earlier. The agency reported that it was the lowest January cattle inventory since 1951.

Economist Jonathan Willner at Oklahoma City University agreed with Shideler that the trickle-down or ripple effects – ironic descriptors, given the nature of the impact – of drought are normally felt right away in industries that support agriculture such as fertilizer producers, tractor manufacturers and trucking lines, as well as all the rural towns that provide fuel stops, restaurants and clothes along the way. From that, it’s easy to extrapolate bigger problems such as home mortgage failures.

Willner said drought has also put more pressure on municipalities to provide utilities for residents – he cited the rural logging town of Willits in Northern California as a worst-case example, as that community is less than 100 days from shutting down for lack of water. He said extended drought upstream in Oklahoma could even shut down the shipping lines passing through the Port of Catoosa or other waterways used for fishing and tourism.

Rogers County Port Authority spokesman Jeff Yowell said that if operations at the Port of Catoosa near Tulsa were discontinued for any reason – lock malfunctions or low water levels, for example – the state would suffer a $2 million-per-day economic impact.

A representative from Webco Industries in Sand Springs told Yowell recently the company couldn’t operate except for the port – “It saves them up to 50 percent on their shipping costs,” he said.

Yowell said a lot of agricultural commodities, the mainstay of the port, pass through from other parts of Oklahoma. A total of 1,494 barges passed through in 2013, hauling about 2.7 million tons of cargo.

Yowell said although he has seen ag materials through the port drop only slightly, petroleum shipping has increased much more dramatically in recent years, so it doesn’t appear to be a simple translation from one industry to another. The Port of Catoosa had a record year in 2012 due to crude oil, he said.
Elk City Chamber of Commerce Economic Development Director Jim Mason said his community has blossomed as it’s moved from agriculture to petroleum. He also cited the growing wind farm industry as another example of adaptation.

“The local grain elevator has closed down and our cotton gin is now gone. A lot of our agriculturally related businesses do seem off,” he said. “Drought has had a big impact, but it hasn’t devastated us.

“Oil and gas has kind of picked up the slack, so it’s possible we might not have noticed the impact as severely,” he said. “A lot of farmers have benefited from mineral rights or wind farm development.”

Elk City’s hotel and housing market has boomed and the schools are struggling to keep up with growing class sizes, he said. Tourism has also increased with petroleum-related meetings and more social events overall drawing visitors from around the region, he said.

Shideler said the next big question that needs to be studied is what happens when an agriculture-to-petroleum transitioned community also hits its water consumption limits. After all, cattle and wheat need water, but drillers and their families need water, too.

El City was identified last year as one of the country’s fastest-growing boom towns with 3.5-percent population growth to about 23,000 people. Mason said his town’s leadership has been planning ahead to protect the local water supplies from the aquifer south of Sayer. Elk City has a capacity of 12 million gallon per day and is using only 4 million to 5 million per day from its 80 wells. The town has another 9 million gallons of storage and has recently completed a new treatment plant.

“At this time, it’s being used almost entirely for people,” he said when asked about consumption for fracking processes. “We are also entertaining some of that with the belief that these companies should reclaim some of the water they use for reuse. There’s a lot of creative developments for recycling that will help the community.”

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Mayors See Need for Deeper Arkansas River

By: Marty Cook – Arkansas Business

The Arkansas River was one of the popular discussions at the Arkansas Municipal League’s recent 2014 Winter Meeting at the Hammons Center in Rogers.

Many mayors of Arkansas cities would like to see the river’s shipping channel deepened from 9 feet to 12 feet to facilitate more efficient barge traffic. Deeper water means heavier barges, and that means lower shipping costs, which means cheaper products for the rest of us.One mayor said it could cost one penny to ship a loaf of bread from New Orleans to Fort Smith with a deeper channel.
Laurie Driver, a spokeswoman for the U.S. Army Corps of Engineers, said a river barge can carry as much as 58 truck trailers, although few barges carry a full load. A deeper channel means a barge could carry 33 percent more — approximately 19 more truckloads. And a normal shipment is 12-15 barges in one tow line, Driver said.Of course, savings on the back end comes with a price tag on the front end. The Corps of Engineers estimates that the deepening of the Arkansas River channel from east Arkansas to the Port of Catoosa in Oklahoma would cost about $188.8 million. That’s a lot of bread, and it doesn’t include the annual maintenance fees involved to make sure the shipping channel stays 12 feet deep. That’s another $2.8 million a year, Driver said.Deepening a river channel is not as simple as scooping up stuff from the bottom, Driver said. The effects of changing the depth have to be studied first, environmental concerns have to be managed, dikes and other structures have to be built, and places have to be found to discard the dredged-up material.
Driver said the dredging costs may be $30 million, which may change by the time the dredging is scheduled, and disposal costs could run about the same amount.The McClellan-Kerr Arkansas River Navigation System runs 445 miles from the Mississippi River into Oklahoma. Large stretches of the river in Arkansas are already 12 feet or deeper and thus able to handle more and heavier barge traffic.

Driver said 308.6 miles of the river system is in Arkansas, and 268 miles of it is 12 feet or deeper. Thirty miles of it are 9 feet deep and 10 miles are “marginally” 12 feet, meaning those 10 miles would have to be dredged to guarantee the proper depth.
Congress has approved the project but not the funding, so the 12-foot channel idles on the shelf until there’s money.
Fort Smith Mayor Sandy Sanders is a huge proponent of the 12-foot channel. Of course, Fort Smith sits at an important junction of the river and would stand to benefit from all the increased shipping.

“It would add a wide variety of logistics companies,” Sanders said. “Studies have shown the potential traffic would pay for the project. It would be huge for the state. The Arkansas River goes through all four congressional districts, and you look at all the cities that are within 25 miles of the river.”

Sanders doesn’t expect the project to be funded immediately but hopes to see it within the next three to five years.

Driver said the Corps of Engineers estimated that the work would take five years to finish — once funding is arranged.
Fayetteville Mayor Lioneld Jordan doesn’t govern from the banks of the river, but he is a vocal advocate of the project. Jordan believes that what’s good for Fort Smith (and other cities on the banks of the river) is good for the region and the entire state and nation.

“It’s a domino effect,” Jordan said. “Here is what is beautiful about it. We have the third largest waterway in the nation and have all the cities that are hooked up to the Arkansas River. It will drive the costs of operating business way down and that can be passed on to the consumer.”

Sanders said the cost of deepening Arkansas’ portions of the river is just a small part of the overall cost. Unfortunately for Arkansas, while that is true, the Corps of Engineers does not operate on a piecemeal basis.

Driver said work on the McClellan-Kerr system is an all-or-none proposal. Congress itemizes funds for each project, so the river won’t get deepened until the money is available to deepen the whole thing from the Mississippi River to the Port of Catoosa.

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Portiss named chair for upcoming “Heroes” campaign

By: Tom Fink – The Claremore Progress

CLAREMORE — Port of Catoosa Port Director Bob Portiss has been named chairman for the upcoming Rogers County 2014 “Heroes for the American Red Cross” campaign.

The campaign is scheduled throughout the month of March, also National American Red Cross Month, with a goal of $35,000.“Heroes for the American Red Cross” is an annual campaign, during which, members of the community, including individuals, businesses, schools, churches and community organizations are encouraged to volunteer to raise $1,000 or more to support the work of their local American Red Cross.“Heroes” may choose how they want to raise the funds — through fund drives, financial donations, special events or business promotions. All money raised through the Hero Campaign stays in Rogers County to help those suffering after a disaster, like a home fire or flood, with assistance with their immediate emergency needs, such as temporary lodging, food and clothing.“I’m honored to have been asked to chair this year’s ‘Heroes for the American Red Cross’ campaign,” Portiss said. “I think we’ve all seen and maybe even personally experienced some service or resource provided by the American Red Cross — whether it’s helping a family after a home fire or responding to a disaster like a tornado, if there is a need, the American Red Cross and their dedicated volunteers can always be counted on to be there to help.

“Now, it’s our turn to help them,” he continued. “Money raised through this campaign helps to ensure that they have adequate resources available to respond at a moment’s notice to disasters and provide victims assistance with their immediate emergency needs of temporary lodging, food and clothing.”

According to the American Red Cross, home fires are the most common (American Red Cross) disaster response.

Last year in Rogers County, the local Rogers/Mayes/Wagoner County Service Center responded to 34 fires, affecting 125 people, and providing close to $21,500 in direct assistance.

In all three counties the service center covers there were 85 home fires responded to, affecting 344 people, with over $52,000 in assistance provided.

Additionally, when family members have an emergency and they need to contact a military member who is deployed, the American Red Cross is the communications link between the service members and their families back home. Last year in Rogers County, there were 28 military communications sent and in all three counties there were 64 sent.

“We’re extremely pleased to have Bob (Portiss) as this year’s Rogers County ‘Heroes for the American Red Cross’ campaign chair,” said Mark Ogle, director, Rogers/Mayes/Wagoner County Service Center. “With Bob’s leadership skills and enthusiasm for his community, I know that this will be another successful campaign.

To learn more about becoming a “Hero” for the American Red Cross, contact Bob Portiss at (918) 266-2291, e-mail him at bob@tulsaport.com, or contact Mark Ogle at (918) 344-8442, or by e-mail at Mark.Ogle@redcross.org.

The American Red Cross shelters, feeds and provides emotional support to victims of disasters, supplies about 40 percent of the nation’s blood, teaches skills that save lives, provides international humanitarian aid; and supports military members and their families.

The Red Cross is a not-for-profit organization that depends on volunteers and the generosity of the American public to perform its mission.

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Putting the pieces together: Tulsa firm completing $78.5M contract for sulfur purification system in Iraq

By: Ray Tuttle – The Journal Record

TULSA – Placing equipment onto steel girders for assembly in the field is not new. A Tulsa company, however, is using the technology in a targeted approach to create business opportunities, both domestically and internationally.

“It has been out there for a long time,” said Doug Houston, owner and CEO of Devco USAand Devco International. “But to be able to create a design that is operator-friendly and maintenance-friendly – that brings a level of uniqueness to our projects.”For example, Devco signed a $78.5 million contract last year to supply and install a sulfur purification system at a state-run plant in northern Iraq. Devco is part of a family of engineering and technology companies owned by Houston Interests, a Tulsa-based company. Houston Interests also owns River Consulting and S&R Technical Services. Devco operates offices in New Orleans; Columbus, Ohio; and Pittsburgh.

“The contract was for a turnkey installation of a sulfur purification system including submerged combustion distillation, sulfur filtration, and sulfur recovery unit,” said Bevan Houston, Devco director of business development.

Scheduled to ship this month, the purification unit will have a production capacity of 500,000 metric tons per year. It will be possible to double that capacity. The project was done in coordination with CTI Consulting, a technology provider out of New Orleans, and Al Hawarth out of Amman, Jordan.

The purification unit, made up of 56 modules, is being manufactured by Insulation Specialists of Tulsa Inc., or ISTI, at its Port of Catoosa facilities. The initial phase of modules will be shipped from Tulsa to a site near Mosul, Iraq, and assembled. The Al-Mishraq Sulphur State Co., which will own and operate the facility, plans to retail the purified sulfur output in Iraq for domestic use. Sulfur is a key ingredient in fertilizer and is in demand within the agricultural sector.

Producing the modules in Tulsa allows for pre-assembly at the port.

“Being able to assemble them this way allows us to work out any bugs and cuts overall costs,” Doug Houston said.

The key to the modular construction is 3-D design, said Bevan Houston. Devco specializes in pairing a process with the plant, Doug Houston said.
“We often partner with technology providers,” he said. “We take their technology and wrap it into a plant, or taking something that started in one form, and provide a level of technology that changes the form.”
For example, the sulfur purification unit headed to Iraq includes a technology called submerged combustion distillation, Doug Houston said. The unit will take raw sulfur from a nearby mine and cook away the impurities to yield pure sulfur to be used in the production of fertilizer.

Using a similar business model in conjunction with ISTI, Devco moved into the shale natural gas plays in the U.S. Utilizing technology from Tulsa-based UOP Russell, Devco engineered and built facilities that recover natural gas liquid from produced gas. Last year, Devco and ISTI built three facilities. Two are operating in Texas and a third is in Louisiana.

At the same time, Devco is building plants overseas. Last year, Devco sent units to Saudi Arabia and Turkmenistan.

“It is a great time, as people around the globe want U.S. technology and equipment, especially in the Middle East,” Doug Houston said. “People are telling us how their countries yearn for the U.S. to play a larger role in business, since the falloff following 9/11.

“Middle East companies are looking for the stability and quality that U.S.-based companies provide,” he said. “We continue to push the envelope for opportunities. With our track record and resume, 2014 will be extremely strong for us.”

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Harsco AXC acquires Owasso-based Hammco Corp.

By: Phil Mulkins – Tulsa World

Harsco Industrial Air-X-Changers Corp. announced Monday it has acquired Owasso-based Hammco Corp., a manufacturer of gas-processing coolers.

Terms of the transaction were not disclosed by Harsco AXC, which is based at the Tulsa Port of Catoosa.Hammco is being renamed Harsco Industrial Hammco LLC, and will report to the parent Harsco’s vice president and general manager Eric Clower.Hammco will provide products for air-cooled heat exchangers used in natural-gas compression and other industries. The two companies will continue operating separately.Hammco, founded in 1971 by the late Charles Helscel, employs about 80 people.Air-X-Changers has built air-cooled heat exchangers since 1954. The company joined Harsco Corp., which is based in Camp Hill, Pa., in 1976.

“Our business deals with the transportation of gas from the wellhead downstream to the end use and the removal of heat from the gas in three areas – upstream, midstream and downstream,” Clower said. “Our air coolers remove heat caused by various industrial processes, including heat caused by compression of gas as it passes through pipelines.”

“Heat is also caused by chemical processing of gas and separation into various components — aided by processing coolers,” Clower added. “Harsco AXC equipment is primarily used midstream — in the pipeline transportation phase and downstream. Hammco equipment will complement the downstream processing of natural gas.”

Harsco AXC operates four facilities in the Tulsa area with 315,000 square feet of dedicated manufacturing space. The company produces a full range of models, types and configurations of air coolers that protect gas compression equipment and control the conditioning of natural gas from wellhead — through compression, processing and delivery through pipeline distribution systems. It sells this equipment to a global market.

Harsco also produces lube oil cooling systems tailored to the needs of turbine operators, and has adapted its designs for use in power generation and other applications. It manufactures cooler replacement parts for any make or model of gas-compression cooler in service and offers a full range of on-site field services.

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