Huge economic boost

November 23, 2016

A $500 million oil refinery set to open near Hebbronville will be a huge economic spur for Webb County and its residents, according to local officials.

Webb County Judge Tano Tijerina said the refinery will provide a $100 million payroll every year for its thousands of potential employees.

About 1,500 initial jobs will be generated during the plant’s construction phase, eventually settling on 300-400 permanent jobs, according to Laredo Development Foundation Executive Director Olivia Varela.

Raven Petroleum is building the refinery to help alleviate the current infrastructure constraints impacting the Mexican petroleum supply market, Christopher Moore, managing director of Raven, said in a statement.

Mexico announced in 2014 that it was aiming to boost its energy sector with foreign investment, liberalize its oil import market and revamp Pemex, which is state owned.

But the import flow from the U.S. to Mexico has been limited by a lack of infrastructure, a news release states.

The refinery will be built near the corners of Webb, Duval and Jim Hogg counties.

These county judges have formed a tri-county partnership leading up to the project. Tijerina said he’s been involved in talks for about a year.

“I think it’s going to bring a lot of economic development here. Refineries last forever,” Tijerina said.

The property is bisected by a Kansas City Southern Railroad line, which already transports those products for other refiners, Kansas City spokeswoman C. Doniele Carlson said.

She declined to say whether the railroad would do the same for Raven.

Possible economic turnaround

Duval County Judge Ricardo “Rocky” Carrillo said Raven Petroleum’s project will bring close to 1,800 construction jobs to a rural economy ravaged by the downturn. It’s slated to break ground in the third quarter of 2017.

“Our current value countywide is $900 million, so just put a pencil to it our tax rate would drop tremendously, by about 50 percent,” Carrillo said.

With a county population of around 12,000, Carrillo said the jobs created will help bolster the economy.

Jim Hogg County Judge Humberto Gonzalez said he expects some of the benefits to spill over into Hebbronville, which is 5 miles away and the county seat for Jim Hogg.

“We’re going to benefit from sales tax, from housing, all the people who need services to survive. When you’ve got at least 1,500 (workers), that’s half the town of Hebbronville coming in,” Gonzalez said.

Gonzalez said that with many people who used to work in the Eagle Ford shale now underemployed, he and other leaders need to prepare for the influx of activity and opportunities the refinery’s construction and operation will bring.

“Food services, lodging, all kinds of restaurants that need to prepare for this onslaught,” he said.

“It’s an opportunity for our small businessman and our community people to take advantage of this.”

Duval County, population 11,388, had a staggering unemployment rate of 11.9 percent in September, compared with an unemployment rate of 5.3 percent near the oil market’s peak two years before. The U.S. unemployment rate currently is 4.9 percent.

Unemployment in Jim Hogg County, which has 5,200 residents, stood at 10.3 percent in September.

Jim Hogg County has lost at least $21 million in valuation on its minerals, reducing annual tax revenue by $500,000 over the past three years, Gonzalez said.

“You can only take so many hits of those every year, and for a $10 million budget that’s significant,” he said. “All the counties surrounding us are in the same predicament … and there’s not enough increase on the housing and other projects side to make up the difference, so we all lose.”

Environmental footprint

The Environmental Integrity Project, a Washington-based environmental group with offices in Austin, is keeping a close watch on the refinery.

Ilan Levin, associate director for the group, said “we’re hoping to get more information because it’s a sizable (project) … and will have a pretty big environmental footprint.”

“We want transparency and there should be some due process, the normal public meetings and public hearings that go along with these things just to make sure that the safety precautions are being met and the top-of-the-line standards are being implemented,” Levin said.

Neither Raven Petroleum nor Raven Resource Group. have active permits to refine crude on file with the Texas Commission on Environmental Quality. Any new refiner would need to obtain permits through the TCEQ before it can begin construction.

Sam Taylor, deputy press secretary for the governor’s office, confirmed in an email that it had been contacted by Raven and said “our office provided positive support for the project by facilitating (Raven Petroleum’s) communication with TCEQ.”

Tomas Puente, Raven Petroleum’s project manager for the refinery, said the project has been in development for about two years. Once the site is up and running, the refinery will produce its own energy from waste.

“This is going to be the greenest refinery in existence. A new refinery hasn’t been built since (1974). … We’re building with 21st century technology,” Puente said.

They are also planning to use a water purification system so their waste won’t conflict with the local water table.

The company chose this tri-county area as its ideal site for the refinery after an exhaustive study, Moore told Laredo Morning Times.

“We’re sitting on top of our crude oil supply and we’re 50 miles from the border,” Moore said. “It’s also an area that’s very conducive and supportive of industrial development.”

While the refinery is under construction, Moore said they would use temporary power generation like diesel to power the site.

Moore said the project is currently self-funded. He said they could take on financial or strategic partners when it best suits their business model.

Education partners

Varela said the key partners in developing the workforce for this refinery will be Laredo Community College’s Economic Development Center, Texas A&M International University and South Texas Workforce Solutions.

“They have already started the process of planning for their workforce development projects,” Varela said. “They are going to be offering customized skill programs that are geared specifically toward the need of the refinery project.”

These new jobs will range from all kinds of construction to more vocational skills like welding, to oil and gas accounting and various specialized engineering positions.

This refinery — South Texas’ first — is a symbol of hope for the beleaguered oil and gas industry, which is still slowly recovering from the bust in 2014.

“This is one of the first indications, a very strong indication, that there is a positive outlook,” Varela said. “And because of this particular project we are already receiving inquiries on other oil and gas projects.”

Varela said the Laredo Development Foundation has been trying to promote this region as a key point in the oil and natural gas supply chain for the U.S. and Mexico.

“This particular project will serve to move us in that direction,” she said.

Federico Schaffler, director of the Texas A&M International University Texas Center for Border Economic Development, said the oil refinery will have a great impact on the economy.

He predicts the refinery will help decrease the unemployment and poverty rate in surrounding counties.

To prepare students, Schaffler said TAMIU officials have been working for the past few years to develop an engineering program.

He said the program will have a strong emphasis in the oil, energy and gas industry.

“It is advancing very well,” Schaffler said.

Another TAMIU official, Steve Mondragon, binational center fellow, said the oil refinery will have a positive impact on the value chain of Webb County.

The chain includes transportation, logistics and information technology support.

Officials at Laredo Community College, which is closed this week, could not be reached for comment.

Preliminary construction phases have begun for the refinery, although Varela said it may take as long as 18 months for the final state environmental permits to come through.

In spite of this, she said the project has been moving forward faster than they originally anticipated.

The oil products and liquified petroleum gas refined here will be exported to Mexico and the Caribbean, according to the news release.

The Caribbean Sea region is known to play an important role as a petroleum processing and transshipment area.

Moore said that Raven could consider building a pipeline from Laredo area to Brownsville for oil products to the Caribbean.

LMT staff writer Judith Rayo contributed to this report