10/12 Industry Report [Q3 2017] by Baton Rouge Business Report

Q3 2017

CYBER THREAT

MALWARE IS TARGETING THE PETROCHEMICAL AND OIL & GAS INDUSTRIES. WHAT’S BEING DONE TO COMBAT THE RISK?

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Investing in Louisiana. Powering the future. Louisiana is growing. Entergy Louisiana is investing in the power grid today in order to provide clean, reliable and affordable energy for generations to come.

CUSTOMER SAVINGS Entergy Louisiana delivers some of the most affordable rates in the country. With rates more than 30 percent below the national average, our customers save money and our region attracts new industry.

COMMUNITY SUPPORT Community is at the heart of everything we do. That’s why we do more than just provide reliable electricity. We help our communities flourish. We employ over 4,000 people across Louisiana who are committed to serving the communities where we live and work.

FUTURE GROWTH As Louisiana grows, Entergy Louisiana is committed to powering that growth. Last year, we invested over a billion dollars, while maintaining some of the most affordable rates in the country. These investments help stimulate our economy, create jobs, and provide clean, reliable and affordable energy for years to come.

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10/12 INDUSTRY REPORT • THIRD QUARTER 2017

CONTENTS

Publisher: Rolfe McCollister, Jr.

CYBER THREAT

MALWARE IS TARGETING THE PETROCHEMICAL AND OIL & GAS INDUSTRIES. WHAT’S BEING DONE TO COMBAT THE RISK? PAGE 26

LAUNCH

10 ICYMI

Industry briefs and other intelligence

14 The big picture

A Baton Rouge nonprofit wants to build a haven for ecotourism in the shape of an offshore rig.

16 Dialogue

10 industry and business leaders sum up the recent legislative session in one word or phrase

19 A favorable forecast

The outlook for energy manufacturing sectors is expected to remain strong in the coming years.

21 Separation without

the heat A breakthrough in hydrocarbon separation technology has the potential to cut energy costs in the U.S. by nearly $2 billion annually.

22 Cool science

Honeywell products made in Louisiana are having a dynamic impact on a series of industries.

24 Executive profile

Meet Jason French, vice president of government and public affairs for Tellurian Inc./Driftwood LNG

43 Getting ready for Round 2 I NSIGHT Petrochemical owners, 58 Columnists weigh in on contractors ponder how to handle a second wave of Louisiana capital investment.

49 The new EPA

While industry is encouraged by regulation postponements, DEQ fears funding cuts might slow permitting.

NEWS

34 A practical education Industry is using apprenticeships, internships and other innovative programs to refine the workforce pipeline.

CLOSING NOTES

61 Executive moves 62 Company news 66 Project maps

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

FOCUS: CONSTRUCTION & DESIGN

52 The brave new world of industrial design The desire for cost efficiency and speed pushes engineers and contractors into futuristic territory.

39 A solid steel success

Based in rural St. Helena Parish, Southland Steel Fabricators has put itself on the cutting edge of the steel fabrication business.

the skills gap, summer crude prices and the value of strategic planning.

70 My toughest challenge Johnny Chavez Jr., Dow St. Charles operations

Bright ideas A look at some of the latest design innovations in Louisiana industry.

Send your ideas and company news to editor@1012industryreport.com. 6

10/12 INDUSTRY REPORT • THIRD QUARTER 2017

EDITORIAL Editorial Director: Penny Font Editor: Jerry Martin Director of Research: Sierra Crump Senior Contributing Writer: Sam Barnes Contributing Writers: 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, Lillian McGuire Advertising Coordinator: Brittany Nieto Chief Marketing Officer: Elizabeth McCollister Marketing assistant: Katelyn Oglesby 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 ADMINISTRATION Chief Financial Officer: Jonathan Percle Senior 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 3

© 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.

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IN THIS ISSUE

The menace that threatens us all

PENNY FONT EDITORIAL DIRECTOR

ur cover story in this edition focuses on a threat that isn’t unique to industry. Target. FedEx. Merck & Co. Mondelez. A.P. MollerMaersk. WPP. The menace known as malware has touched pharmaceutical companies, advertising agencies, law firms, retail, banks, airports and governments alike. As senior writer Sam Barnes notes in this issue’s cover story, for petrochemical and gas & oil companies, it’s no longer a question of whether an attack will come, but when. Cyber experts recently issued a dire warning to heavy industry that both their IT and their OT (operational technology) systems are vulnerable to an attack—now more than ever. Digitization has left the industry susceptible to a variety of threats. “In 2017, the likelihood of a breach [in the oil and gas and industrial marketplace] is unfortunately approaching 100%,” Eitan Goldstein, senior manager of global cyberstrategy and product development at Siemens in Washington, D.C., tells our writer. “There’s an increasing sophistication of bad actors. They’re better financed and have better tools at their disosal. Secondly, you’re seeing that with greater connectivity comes greater risk. The more you connect, the wider your ‘digital attack surface’ is, and that opens up new risk to our customers.” What Barnes also uncovered in his reporting is that the industrial market remains unprepared for inevitable attack. In one recent survey of U.S. oil and gas cybersecurity risk managers, just 35% of respondents rated their organization’s OT cyber readiness as high. Louisiana’s industrial corridor should be particularly concerned. Private, academic and public entities are all playing catch-up to get prepared. So what’s being done to combat the risk? Read our cover story beginning on page 27, which also offers National Institute of Standards and Technology guidelines for preventing cybersecurity attacks.

10/12 INDUSTRY REPORT • THIRD QUARTER 2017

OIL RIG AS TOURISM DESTINATION? Our Q3 issue is full of the indepth Gulf Coast coverage that’s only available in 10/12 Industry Report. Get a multiyear forecast for the energy sector, insight into technological breakthroughs right here in south Louisiana with global implications, and practical strategic planning tips. Check out: • Anyone who’s spent weeks on end on an oil rig might not consider it a tourism destination exactly, but a Baton Rouge nonprofit called Restoration Initiative in the Gulf (RIG) Foundation thinks otherwise. They’re building an ecolodge at the edge of the Louisiana marsh in the shape of an offshore oil platform. The structure will serve as a base of operations for the scientific and education communities, as well as provide an adventure/travel destination catering to the popular volunteer tourism trend. Travel packages might offer experiences like planting marsh grass, beach clean-up or tag-and-release fishing excursions. See a rendering and read more on page 14. • We’d really prefer not to relive the 2017 Louisiana Legislative regular and overtime sessions, but we did want to get your input on how Louisiana industry fared. So we asked 10 industry and business leaders to sum up the sessions in one word or phrase for us. Their answers begin on page 16. • There’s some good news in the future for energy manufacturing. It’s expected to remain strong in the coming years, given the abundant supply of affordable nature gas. We sum up The LSU Center for Energy Studies Economic & Policy Research Group’s “Gulf Coast Energy Outlook 2017” for you on page 19. • Louisiana companies have had some impressive technological breakthroughs with global implications. Read about ExxonMobil’s hydrocarbon separation technology that could cut energy costs in the U.S. by $2 billion and reduce industry’s global annual carbon dioxide emissions by 45 million tons on page 18. Read about

Honeywell’s Solstice yf, a new mobile air conditioning refrigerant designed to replace R-134a, the most widely used in the automobile industry. We share the story—and the anticipated impact—on page 22. • Workforce challenges are forcing Louisiana companies to develop some innovative programs to recruit employees. Read about successful apprenticeship and internship programs on the 10/12 corridor—and get insight into best practices you can adopt—beginning on page 34. • If you thought the first industrial boom was impressive, get ready for Round 2. Get the scoop on future Louisiana capital investment beginning on page 43. • An environmental paradigm shift is taking place in Washington, D.C., and all eyes are on the Environmental Protection Agency. How will Louisiana industry be impacted? Our story beginning on page 49 takes a look inside “The new EPA.” FOCUS ON DESIGN Augmented reality. Immersive mixed reality. Building information modeling. Digital laser scanning. The world of industrial design is changing—and the result is efficiency, both in cost and speed. Lee Mayeux, vice president of operations at Cajun IDC, sums it up with this anecdote: “What used to take weeks on end, trying to determine what’s on site, can be taken care of in a day with a 3-D scanner.” Get a look inside the tools that designers and engineers are using in our Focus section, beginning on page 52. Also check out our photo spread of design innovations that are making it easier to route piping, run production lines and contain spills, beginning on page 56. REACH OUT As always, we want to hear your ideas and company news. Send them to editor@1012industryreport.com. If other decision-makers in your company should receive this publication this year, call (225) 421-8140. 1012industryreport.com

THE ALL-NEW DISCOVERY

VERSATILITY WITH A VIEW FOR THOSE THAT ARE NEVER AT REST

MSRP FROM $49,990* The All-New Discovery is ready for whatever lies ahead by delivering the ultimate in all-terrain capability with Terrain Response® 2† and All-Terrain Progress Control† to help you feel confident in challenging situations.‡ The All-New Discovery is practical as well, with room for seven adults†, a powered inner tailgate† and multiple charging points, making it ideal for people who enjoy living life to the fullest. For more information on the All-New Discovery, visit your local Land Rover Retailer. Land Rover Baton Rouge 13934 Airline Highway, Baton Rouge, LA 70817 225-756-5247 www.LandRoverBatonRouge.com

Model Shown: 2017 Discovery HSE Luxury. †Features are optional on certain models. ‡These systems are not a substitute for driving safely with due care and attention and will not function under all circumstances, speeds, weather and road conditions, etc. Driver should not assume that these systems will correct errors of judgment in driving. Please consult the owner’s manual or your local authorized Land Rover Retailer for more details. *Price shown is Manufacturer’s Suggested Retail Price for the 2017 Discovery. Supplies are limited. Excludes destination/handling charge, tax, title, license, and retailer fees, all due at signing, and optional equipment. Retailer price, terms and vehicle availability may vary. See your Land Rover Baton Rouge Retailer or call 225-756-5247 for qualifications and complete details. © 2017 Jaguar Land Rover North America, LLC

LAUNCH ICYMI

The end of the car as we know it THE WORLD’S BIGGEST oil producers are starting to take electric vehicles seriously as a long-term threat, Bloomberg noted in July. OPEC quintupled its forecast for sales of plug-in EVs, and oil producers from ExxonMobil to BP also revised up their outlooks in the past year, according to a study by Bloomberg New Energy Finance released July 14.

The London-based researcher expects those cars to reduce oil demand 8 million barrels by 2040, more than the current combined production of Iran and Iraq. “Growing popularity of EVs increases the risk that oil demand will stagnate in the decades ahead, raising questions about the more than $700 billion a year that’s flowing into fos-

sil-fuel industries,” Bloomberg reported. “While the oil producers’ outlook isn’t nearly as aggressive as BNEF’s, the numbers indicate an acceleration in the number of EVs likely to be in the global fleet.” OPEC raised its 2040 EV fleet prediction to 266 million from the 46 million it anticipated a year ago. Battery cars under the new projection account for 12% of the market within 23 years, compared to 2% in the 2015 forecast. BP anticipates 100 million EVs on the road by 2035, a 40% increase in its outlook compared with a year ago. But the threat may have more to do with driverless technology than electric vehicles. Even more startling was a spring report released by RethinkX, an independent research group with headquarters in San Francisco and London, which predicts a historic revolution in transportation that would end the era of individual vehicle ownership ... and that would come even sooner. The report, Rethinking Transportation 2020-2030: The Disruption of Transportation and the Collapse of the ICE Vehicle and Oil Industries, provides a detailed analysis of data, market, consumer and regulatory dynamics. It finds that within 10 years of the

—Jerry Martin

NO MORE WAITING

THE REAL CLEAN POWER PLAN MICHIGAN ENERGY COMPANY DTE Energy Co. said in May it will build more natural gas and renewable power plants and shut all of its coal units by 2040, reducing carbon emissions by more than 80% from 2005 levels by 2050. The company said it will achieve these reductions by adding more renewable energy, transitioning its 24/7 power sources from coal to gas and continuing to operate its zero-emission Fermi 2 nuclear power plant. Two weeks later, Tennessee Valley Authority announced it also expects to continue cutting carbon emissions and reducing energy costs by producing more power with natural gas and nuclear while shutting old coal plants. TVA Chief Executive Bill Johnson said the company expects to cut CO2 emission by 60% below 2005 levels by 2020 and 70% by 2030. Despite efforts by President Donald Trump to sweep away former President Barack Obama’s climate change regulations, like the Clean Power Plan, and his decision in June to withdraw from the Paris climate agreement, Johnson said TVA would continue with previously announced plans to shut old coal plants for economic reasons. “We started down this path before anyone ever heard of the Clean Power Plan or the Paris climate agreement by looking for the cheapest way to serve customers,” he said. —Reuters

10 10/12 INDUSTRY REPORT • THIRD QUARTER 2017

regulatory approval of driverless vehicles: • 95% of U.S. passenger miles traveled will be served by on-demand autonomous electric vehicles (A-EVs) owned by companies providing transport as a service (TaaS). • A-EVs engaged in TaaS will make up 60% of U.S vehicle stock. • the number of passenger vehicles on American roads will drop from 247 million in 2020 to 44 million in 2030. While the researchers envision a total disruption of the “car value chain,” it is not lost on them what this would mean for the oil industry. “For the oil industry, the widespread shift away from individual gas-powered vehicles and toward electric, shared autonomous vehicles will be catastrophic. Global oil demand will peak at 100 million barrels per day by 2020, dropping to 70 million barrels per day by 2030. This will impact different companies and countries disproportionately—and in many cases, dramatically—depending on their exposure to high-cost oil.” Will Americans be so quick to give up their beloved individually owned vehicles? Maybe not. But stay tuned.

SENATE REPUBLICANS ARE floating legislation to fast-track exports of domestic U.S. gas. Sen. Bill Cassidy (R-La.) introduced legislation June 22 that would largely scrap decades-old restrictions that require the federal government to sign off on exports of natural gas abroad. The bill, dubbed the “License Natural Gas (LNG) Now Act,” would remove provisions from the Natural Gas Act of 1938 that require federal approval to export natural gas abroad. Under the law, the Energy Department currently assesses whether such exports meet a “public interest” test, although nations that have free-trade agreements with the United States automatically qualify for exports. Cassidy’s bill would require the approval of exports “without modification or delay,” but would retain authorities for the federal government to limit natural gas imports and exports during emergencies or disasters. It would still allow the federal government to restrict exports to “unfriendly” nations. —E&E Daily

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COURTESY CHENIERE ENERGY

THE NEW GLOBAL AGE OF GAS

Sabine Pass LNG

WHILE A GLOBAL SURPLUS of natural gas and cheap oil is dampening current LNG export expectations, many owners remain bullish on Louisiana continuing its trajectory toward becoming a major hub by 2020. In fact, with more than $88 billion in LNG projects planned, under construction or in operation, the state is poised to become the center of the LNG universe. Regardless of short-term market variables, Jason French, chairman of the brand-new Louisiana Energy Exports Association, says satisfying long-term demand requires “a major LNG facility to be built somewhere in the world every year between now and 2035.” The World Trade Center of New Orleans and several leading LNG companies launched the LEEA in February to promote industry growth and lobby for pro-LNG public policies. “Those still pursuing investments are going to be well positioned to meet the real run on LNG in the 2022, 2023 timeframe,” French adds. Thomas Hudson, president of G2 LNG in Baton Rouge, a LEEA member, predicted a “natural gas revolution” when he spoke in early May at the Future of Trade Summit in Baton Rouge. Two months earlier, the company announced plans to add 500 acres to the site of its proposed $11 billion Cameron Parish LNG export facility. Hudson says Louisiana is in the driver’s seat as the LNG market anticipates the surge in demand. “Frankly, Louisiana is the complete package,” says Hudson. “It’s no wonder we’re attracting tens of billions in domestic and foreign investment in the natural gas value chain. It’s up to us to realize this potential and for Louisiana to dominate this new global age of gas.” —Sam Barnes

NUMBERS

IN SO MANY WORDS

Those legislators who actively worked to pass the bill will not be forgotten—nor will those who stood in its way or worked to defeat it.

$10 BILLION

Value of chemical project starts in Texas and Louisiana scheduled for second half of 2017, along with over $11 billion in project completions

—BATON ROUGE AREA CHAMBER CEO ADAM KNAPP, on the defeat of HB 632, which was aimed at raising Louisiana’s gas tax to fund infrastructure improvements

Source: Industrial Info Resources

SAFETY CORNER

IF ONE WINS, BOTH LOSE SOME ISSUES THAT TEND to compete for priority are not mutually exclusive. Productivity and safety are examples of such issues. Balancing these two priorities tends to enhance both, while letting either one triumph over the other will not only damage these efforts but also create collateral damage in other areas of the organization. Thinking safety can be ignored in production is akin to saying that efficiency and the cost of production don’t matter. A safety mishap severely can impact both the volume and cost of production like few other things can. — Terry Mathis, founder and CEO of ProAct Safety, writing for EHS Today

ALON USA SIZES UP DELEK US HOLDINGS INC. of Brentwood, Tennesee, has completed its purchase of Alon USA Energy Inc., Dallas, which owns and operates a 74,000-b/sd refinery in Krotz Springs, Louisiana; an idled 70,000-b/sd, three-refinery complex in California; and through its majority interest in Alon USA Partners LP, a 73,000 b/sd refinery at Big Spring, Texas. As part of the all-stock transaction, which closed on July 1, Delek acquired the remaining 53% of Alon USA’s common stock not already owned by Delek at a fixed exchange ratio of 0.5040 of a share of Delek common stock for each outstanding Alon share, the companies said. The combined company will be led primarily by Delek US’ existing management team, with Uzi Yemin serving as chairman, president, and chief executive officer; Fred Green as executive vice-president and chief operating officer; and Kevin Kremke as executive vice-president and chief financial officer.

Annual growth in demand for drilling fluids through 2021 Source: Freedonia Group

—Oil & Gas Journal

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10/12 INDUSTRY REPORT • THIRD QUARTER 2017

LAUNCH: ICYMI NUMBERS

$11.3 BILLION

Value of all industrial projects either completing or starting construction in the second half of 2017 in Calcasieu Parish

Source: Industrial Info Resources

EXXONMOBIL TO CONTEST FIRE FINES U.S. REGULATORS FINED ExxonMobil approximately $165,000 for safety lapses resulting in the Nov. 22, 2016, fire that injured six workers at its Baton Rouge refinery on Scenic Highway. OSHA issued the nine citations—first reported by Reuters—in May. Information on OSHA’s website shows that eight of the nine citations are listed as serious, each carrying a fine of $12,675. The ninth, listed as “repeat,” totals $63,373. ExxonMobil said in a statement it is contesting the citations and associated penalties. “We cooperated with OSHA’s investigation and shared extensive information and records to support our position,” the statement says. “Currently, we are contesting the resulting citations and associated penalty.” The fire injured six people—including four critically. —daily-report.com

IN SO MANY WORDS

It will be interesting to see who blinks first—OPEC with an additional [production] cut or U.S. E&Ps laying down rigs. Given a choice to motivate a positive trading catalyst, we’d pick the latter, as the threat of U.S. production growth appears to be the dominant concern. —ANALYSTS AT TUDOR PICKERING HOLT & CO., on the standoff over reducing global oil inventories

WE’RE (STILL) NO. 1

SOUTH OF THE BORDER

SOUTHERN BUSINESS & DEVELOPMENT magazine ranked Louisiana No. 1 for the ninth consecutive year as the Southern state claiming the most economic development project wins per capita. The magazine tracked the most significant capital-investment and job-creation projects across the South, with states earning points for large employment projects (200 or more jobs) and large capital-investment projects ($30 million or more) attracted during 2016. In addition to Louisiana’s state performance, Lake Charles earned the magazine’s designation as the Small Market of the Year for the fifth consecutive year, while New Orleans trailed the Honorable Mention awards winners in the Major Market of the Year competition by just five points.

FACED WITH UNCERTAIN GROWTH in demand for refined products in the U.S., at least five refiners with major U.S. operations—including majors Shell, BP and Chevron—joined the bidding at a spring auction offering access to Mexico’s downstream distribution system. Energy market reforms now unraveling national oil company Petróleos Mexicanos’ (Pemex) domestic supply monopoly are providing this opportunity. Initial auction winner Tesoro gained storage and pipeline capacity in two states in northwestern Mexico it expects to supply from a Washington state refinery. The market reforms also extend to retail gasoline stations, and majors BP and ExxonMobil as well as Valero and international trader Glencore have recently announced plans to launch retail networks in Mexico. Valero is the latest U.S. petroleum marketer to jump into the liberalizing fuel market, eyeing gasoline and diesel supply by rail, tanker and barge and investment in new terminals.

—Staff report

—RBN Energy blog

ALL SYSTEMS GO AT MOTIVA AS A WHOLLY OWNED affiliate of Saudi Aramco, Motiva Enterprises said in May it is expected to be the primary focus of an estimated $18 billion growth effort throughout the Americas and is exploring opportunities to increase refining capacity, branch into chemicals, and expand its commercial operations, marketing and branded presence over the next five years. The company also recently completed an expansion of its Port Arthur Refinery’s largest hydrocracking unit and diesel hydrotreater, resulting in a 30% increase in capacity. —Staff report

12 10/12 INDUSTRY REPORT • THIRD QUARTER 2017

BUSINESS TICKER • Golar LNG and Delfin Midstream have signed an agreement to jointly develop the Delfin floating LNG project in the Gulf off the Cameron Parish coast. Bechtel has signed on as a contractor. • Exxon Mobil plans to move 1,600 jobs out of Fort Worth between 2018 and 2020. XTO Energy, an Exxon subsidiary, will relocate to its parent company’s new campus north of Houston. • EQT will become America’s largest natural gas producer with a $6.7 billion acquisition of Rice Energy, set for the fourth quarter. • BP is considering spinning off certain pipeline assets in the U.S. Gulf and Midwest regions in an initial public offering.

• Australia-based Liquefied Natural Gas Ltd., parent company of the Magnolia LNG liquefaction terminal planned for Lake Charles, is considering redomiciling to the U.S. to increase its stock value. A decision is expected by end of 2017. • Braskem has made the final investment decision to proceed with the largest polypropylene production line in the Americas. The $675 million plant will be in La Porte, Texas. • Cheniere Energy is looking to build more LNG plants, speculating that the current slowdown in investment will lead to a post-2020 construction boom that’ll benefit low-cost producers.

Sources: TankTerminals.com, Reuters, Dallas News, Gulf Coast Petrochemical News, The American Press, Bloomberg

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COURTESY NOPB

200

WIN-WIN-WIN ON THE RAILS A DEBATE OVER THE future of the New Orleans Public Belt Railroad, which 10/12 Industry Report documented at length in its 2017 Q2 issue, has been resolved. Mayor Mitch Landrieu’s administration was considering proposals to pass the city-owned asset into a public-private partnership that could better capitalize the railroad and potentially generate revenue for the city. The city faced strong opposition to the plan to have a private operator take over management of the railroad from NOPB management, the Port of New Orleans, and local union and trade groups. Instead, a compromise satisfactory to all was announced in early June, with the NOPB and its assets now being aligned under the Port of New Orleans, which it serves. An additional element of the plan calls for the port to transfer the Governor Nicholls Street and Esplanade Avenue

wharves along the Mississippi River to the City of New Orleans, creating contiguous public access to the riverfront from Crescent Park to Spanish Plaza along a 3-mile stretch. “This is a win-win-win for all involved. Our guiding principle from the outset of this process has been to do what is in the best interest of the citizens of New Orleans,” Landrieu said. “It is clear that the Public Belt Railroad is a critical element of the Port’s competitive advantage, which means it is critical for the future growth potential in trade and commerce and the long-term economic success of the City.” The city, port and NOPB are working together for any legal and regulatory approvals necessary to finalize the transfer of assets, and the port has agreed to recognize the rights of the employees of the Public Belt system under existing contracts and applicable law.

Petrochemical projects planned or under study in the U.S., representing over $150 billion in capital investment over the next five years Source: Wood Mackenzie

—Jerry Martin

IN SO MANY WORDS

This will be their Keystone: Do you support job creation, or ideology? There’s going to be a reckoning here. —BRENDAN BELL, the former director of strategic initiatives at the U.S. Energy Department’s loan programs office, on a battle brewing among Republicans over proposed federal funding for the Lake Charles Methanol project. However, an Energy Department spokeswoman insisted the $2 billion loan was safe. 1012industryreport.com

THEY DON’T HAVE CRAWFISH, THOUGH AN ECONOMIC REPORT RELEASED in May by the American Chemistry Council shows that the Appalachian region could become a second center of U.S. petrochemical and plastic resin manufacturing, similar to the Gulf Coast. ACC President and CEO Cal Dooley presented the findings at a Capitol Hill press event with lawmakers. “The Appalachian region has distinct benefits that could make it a major petrochemical and plastic resin-producing zone,” Dooley said. “Proximity to a world-class supply of raw materials from the Marcellus/Utica and Rogersville shale formations and to the manufacturing markets of the Midwest and East Coast has already led several companies to announce investment projects, and there is potential for a great deal more.” ACC’s report presents a hypothetical scenario that includes the development of a storage hub for natural gas liquids (NGLs) and chemicals, 500-mile pipeline distribution network and associated petrochemical, plastics and potentially other energy infrastructure and manufacturing in a quad-state area consisting of West Virginia, Pennsylvania, Ohio and Kentucky. The analysis projects a $32.4 billion investment in petrochemicals and derivatives and a $3.4 billion investment in plastic products, including five ethane crackers. —Staff report

EVENTS

CHANGES ON TAP FOR LAGCOE THE LOUISIANA GULF COAST Oil Exposition is expected to be a more intimate event this year, with less exhibition space, scheduling changes and three keynote speakers. The Advertiser reports the changes are partly the byproducts of an industry still struggling for recovery from three years of down prices for crude oil and natural gas. Louisiana’s premier oil and gas show still expects to draw good crowds and enthusiastic exhibitors, but not at the volume of past years. Attendance for the event exceeded 17,000 and 16,000 in 2013 and 2015, respectively. LAGCOE is scheduled to take place Oct. 24-26 at the Cajundome in Lafayette. —The Advertiser

10/12 INDUSTRY REPORT • THIRD QUARTER 2017

LAUNCH: THE BIG PICTURE

BUILDING

‘A RIG’ TO SAVE

THE COAST • THE IDEA: A Baton Rouge-based nonprofit called the Restoration Initiative in the Gulf (RIG) Foundation has gone public with a unique new coastal restoration idea: building an ecolodge at the edge of the Louisiana marsh in the shape of an offshore oil platform. The foundation announced in July the launch of a Kickstarter crowdfunding campaign to commission market analysis and develop an investor toolkit for capitalizing the facility. • THE PURPOSE: Called “The RIG,” the structure would serve as a base of operations for the scientific and education communities, as well as provide an adventure/travel destination catering to the rapidly expanding marketplace of volunteer tourism. • THE DESIGN: Architecturally, The RIG is an industrial superstructure perched on the edge of the marsh, incorporating a fully appointed ecolodge designed to withstand the onslaught of a major hurricane. It is part research outpost and part sustainable boutique hotel—elevated 25 feet above the water with expansive views of the Gulf of Mexico. Three sites in Terrebonne Parish are currently under consideration. • THE WORK: The RIG experience targets “voluntourism,” one of the fastest growing trends in the sustainable tourism sector, which could account for 25% of the global travel market within the next five years. In addition to offering guests access to all of the attractions, culture and beauty of Louisiana’s Cajun Country, the RIG plans to provide travel packages that dedicate time to specific volunteer projects, such as planting marsh grass, beach clean-up or fish tag-and-release programs, all conducted under trained facilitators. • THE SYMBOLISM: The RIG’s provocative design will leverage the power of an iconic symbol (the offshore oil platform) and imbue it with a new meaning—raising public awareness and putting a “face” on the critical partnerships that are essential to the cause of saving the coastal wetlands, organizers say. • THE CREATORS: The RIG Foundation is the brainchild of architect Robert Obier and Stephen Sessums, the director of Weights and Measures at the Louisiana Department of Agriculture. Obier has practiced architecture for over 30 years and holds a master’s in industrial design from the Art Center College of Design. “Our aim is to immerse our guests in a truly genuine Louisiana experience,” says Obier, “totally authentic, yet completely original and on the cutting edge of experiential travel.”

14 10/12 INDUSTRY REPORT • THIRD QUARTER 2017

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COURTESY THE RIG FOUNDATION

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

LAUNCH: DIALOGUE

DIALOGUE

Summing up the session Every legislative session has winners and losers. As for the 2017 Louisiana Legislature, budget frustrations

loomed large, and legislators were forced into an “overtime” special session to simply pass an annual budget. So, at the end of the day, how did Louisiana industry fare? We asked 10 industry and business leaders to sum up the recent sessions in one word or phrase, along with an explanation.

—Sam Barnes

UNPREDICTABLE.

SURVIVAL.

Louisianans working in oil and natural gas keep being told their businesses don’t pay enough taxes, saying again and again that the state needs more and more. We began the session with headlines such as “Texas Set to Repeal the Most Terrible of Taxes, while Neighboring Louisiana Looks to Impose It.” Then, ExxonMobil announced a record-breaking facility going to Texas, not Louisiana. What this illustrates is that the only thing predictable about Louisiana’s business and legal climate is its unpredictability. ExxonMobil invested tremendously in Louisiana and will certainly continue to in the future. However, without a stable, positive business environment, major announcements going to other states may become more frequent, along with the thousands of jobs they represent. An economic strategy of tax and sue does not work. Putting people back to work does.

Here in Lafourche and Terrebonne parishes, coastal protection and restoration is not just a wish, it is a desperate and urgent need for the survival of our businesses, homes and entire coastal communities. With the full support of Gov. Edwards, the Legislature unanimously approved the $50 billion 2017 Coastal Master Plan on June 2, which includes the Morganza to the Gulf Hurricane Protection System and the Houma Navigation Canal Lock, as well as levee and restoration projects throughout coastal Lafourche and Terrebonne. Our governor’s and Legislature’s commitment to protecting and restoring our Bayou Region is critical to the sustainability of our businesses here and this unique community that 200,000 Louisiana residents call home.

MARC EHRHARDT Executive Director, Grow Louisiana Coalition

JENNIFER ARMAND Executive Director, Bayou Industrial Group

DRAMATICALLY ANTICLIMACTIC. From the quick failure of the commercial activities tax, to the Legislature’s punt on the fiscal cliff, to the gas tax running out of fuel—this session produced a lot of drama without much to show for it. However, one bright spot was the passage of major criminal justice reform legislation, which will improve the lives of Louisiana citizens and save the state money. Now our challenge is to tackle fiscal reform in a way that enhances opportunities for economic growth by growing jobs, and thus our tax base. That is the real way out of the fiscal ditch—not by creating more taxes, but by creating more taxpayers. MICHAEL HECHT President & CEO, Greater New Orleans Inc.

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CHALLENGING.

FRUSTRATING.

There are many priorities that industry has in Baton Rouge, including transportation infrastructure funding. We were disappointed in the lack of progress on these issues and expect both legislative chambers and the governor to work more diligently towards solutions during the next legislative session. Our key issue in the Capital Region was the gas tax. Transportation infrastructure issues have become a major quality-of-life issue for our employees and are affecting our competitiveness. CRISIS (Capital Region Industry for Sustainable Infrastructure Solutions) looked at all existing data and identified four major projects that had the greatest impact for the dollar. We were included in the Governor’s Task Force on Transportation, which recommended an increase in the gas tax to fund these projects and others around the state. Unfortunately, the legislation did not advance beyond the House.

Industry is begging for stability. One of the top things companies look for when deciding to grow within, or relocate to, a state is a predictable business climate. After a series of tax and policy changes adopted over the last few years that funded an ever-growing state government on the backs of Louisiana employers, our business climate is neither stable nor predictable. It doesn’t take a genius to figure out the way to entice companies to grow and expand in Louisiana isn’t trying to tax their commercial activities and business transactions like we saw this past session. We are thankful that the majority of our Legislature saw the ever-growing appetite for revenue as a hindrance to true economic development.

TIM HARRIS Site Manager, Eastman Chemical Co.

Unfortunately, the divisive politics seen in Washington, D.C., and other states has consumed Baton Rouge as well. That toxic political environment made the lack of action on major issues affecting industry and the state as a whole—such as tax reform, improving the state’s infrastructure, certainty on tax incentives and local tax agreements etc.—entirely predictable. There are strong, good people leading both political parties in this state, though, so I remain hopeful that common ground can be found and progress can be made. We need greater investment in our roadways and waterways, certainty and fairness in our tax system, and stable but flexible incentive programs to ensure that businesses continue to locate, grow and expand in Louisiana.

THE GOOD. Several failed attempts were made to increase taxes on our large and small businesses in Louisiana. These folks employ the hard-working, taxpaying citizens of our state. These are the same businesses that are already feeling the pain from a poor economy in an overregulated and overtaxed state.

THE BAD. The session did not give business and industry the stability and predictability they need for their Louisiana assets. There were continued failed attempts at fiscal reform, the ongoing discussion of the elimination of critical exemptions and credits and the looming fiscal cliff from the temporary sales tax, then factor in the recent credit rating downgrades.

THE UGLY. The sine die clock struck 6 as [House Speaker Taylor] Barras was attempting to make the right call on the onslaught of last-minute procedural moves dealing with the final passage of the state’s $29 billion budget, forcing a special session. CHARLES KLECKLEY Former Speaker of the Louisiana House (R-Lake Charles)

UNACCEPTABLE. The session did little or nothing to speak of for the port, maritime and intermodal industries. The general tenor of the session did not address or acknowledge Louisiana industry overall. With huge foreign direct investments being made in our chemical industry, you would think that our own Legislature would unite to endorse and encourage job creation and workforce development along with improved infrastructure in the way of better highways, bridges, ports, airports and intermodal connectors. It is appalling that such a division exists within both chambers, but especially in the House of Representatives. Unless there are some huge turnarounds soon, we will all be witnessing a return to the dark ages of citizen and college graduate outmigration to other states or countries because of better opportunities and a brighter future. GARY LAGRANGE Executive Director, Ports Association of Louisiana 1012industryreport.com

JOHN WALTERS Vice President of Governmental Relations, Associated Builders & Contractors of Louisiana Inc.

PREDICTABLE.

JASON FRENCH Chairman, Louisiana Energy Exports Association

DISAPPOINTING. After much discussion about tax reform and spending/budget reform, the Edwards Administration suggested only huge tax increases on business and industry, even though spending reform is a necessary piece to solving the state’s financial problems. Gov. Edwards seems confident raising taxes on Louisiana businesses will solve all the state’s woes. However, the House of Representatives showed its displeasure with the governor’s plan by defeating all his tax proposals. But most of the tax increases from this year will be back on the table when the next special session rolls around. There also was no movement to warm Louisiana’s business climate. A constitutional amendment to address PILOT (Payment in Lieu of Taxes) agreements was defeated in Senate committee. Add that to the governor’s 2016 executive order changing the rules of ITEP (Industrial Tax Exemption Program) and it will be more difficult to attract new business and industry. GREG BOWSER President, Louisiana Chemical Association

POSITIVE. On the offensive, Rep. Stuart Bishop (R-Lafayette) filed House Bill 461 on our behalf to extend an exemption that was cut in previous years. This exemption lowers the severance tax for inactive wells and further reduces the tax rate on inactive wells that have been a part of the state’s Orphaned Well Program for five years or longer. HB 461 saw no objection through the legislative process. Being that it was a fiscal session, monitoring instruments moving through the Legislature was a key priority. Thankfully, not much defense needed to be played as taxing or removing incentives or exemptions on oil and gas companies never became part of the conversation. GIFFORD BRIGGS Vice President, Louisiana Oil and Gas Association 10/12 INDUSTRY REPORT • THIRD QUARTER 2017

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LAUNCH: INTELLIGENCE

A FAVORABLE FORECAST The energy manufacturing sectors are expected to remain strong in the coming years, given the abundant supply of affordable natural gas. The Center for Energy Studies Economics & Policy Research Group’s first “Gulf Coast Energy Outlook” notes that in Louisiana alone, more than $46 billion in capital expansions have been completed since 2011, with another $96 billion in remaining announced projects. Here’s a look at other key data from the report.

7.7

16.7

7.7

Louisiana upstream oil and gas extraction and services as a percent of U.S. industry GDP

Louisiana refining and chemical manufacturing as a percent of U.S. industry GDP

ENERGY MANUFACTURING CAPITAL EXPENDITURES (GULF OF MEXICO REGION - BY STATE)

80%

70%

$50

50%

40% 6

30%

20%

2 0

$45 $40 $35 BILLION $

60%

SHARE OF TOTAL U.S.

PRODUCTION (MMBbl per day)

Refining and chemical manufacturing as a percent of Louisiana’s total GDP

FORECAST FOR CRUDE OIL PRODUCTION

$25 $20 $15 $10

10% 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029

$30

FORECAST FOR NATURAL GAS PRODUCTION 60%

100

50%

40%

30%

20%

10%

Texas

Alabama/Mississippi

LOUISIANA ENERGY MANUFACTURING (TOTAL CAPITAL EXPENDITURES BY SECTOR)

$30 BILLION $

120

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Louisiana

SHARE OF TOTAL U.S.

PRODUCTION (Bcf per day)

4.6

Upstream oil and gas extraction and services as a percent of Louisiana’s total GDP

$25 $20 $15 $10 $5

2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 Gulf of Mexico region as share of total U.S. Total U.S.

0 $0

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Gulf of Mexico region as share of total U.S. (FORECAST) Gulf Coast

LNG Export Rest of U.S.

Methanol/Ammonia

Cracker/Polymer

Other

Source: “Gulf Coast Energy Outlook 2017,” LSU Center for Energy Studies Economic & Policy Research Group 1012industryreport.com

10/12 INDUSTRY REPORT • THIRD QUARTER 2017

AD WILL RUN AS IS

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20 10/12 INDUSTRY REPORT • THIRD QUARTER 2017

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LAUNCH: RESEARCH & DEVELOPMENT

Separation without the heat

breakthrough in hydrocarbon separation technology by ExxonMobil and Georgia Tech scientists has the potential to cut energy costs in the U.S. by nearly $2 billion a year and reduce industry’s global

annual carbon dioxide emissions by 45 million tons. The technology could separate complex hydrocarbon molecules through synthetic carbon membranes at the molecular level: a process called organic solvent reverse osmosis. If proven to be scalable, the method could reduce the amount of

energy and emissions associated with the production of raw materials used in plastics and polymers. The novel approach enables similarly sized molecules to be separated using a molecular-level filter. The molecules you need to produce plastics pass through; the ones you don’t are

recycled back into the process. Separation is a critical step in the production of plastics that currently requires a huge amount of heat. Because organic solvent reverse osmosis works at room temperature, it could replace existing separation technology with a heatless process for plastics production.

—Jerry Martin

PRESSURE IS APPLIED TO PUSH HYDROCARBON MIXTURES THROUGH A MOLECULAR FILTER

ULTRAMICROPORES

MICROPORES

CARBON MOLECULAR SIEVE MEMBRANE

HYDROCARBON MIXTURE

PARAXYLENE BUILDING BLOCKS

THIS SEPARATES PARAXYLENE, A BUILDING BLOCK FOR POLYESTER AND PLASTICS

Scientists are already manufacturing polymer hollow fiber membranes, which are precursors to more advanced carbon molecular sieve hollow fiber membranes.

WHAT’S THE IMPACT? CHEMICAL SEPARATION PROCESSES ACCOUNT FOR AS MUCH AS

ROB FELT, GEORGIA TECH

REDUCE ENERGY USED IN PLASTICS PRODUCTION BY

1012industryreport.com

500 TRILLION BTUS AND CARBON EMISSIONS BY

45 MILLION TONS ANNUALLY.

15% OF THE WORLD’S TOTAL ENERGY CONSUMPTION.

Sources: Georgia Tech, ExxonMobil 10/12 INDUSTRY REPORT • THIRD QUARTER 2017

LAUNCH: INNOVATION

Cool science

UP AND RUNNING: Honeywell’s Solstice yf production facility in Geismar started up in May. Turner Industries was the EPC contractor on the project.

BY JERRY MARTIN

Honeywell products made in Louisiana are having a dynamic impact on a series of industries.

nnovative products manufactured at Honeywell plants in Louisiana are having a global impact—not only on a wide range of industries, but also on the environment. Honeywell held a ribbon-cutting in May as it kicked off commercial operations at a manufacturing plant in Geismar that will meet the growing global demand for a new mobile air conditioning refrigerant. With the startup, the plant in Ascension Parish has become the world’s largest site for producing HFO-1234yf, sold commercially as Solstice® yf. Based on next-generation hydrofluoro-olefin technology, Solstice yf was developed by Honeywell scientists to meet the needs of the automotive industry to replace R-134a,

the most widely used auto refrigerant. Solstice yf has a global-warming-potential (GWP) of less than 1, which is lower than carbon dioxide and 99.9% lower than R-134a, which has a GWP of 1300. R-134a is a hydrofluorocarbon (HFC), which many governments and industries have been looking at phasing out since the early 2000s. “Solstice yf is a breakthrough innovation that is helping the auto industry transition to more environmentally preferable technologies without sacrificing performance,” said Ken Gayer, vice president and general manager of Honeywell Fluorine Products. “Honeywell invested significantly in research and development for more than a decade to enable our award-winning scientists

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to create new, near drop-in alternatives to meet the rising demand to replace HFCs.” REDUCING EMISSIONS Already, more than 28 million cars on the road use Solstice yf, a number that Honeywell expects to surpass 40 million by the end of 2017. Nearly every carmaker in the auto industry plans to use the refrigerant in at least one of their U.S. models. Global adoption of the refrigerant will reduce greenhouse gas emissions by the equivalent of permanently removing more than 30 million cars from the road, Honeywell says. The Honeywell development team, led by Rajiv Singh, won the prestigious Heroes of Chemistry Award from the American Chemical Society for the product.

Honeywell’s Geismar facility has increased its workforce by more than 20% to staff the Solstice production operation, with 260 full-time employees now working at the site. Construction on the new plant began in 2015 and supported nearly 1,400 construction jobs. The state-of-theart plant will serve as the showcase for some of Honeywell’s own process and automation technologies, including Honeywell Connected Plant and the Experion Orion Console, the automation software that runs the Solstice yf production line. [See pages 56-57 for more on the Experion technology.] FOAM WITHOUT HFC Meanwhile, a Solstice sister product manufactured at Honeywell’s 1012industryreport.com

COURTESTY HONEYWELL

Baton Rouge plant is being adopted for use in products ranging from chair armrests to shoe soles to home insulation. Honeywell’s Solstice Liquid Blowing Agent (LBA) was developed as an ultra-low-GWP replacement for a range of HFC blowing agents that are being phased out by the Environmental Protection Agency. Dow selected Solstice LBA last year for use in new foam systems it developed to make integral skin, or I-Skin, foam. Blowing agents are critical for foam systems because they cause the foam to expand properly, significantly impact the foam’s performance and make it easier to manufacture. But the use of HFC blowing agents in I-Skin polyurethane foam applications was banned in the U.S. as of Jan. 1, so Dow collaborated with Honeywell and Air Products, which makes catalysts designed specifically to work with Solstice LBA, to develop its new systems without HFCs. Honeywell’s Solstice LBA world-scale manufacturing plant in Baton Rouge started up in June 2014 with two production trains. The facility has 160 employees. “The result of our collaboration is best-in-class, HFC-free, I-Skin systems that meet our high performance standards in advance of impending environmental regulations,” said Scott Snyder, Dow marketing manager, last year. “Our new I-Skin systems will give our customers a competitive advantage, as well as improve the sustainability profile of their products.” Tests of Dow’s new polyurethane solutions, VORALUX™ for furniture and SPECFLEX™ for custom molding, demonstrated superior results for a variety of Shore A hardness levels, a critical quality measure, Honeywell says. Solstice LBA is used in a variety of rigid foam insulation applications, including residential and commercial refrigeration equipment, spray foam insulation and insulated metal panels, as well as flexible foam applications, such as molded and slabstock 1012industryreport.com

foam, and I-skin. I-skin becomes part of products such as office furniture armrests, molded seat pads, shoe soles and many other products that require cushioning properties and a durable surface—even padded cushions for rollercoasters. ROOFING AND WALLS NCFI Polyurethanes, a leading maker of sustainable polyurethane products, has also shifted to Solstice LBA for its I-skin applications, as well as for roofing applications, with wall insulation systems expected to follow. The adoption of Solstice LBA is part of how NCFI is fulfilling its commitment to reduce greenhouse gas emissions that was first publicized during an exclusive 20-company roundtable discussion held at the White House in October 2015. At that event, NCFI was honored for its proactive plans to transition from HFCs to low-GWP products. Honeywell was also recognized at the event. Compared to NCFI’s HFC-based insulation systems, the new systems featuring Solstice LBA deliver improvements in sprayability, consistency and surface finish, according to Honeywell. The foam is also stronger, which allows for walking on the roof to maintain equipment with less risk of damaging the foam. And in April, Demilec, one of North America’s largest manufacturers of spray foam insulation, introduced a new product also formulated with Solstice LBA. The company’s Heatlok® HFO High Lift spray foam insulation system is for use in commercial and residential wall insulation. “We are seeing growing acceptance of spray foam by architects, builders, and homeowners,” said Demilec President Paul Valle. “They recognize the value of a well-sealed building insulated with spray foam. I think Solstice LBA will become a key differentiator as people demand a more comfortable living space with greater energy efficiency.” From the innovative chemistry to the major impact on a range of industries, Honeywell’s Louisiana workers are making some pretty cool stuff these days—not to mention helping all those drivers cool down their cars.

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Call us at 225.388.2701 for advice, guidance and education on ways to move your business forward.

10/12 INDUSTRY REPORT • THIRD QUARTER 2017

LAUNCH: PEOPLE

Executive Profile: Jason French

—Erin Z. Bass

What are your responsibilities at Tellurian Inc.?

I manage the company’s state and local government and public affairs efforts. This includes maintaining a

LEE CELANO

Texan by birth, Jason French spends most of his time in Louisiana these days, working to make Tellurian a leading voice in the state’s growing LNG industry. Driftwood LNG, a subsidiary of Tellurian, is developing a liquefied natural gas production and export terminal on the west bank of the Calcasieu River that will be able to export up to 26 million tons of LNG to customers around the world. As a voice for this developing world-scale project, French also leads efforts to educate the public and state policy makers on issues important to the energy industry. His experience running government affairs with BP during the Deepwater Horizon oil spill changed his career “unimaginably,” he says. The 2010 tragedy is what brought him to Louisiana for the first time, and he’s pretty much been working in the state since. He remained with BP through the company’s spill response efforts, helping residents and elected officials in Grand Isle, then joined Cheniere in 2011. Relatively unknown at the time, Cheniere would blaze an energy trail in the U.S, and that job would lead French to Tellurian in 2016. Although his work often takes him away from his family, French enjoys a good challenge and the task of building coalitions. He recently led an effort to form the Louisiana Energy Export Association and bring together many of the leading LNG companies. He’d like to start his own government affairs firm one day but for now is happy to carve out moments of downtime with his family and get out on the water when he can.

NAME

Jason French POSITION

Vice President of Government and Public Affairs COMPANY

Tellurian Inc./Driftwood LNG AGE

dialogue and positive relationship with our neighbors, working with legislators and the administration in Baton Rouge, managing our philanthropic efforts in Louisiana and generally working to establish Tellurian as a leading voice in Louisiana’s growing LNG industry. What is your secret to leadership and advancing in your field?

I am a firm believer in seeking out challenges and taking on the assignments that others believe are impossible or unwanted. I also believe you must be willing to challenge your organization’s leadership when appropriate. If your input is not welcomed, you should consider whether or not you are in the right organization. What are your day-to-day responsibilities like?

No two days are the same. For the last couple of months, my days have been consumed by the Louisiana state legislative session. In the coming months, I will be spending significant time meeting with community and civic leaders to explain the details of our $16 billion

24 10/12 INDUSTRY REPORT • THIRD QUARTER 2017

investment in Louisiana and the opportunities that the project will create. I will also be leading an effort to pass a constitutional amendment on the October ballot that will be very important to anyone planning to build an LNG facility, a commercial venture or a home in Louisiana. What do you see for the future of your industry?

I believe that the future of the American energy industry in general, and the LNG industry in particular, are bright. America has been blessed with an abundant amount of natural gas. We have the ability and the infrastructure to develop those assets and to export them to allies across the world. We are creating tremendous economic growth in our country, while exporting a cleaner burning and much-needed fuel to the rest of the world. It is a tremendous position for our industry and our country to be in. What is your most satisfying professional accomplishment?

I was asked to lead BP’s efforts in Grand Isle during one of the most tense periods of the spill response.

HOMETOWN

Houston, Texas EDUCATION

Bachelor of Arts, University of Louisville

People were angry and frightened— and rightfully so. As to be expected, they had very little trust or faith in anyone from BP. I spent the next five months of my life in Grand Isle leading BP’s community relations efforts, working with residents, elected officials and other responders to try to make the situation better. While we could not erase the effects of the spill, we worked hard to make sure people’s claims were paid, that their property was protected and that they got back to work as quickly as possible. I believe we made a positive impact, and I’m proud of that work. What is a great piece of advice you have personally received? Did you have occasion to put it to use?

I was once told, “Just do the right thing. The worst thing they can do is fire you.” I have put it to use many times—and have yet to be fired as a result. 1012industryreport.com

MARINE

HEAVY CIVIL

PAVING

PILING

ASPHALT

UTILITIES

SITEWORK

VACUUM EXCAVATION

WWW.BOHBROS.COM 1012industryreport.com

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COVER STORY

CYBER THREAT

MALWARE IS TARGETING THE PETROCHEMICAL AND OIL & GAS INDUSTRIES. WHAT’S BEING DONE TO COMBAT THE RISK? BY SAM BARNES

“In 2017, the likelihood of a breach [in the oil and gas and industrial marketplace] is unfortunately approaching 100%,” says Eitan Goldstein, senior manager of global cyber strategy and product development at Siemens in Washington, D.C. “There’s an increasing sophistication of bad actors. They’re better financed and have better tools at their disposal. Secondly, you’re seeing that with greater connectivity comes greater risk. The more you connect, the wider your ‘digital attack surface’ is, and that opens up new risks to our customers.” And yet, the industrial market remains grossly unprepared. A survey of U.S. oil and gas cybersecurity risk managers indicates that the deployment of cybersecurity measures in the industry isn’t keeping pace with the growth of digitization in oil and gas operations. In a study from the Ponemon Institute called “The State of Cybersecurity in the Oil & Gas Industry: United States,” only 35% of respondents rated their organization’s OT cyber readiness as high. The Ponemon Institute conducts independent research on privacy, data protection and information security policy. In its polling of 377 individuals responsible for securing or overseeing cyber

ISTOCK

he headlines are worrisome and increasingly frequent. Time and again, the business community is successfully targeted by enterprising cyber profiteers who hack into corporate IT systems to steal and hold hostage sensitive proprietary information, usually for profit. And the list of targets is getting longer— Target, FedEx, Merck, to name a few—all falling victim due to inadequate or out-ofdate safeguards. Louisiana’s industrial corridor should be particularly concerned. Cyber experts recently issued a dire warning to petrochemical and oil and gas companies that their IT and OT (operational technology) systems are vulnerable to an attack, now more than ever. The inexorable digitization of the industrial community has left it susceptible to a variety of threats. It’s not a question of whether an attack will come, but when. Since May, hackers have targeted nuclear power plants, energy facilities and manufacturing operations in the U.S., according to a joint report from the FBI and Homeland Security. The hackers also reportedly infiltrated a company that makes control systems for equipment used in the energy industry.

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10/12 INDUSTRY REPORT • THIRD QUARTER 2017

ISTOCK

risk in the OT environment—including upstream, midstream and downstream applications—the institute found that most respondents described their organization as being in the early to middle stage of maturity with respect to its cyber readiness. “Petrochemical and oil and gas people need to be cognizant of the fact that the malware now being written can target OT systems in the energy sector,” says Jeff Moulton, director of the LSU Transformational Technology and Cyber Research Center in Baton Rouge. “These malware attacks are specifically targeting industrial control systems, and that could be catastrophic. That could cause regional catastrophes.” OVERCOMING THE ROI MINDSET Terrorism is not the biggest dan-

ger—it’s profiteering. Ransomware is the most prevalent form of hacking in the market, whereby hackers hold vital information or operational systems hostage for a specified “ransom.” Regrettably, companies are paying up. “Coding-wise, ransomware is complex, but it’s basically an attachment that has been sent to you on what we call a phishing campaign,” Moulton says. “They send an email to you that entices you to open an attachment, and then when you open that attachment it puts an encryption software on your machine, searches different files and encrypts your system. It basically puts it under lock and key. “For a business, that means you can’t get your accounts payable, accounts receivable, etc. ... it’s catastrophic. So people tend to pay

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up because there’s not much the government or anyone can do about it. These are criminally motivated actors, and because there’s blood in the water, there’s money out there, it’s not going away.” Industry’s ROI mindset is the main reason adequate funding is not funneled into cybersecurity initiatives, but Moulton sees that starting to change. “We hear all the time, ‘Corporate won’t let us do this, corporate won’t let us do that,’ because it comes down to a return on investment. Now, it’s getting noticed by the boards of directors. The return on investment pressure is still there, but [cyber risk is] beginning to get its due attention now.” After getting past the financial hurdle, many companies turn to experts such as Siemens for help. One of Siemens’ services is assisting

large energy companies to prepare their IT staffs for cyber threats that specifically target OT functions. The solutions are highly tailored, since every organization has a vastly different structure. “They don’t have the in-house expertise to deal with these challenges, particularly on the OT security side where the risk is a little bit newer,” Goldstein says. “Everyone is in a different place trying to figure out how to do this OT security thing right. The basic idea is there are some foundational things you must do. Then there’s a series of technologies, services and processes that you layer on top of it.” For starters, Siemens performs initial risk assessments and deploys next-generation technology—such as machine learning—to detect threats on a network. “It’s the con1012industryreport.com

cept of applied machine learning, or artificial intelligence. It helps you do things without someone necessarily needing to monitor a screen full time. We’re trying to help our customers automate their responses, because the faster you can detect a threat, the lower the impact is from a potential breach.” One problem is that many organizations’ systems are entirely too slow to detect threats. In fact, the average threat remains on an organization’s network for up to six months—a period known as the “dwell time.” Meanwhile, the IT/OT infection can maneuver through a network, learn about the organization and steal data. Fortunately, recent headlines have raised the awareness level among many corporate CEOs and boards. “In 2017, our customers are very much aware of the risk to industrial control systems,” Goldstein adds. “It’s our view that to get all the benefits of digitalization, you need to get security right.” LOOKING FOR WEAK LINKS The industrial community is vulnerable because of the interconnectedness of its various suppliers and contractors. Enterprising hackers are targeting these less “cyber savvy” smaller companies to infiltrate the larger corporate entity. “When you talk about oil, gas and industry, there are two sides to the coin, IT and OT,” says Henry “Paco” Capello, director of information systems for LSU’s Stephenson Disaster Management Institute. An industrial facility is at risk when there are touchpoints between the two, he notes. “There’s supposed to be segregation—what we call ‘air gapped,’ which means there’s no connection between IT and OT. Everybody thinks they’re air gapped, but when we dive down into it, there are touchpoints between IT and OT. If there are touchpoints, there are routes where someone can get to the OT.” LSU’s Joint Cyber Training Lab, under the umbrella of the Cyber Research Institute, operates a simulated industrial control system to replicate operational processes in oil and gas, water treatment and energy environments, then simulates OT attacks. These are used to train IT 1012industryreport.com

staff, as well as other managers, of both private companies and public entities on potential threats and responses. “We can change their mixtures, we can turn off valves, we can turn on valves,” Capello says. The JCTL can generate scaled internet traffic, mimicking client-server network communications, emulating production networks and simulating 36,000-plus known malicious exploits for penetration testing and cyber-incident response training. In fact, the lab has been instrumental in training the Louisiana Army National Guard’s fledgling Cyber Network Defense Team, a newly formed unit responsible for defensive cyber operations in support of civil authorities—and ultimately, it hopes, for private industry. At just one year of age, the team is “operating at a crawl” but making important progress, says LANG Adjutant General Glenn Curtis at Jackson Barracks in New Orleans. For one to two weekends a month, 30 to 50 guardsmen undergo cyber training to hone cyber tactic detection skills, techniques and protocols. “[ JCTL] helps us train and earn certifications,” Curtis says. “We have now fully staffed our first 39-person cyber protection team.” The guard has had little trouble finding applicants for such a unique mission, since it provides free training for one of the fastest growing job markets in the U.S.—a big draw for millennials. “They get trained through the military, then they provide us with a service. And for them, once they go through that training they are very employable in the private sector or in government outside of the military.” So what does a CND-T response to a cyber threat look like? In real terms, it’s defensive in nature. “It’s to protect,” Curtis says. “It’s to figure out who the bad guys are, figure out how they’re trying to get into a system, and keep them out. Everything that I’ve seen is postured around that.” The CND-T also plans to work with private industry and public entities to share information, raise awareness and provide protection, by relying upon information accessible only to the military.

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10/12 INDUSTRY REPORT • THIRD QUARTER 2017

The Department of Defense is particularly vested in protecting private industry since Federal Acquisition Regulations require that small businesses get 25% of DOD procurements. Therefore, it must secure the supply chain at every level. “We’re not here to take over,” Curtis says. “We’re here to help you. Our interests are to keep the utilities on and to keep commerce moving. To keep the river flowing so to speak. We’re not interested in what their business is and how they make money, and their business models. We want to keep what I call ‘normalcy’ in place. As such, we can help them protect their assets by pointing out a threat, its cause and the manner in which it infiltrated the system.” HELP FROM THE STATE As a state, Louisiana is ahead of the game in producing a comprehensive Information Security Policy. Its forward-leaning, collaborative approach to cybersecurity led it to being selected in 2016 as one of five states to participate in a policy academy by the National Governors Association,

with the goal of creating a uniform cybersecurity plan. In the last year, Dustin Glover, chief information officer for the State of Louisiana, has also worked with the Governor’s Office of Homeland Security & Emergency Preparedness to create a separately identifiable Emergency Support Function for cybersecurity, as part of the state’s Emergency Operations Plan. “The plan has been to get everyone together and make sure that we are doing collectively what is needed to best suit the state’s needs holistically, and develop a plan for either escalations or information sharing to ensure that things are managed and responded to consistently,” Glover says. He credits the state’s progressive cybersecurity approach to the existence of GOHSEP, LANG’s CND-T, and another state operation known as the Louisiana State Analytical and Fusion Exchange, or LA-SAFE. LA-SAFE operates as a “fusion center,” which is defined as a “collaborative effort of two or more agencies that provide resources, expertise, and information to the center with the goal of maxi-

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COURTESY LOUISIANA ARMY NATIONAL GUARD/SGT. GARRETT L. DIPUMA

UNDER ATTACK: Louisiana National Guard Sgt. 1st Class Jason Allen of the state’s Defensive Cyber Operations Element participates in a cyberattack simulation in May. Some 20 Louisiana soldiers and airmen trained with 850 other guardsmen nationwide, as well as the FBI, Department of Homeland Security and more than 30 nongovernment entities including Entergy, Lockheed Martin, Monsanto and LSU.

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mizing their ability to detect, prevent, investigate, and respond to criminal and terrorist activity.” “Taking the recipe that they’ve developed for success over the years, whether that be responding to hurricanes, to hazmat or whatever, they just look at cyber as another box and [expect] that they have a way to make this work,” Glover says. He was appointed state CIO after the creation of the Office of Technology Services in 2014. In addition to streamlining IT efforts—including cybersecurity initiatives—the move saved the state some $70 million and instantly created an 850-person IT shop. LSU’s Transformational Technology and Cyber Research Center and JCTL are vital contributors to the state’s cyber readiness plan. Since their creation, they’ve attracted nearly $5 million in strategic research projects to enhance security for the military, electric grid, homeland security and other applications, with state leaders anticipating a significant increase in future research investments from both federal and private sources.

Additionally, the JCTL incorporates state and federal cyber response frameworks and programs with a focus on critical infrastructure industries and private sector training. “The power of that lab is not trivial,” says the TTCRC’s Moulton. “We can emulate any environment, any configuration of a network that you can imagine. So, when you’re training your IT staff or you want to do something from a configuration perspective, you can bring them into the lab and do it without taking down your operational network.” The lab can also replicate daily cyber traffic with actual known threats (such as Stuxnet, which recently took down an Iranian centrifuge)

to teach participants to recognize certain cyber signatures. “If I’m at ExxonMobil, for example, that’s a pretty big deal,” Moulton says. “We can work collectively or we can work individually. We have five different tables there and each table is a separate network, or it can be one network. It’s very configurable.” THINK GLOBALLY, ACT LOCALLY Moulton is pushing for more locally managed cyber planning and response, and hopes that one day there will be regionalized cyber warnings to specific zip codes or area codes. “Cybersecurity is an individual thing,” he adds. “It affects individuals personally and in their business relationships. While we’re

“In 2017, the likelihood of a breach (in the oil and gas and industrial marketplace) is unfortunately approaching 100%.” —EITAN GOLDSTEIN, senior manager of global cyber strategy and product development, Siemens

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DON KADAIR

“Malware attacks are specifically targeting industrial control systems, and that could be catastrophic.”

trying to solve this on a global or national scale, in reality we should be there to support the local people. One day, we’re going to be able to provide attack sensing and warning for small businesses here, and say, ‘Hey, your network or your point of sale system has just been hacked or is about to be hacked.’ Small businesses don’t have an IT staff, they call the Geek Squad. This is too complex. So, that’s what we’re doing for Louisiana.” LANG’s Curtis hopes the newly formed CND-T will one day play a more collaborative role in detecting and preventing attacks for private industry. While significant progress has been made, the overall response apparatus lags far behind the threat. “In the military, we describe

things as a crawl, walk and run. We’re still very much in the crawl phase,” Curtis says. “Our protection team is stood up, but it’s less than a year old. All of us, collectively, are far behind the threat. Our adversaries are way out in front of us.” He says critical changes and improvements have been made that should enable public entities and private business to eventually get in front of the problem. “Through GOHSEP, the Fusion center and everybody sharing their stories about what’s going on and what they see, that will help. Information sharing is the only way we’re going to catch up.” LANG’s Deputy Chief Information Officer Stephen Dorrell sees CND-T progressing to a point where it proactively monitors net-

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DON KADAIR

—JEFF MOULTON, director, LSU Transformational Technology and Cyber Research Center in Baton Rouge

CYBER SAFETY: Jonathan Shi is director of LSU’s Industrial Assessment Center—one of 28 such centers in the U.S.—which provides free industrial assessments on cybersecurity, energy efficiency, productivity, sustainability and competitiveness to small and medium-sized manufacturers across Louisiana.

works to see attacks as they’re coming in. “There are some other states that are starting to do this, which we hope to try to model one day here in Louisiana,” Dorrell says. “They have their own Fusion centers, if you will, where the military guys look very deep into threats from across the world. They then sanitize the information so it can be communicated to municipalities or the private sector.” In Kansas, utility companies

have partnered with the military for help in detecting and preventing attacks. “We’re crawling toward that,” Dorrell says. “You’ve got to build a trust; you’ve got to build the interest. You’ve got to get partners willing to help you do that.” While substantial progress is being made, LANG’s Curtis admits that the war against cyber threats will likely never end. “The military structure knows it needs more of these teams. It needs more capability.” 1012industryreport.com

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AD WILL RUN AS IS

WHAT YOU SHOULD DO JONATHAN SHI, director of LSU’s Industrial Assessment Center, attended a June meeting of IAC leaders in New Orleans, in part to discuss a new addition to his team’s assessment toolbox: cybersecurity. The LSU IAC is one of 28 in the U.S., providing free industrial assessments on cybersecurity, energy efficiency, productivity, sustainability and competitiveness to small and medium-sized manufacturers across Louisiana. At the meeting, Patricia Toth, cybersecurity program manager at the National Institute of Standards and Technology, provided some basic guidelines for companies to follow to prevent cybersecurity attacks. Below is an outline of her advice.

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TRAIN YOUR EMPLOYEES. “That’s your first line of defense. If your employee is suspicious of that email that comes in that doesn’t look right and turns out to be a phishing attack, they could have saved your company. We really need to train our employees and have them understand the risks and vulnerabilities.”

IMPLEMENT GOOD POLICIES AND PROCEDURES. “That way, employees know what they can and cannot do on their systems. Social media is a big issue for a lot of small businesses because their employees are on social media all day long. They click on something and what happens? Malware is introduced into your system.”

IDENTIFY YOUR ASSETS. “Create an inventory of everything you have within the company, all of your IT assets, hardware, software, servers, laptops, cell phones, etc.”

ESTABLISH A DETECTION SYSTEM.“You should have anti-virus software, anti-malware, anti-spyware installed, installed properly and kept up to date.”

PROTECT YOUR INFORMATION. “Now that you’ve identified where it is and what it is, you should protect it. Only certain folks within the company should look at certain types of information. That should be based upon their role within the company. That also means having good surge protectors and an uninterruptible power system, so when the power goes down you don’t lose all your data. Also, perform automatic backups.”

SECURE WIRELESS ACCESS POINTS.“This is a big vulnerability for a lot of businesses. They really don’t understand how easy it is for someone to get into their internal information through their WiFi. We’re suggesting that they encrypt information and don’t broadcast things in the clear.”

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SET UP EMAIL AND WEB FILTERS.“You can block

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certain types of websites you don’t want your employees to access during the day. We encourage folks to set up these types of things, use these tools that are available. They can go a long way to helping build their cybersecurity program.”

• • • •

KEEP GOOD LOGS. “That way, you know who’s logging into the system, what time they came in, and what they accessed. When you have an incident occur you can go back and do the forensics and figure out what happened, who had access, and try to recover from there.”

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10/12 INDUSTRY REPORT • THIRD QUARTER 2017

NEWS WORKFORCE DEVELOPMENT

A practical education

BY MEREDITH WHITTEN

Industry is using apprenticeships, internships and other innovative programs to refine the workforce pipeline.

ixteen years ago, Spencer Coxe started as a machinist in ExxonMobil’s apprenticeship program. For four years, Coxe balanced classroom work with on-thejob training. When he completed the program, he had earned a certificate as a first-class machinist from the State of Louisiana. He also earned a permanent position working for ExxonMobil, where today Coxe works as a first-line supervisor and also mentors current apprentices at the company. “I thought I knew everything about machine work before I came here,” Coxe says. “What I learned in the apprenticeship program really

COLLIN RICHIE

ON THE JOB: The Dow Chemical Co. offers apprenticeships at its facilities in Plaquemine and Hahnville. Apprenticeship Program Tech Leader Dustin Troxclair educates apprentices Chandler Young (left) and Jared Lands.

opened my eyes to safety, working with different types of equipment and working with different supervisors.” Yet, it is not just Coxe who benefited from his time as an apprentice—ExxonMobil did, too. Industrial companies providing apprenticeships, internships, co-ops and other workforce-development programs reap immense benefits. For many businesses, including in south Louisiana, these initiatives are critical for ensuring the company, as well as industry overall, stays globally competitive by developing a skilled workforce. As IndustryWeek reports, President Donald Trump would seem

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to agree. He publicly announced he wants to ramp up the number of apprenticeships in the United States from 500,000 to 5 million. And he’s promising money to back up the idea—with $200 million, to be exact, more than the $90 million the Obama administration allocated for the effort. “Trump specifically mentioned manufacturing apprenticeships in his executive order on apprenticeship expansion, issued in June,” IndustryWeek notes. “It’s an order that has potential, say workforce leaders in manufacturing, but lacks meaningful details. ... The big questions: Where will the extra funding come from, as the White House

budget proposal slashes Department of Labor funds by 21%? And which regulations will be changed or eliminated, as Trump promised, to make apprenticeship programs more accessible and user-friendly for real-world employers?” While there is talk of creating new federal incentives for apprenticeship programs, large manufacturers like ExxonMobil and Dow are already moving the needle on their own. DIFFERENT FLAVOR OF HIRING “[These programs] deepen the pipeline,” explains Shawn Loachridge, human resources leader with The Dow Chemical Company. “They all tie together when we talk 1012industryreport.com

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DON KADAIR

about workforce sustainability and the sustainability of our operations.” Dow has been an industry leader when it comes to apprenticeship programs. In 2014, Dow, along with Alcoa and Siemens, produced the Employer’s Playbook for Building an Apprenticeship Program. Then, in 2015, Dow launched a pilot program for its U.S. Apprenticeship Program. A year later, the program expanded to Louisiana, with apprenticeships at the company’s facilities in Plaquemine and Hahnville. Earlier this year, Dow’s apprenticeship program became fully registered with the U.S. Department of Labor. Dow’s program is aimed at people interested in pursuing careers as instrument electrical technicians, process technicians or millwrights. Dow targets recent high school graduates, military veterans and mid-career professionals. Applicants with more than 30 hours of college credit are not eligible for the apprenticeship program. “It’s a different flavor of hiring— we’re not looking for experience,” Loachridge says. “We’re looking for individuals who have initiative, a passion to learn and the core values we look for as a company.” The three-year program includes curriculum-based training and workplace training. For the education part, Dow formally partnered with the Louisiana Community and Technical College System through an MOU. Dow works closely with LCTCS to ensure the curriculum meets industry’s needs. As part of the program, Dow requires each apprentice to achieve a two-year associate degree in a particular craft. Apprentices work in the classroom, on the job or a combination of the two for 40 hours a week. The school/work split changes every semester and varies with each individual, depending on their experience, says Janet Alvarez, Dow’s apprenticeship program manager for the U.S. The two parts are intricately linked. “If they are learning about pumps at school, we set them up to see that on the job,” she explains. Once accepted into the program, the apprentice is assigned a mentor, providing an immediate connection within the company. “They’re getting hands-on experience from someone who is working in the field. It

“What I learned in the apprenticeship program really opened my eyes to safety, working with different types of equipment and working with different supervisors.” —SPENCER COXE, first-line supervisor and apprenticeship mentor, ExxonMobil

directly ties the education side to the actual practical side,” Loachridge says. The company pays for all education costs—tuition, books and equipment—while also paying the apprentice a salary. “That work-hour credit for time in class is a highlight to the Dow program,” Alvarez says. “It’s imperative for success. We want our apprentices to fully focus on the curriculum and the on-the-job training.” Dow offers its apprenticeship program across seven sites in four states, with expectations to reach about 140 individuals in the program overall by year end. At Dow’s two Louisiana sites, about 20 apprentices are currently in the program. Loachridge notes the company intends to expand the program at both Louisiana sites. LONG-TERM INVESTMENT While the program stops short of guaranteeing a job, that is essentially its purpose.

“We will preferentially consider applicants for full-time openings,” Alvarez says. Indeed, the offer accepting them into Dow’s apprenticeship program requires the apprentice to commit to work for Dow. “Our vision is this is a long-term career,” she says. Adds Loachridge: “Apprentices must maintain a certain GPA, complete the program and demonstrate mastery of particular skills. If you do these things and uphold your end of the bargain, we will have a role for you.” Alvarez says for Dow, which also offers internships and other workforce development initiatives, the apprenticeship program is an investment in the company’s long-term growth and success. “We’re looking for highly skilled, highly trained people to fill critical roles with the company,” she says. “We need good people to run our plants—that’s how we stay safe. We saw there was a gap, so Dow stepped up.”

Other companies with a presence in south Louisiana have done the same. At ExxonMobil, apprentices start out in the classroom, getting orientation on basic safety and taking courses such as basic math, physics and relevant subjects, like hydrocarbons. After the classroom experience, they move to six months of off-shift, hands-on work in machine shops, where they learn to run equipment and manufacture parts. “They’re running every piece of equipment in our machine shop, every working part of a pump,” Coxe says. Apprentices rotate every three months between the refinery and chemical plant, giving them experience in all facets of the Louisiana operations. Across ExxonMobil’s four sites in Louisiana, the company typically hires about 15 to 20 apprentices a year in the mechanical side and about 30 to 35 in the operations side.

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NEWS: WORKFORCE DEVELOPMENT

THE UPSIDE: Well-planned apprenticeship programs can help attract highly qualified applicants, increase productivity, reduce training expenses, enhance the problem-solving skills of craft workers, and develop a more committed workforce.

continues to receive cuts, companies have to step up to the plate.” The connection with Louisiana’s community and technical colleges is also essential, says William Wainwright chancellor at Northshore Technical Community College. “Students in Louisiana’s community and technical colleges have access to a variety of apprenticeship opportunities, whether through traditional registered apprenticeship training or customized apprenticeship training programs developed between colleges and industry to meet unique workforce demands,” Wainwright explains. “In addition, colleges provide invaluable internship opportunities with business and industry outside of the traditional apprenticeship model.” Adds Conner Gilliland, Baton Rouge area recruiting coordinator with ExxonMobil: “All of these programs, from teacher externships to internships and apprenticeships, are to develop opportunities through our STEM initiatives and help the community continue to understand the vast array of positons we offer at our plant or with our contractors.”

ISTOCK

MYRIAD BENEFITS According to the Louisiana Workforce Commission, employers benefit from administering a well-planned apprenticeship in myriad ways, including attracting adequate numbers of highly qualified applicants, increasing productivity, reducing the cost of training, enhancing the problem-solving skills and versatility of craft workers, and developing a more committed workforce. One benefit that companies value is the opportunity to provide safety training. “From the start, we instill safety in them, so we can ensure our safety culture is in every move they make,” says Coxe. “By going through the apprenticeship program, the company knows you have been given the tools to safely and effectively do your job.” Apprenticeship programs are just one piece of a broader workforce-development strategy. BASF, for example, has a variety of programs intended to ensure a sustainable workforce well into the future. BASF offers an 18-month professional development program for recent university graduates. Aimed at developing future engineers, the program—similar to an apprenticeship program—involves rotating through several different roles and several sites at BASF. “They are stepping into their first full-time job after coming out of school, so our professional development program offers them a nice transition,” says Tom Yura, senior vice president and general manager of BASF’s Geismar site. “They get to try different roles, look at different sites and be mentored, all while starting to develop themselves professionally.” About 40 people participate in BASF’s professional development program each year. Meanwhile, internships—available to students still pursuing two-year degrees through community colleges—“allow them to start testing what kind of career they want,” Yura points out. For example, electrical instrumentation technician interns get practical experience to complement their studies. “They work with instruments and get called out at night,” Yura says. “This helps them think about, ‘How

do I feel about working at night? How do I feel about climbing a high ladder?’ If it’s something they want to pursue, the internship helps them focus on what to study and what questions to ask in the classroom.” HIGH CONVERSION RATES Sasol offers summer internships at its southwest Louisiana facility for a variety of disciplines, such as research and development, information management, supply chain, engineering, and document control. Interns work directly with Sasol engineers and other professionals in a collaborative, teamwork environment. Each year, Sasol identifies internships that coincide with upcoming projects in the company’s various departments. Currently, Sasol has 13 interns, most from Louisiana universities. “For Sasol, the program contributes to our efforts to build a pipeline of talented, young professionals and strengthens communication channels with our Louisiana university partners,” says Kim Cusimano, manager of public affairs for Sasol’s North American Operations.

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Similarly, BASF’s summer internship program for engineers “allows future potential employees to check us out,” Yura says. This is mutually beneficial, he says. “Instead of us hiring someone based solely on an interview, we get to check them out, too.” While there’s “no harm done” if it’s not a good fit, BASF’s internship programs have high conversion rates to full-time jobs with the company. Seeing such results is critical for companies as they seek to not only sustain the workforce, but ensure the workforce has the appropriate skills needed well into the future. “Our pipeline is changing. We are working on filling the skills gap and increasing the pipeline quality,” Yura says. “My job is to ensure I have the workforce of tomorrow ready to come in tomorrow.” Adds Loachridge: “Skill sets are changing, just based on changes within industry. We’re helping mold them and not going out and buying those skills on the market. We’re growing future employees with a hands-on approach to their development. As public education funding

“They work with instruments and get called out at night. This helps them think about, ‘How do I feel about working at night? How do I feel about climbing a high ladder?’” —TOM YURA, senior vice president and general manager, BASF Geismar

TAKING ON THE PERCEPTION Yet, despite the success of these initiatives, industry still faces challenges, particularly related to overcoming outdated perceptions of craft work and the career paths and earning potential such positions offer. “Our job as industry is to inspire that next group,” Yura says. “It’s harder to get people excited about STEM education and working in manufacturing because there are misconceptions that these fields are boring. They don’t realize that today’s skilled craft workforce in manufacturing is working with robots, flying drones and operating cutting-edge technology. They’re not in the middle of a field with a pick axe. With these jobs, you can make $80,000 straight out of college.” Inspiring future workers often involves convincing parents, teachers and others who have influence over students. “We work closely with parents and counselors to help them realize that this is not a Plan B—this is a Plan A,” Alvarez says. “It’s a truly viable 1012industryreport.com

BEST PRACTICES

Local manufacturers with thriving apprenticeship and internship programs share seven tips for success

COMBINE THE CLASSROOM AND THE WORKPLACE. The combination of curriculum and on-the-job training is important, according to Dow’s Janet Alvarez. The Louisiana Workforce Commission requires a minimum of 144 hours of classroom training instruction for apprenticeships.

GET BUY-IN ACROSS THE COMPANY, STARTING AT THE TOP. It’s important to make it clear that it is “not the flavor of the month or just another one of those corporative initiatives,” counsels Dow’s Shawn Loachridge.

GET PARENTS AND TEACHERS INVOLVED.

Your Partner in Hurricane Preparedness Keep your fuel tank full and equipment running strong before, during and after any storm.

“Innovative education and partnerships will help increase pipeline quality,” BASF’s Tom Yura says.

USE EMPLOYEES AS SUBJECT-MATTER EXPERTS. “Some of the best practices we have include using subject-matter experts,” ExxonMobil’s Spencer Coxe says. “Those are the people who are really familiar with the equipment and able to share knowledge and really ingrain the safety culture.”

FROM THE START, COMMUNICATE HOW ASSIGNED TASKS OR PROJECTS ALIGN WITH THE COMPANY’S BUSINESS OBJECTIVES, REGARDLESS OF THE SIZE AND SCOPE OF THE PROJECT. “We choose projects that expose interns to professionals and disciplines across the organization with tasks geared to develop professional skillsets as well as soft skills aligned with Sasol values,” says Kim Cusimano of Sasol’s North American Operations.

INCENTIVIZE AND ENCOURAGE STUDENT COMPLETION CONTINGENT UPON HIRING. “Today’s most effective internship models result in student employment contingent upon program completion and satisfactory performance,” Northshore Technical Community College’s William Wainwright adds. “Successful internship opportunities today are also represented by careful planning and joint curriculum development activities between colleges and industry.”

A C lea rer Pa t h

DON’T HESITATE TO START AN APPRENTICESHIP, INTERNSHIP OR OTHER WORKFORCE-DEVELOPMENT PROGRAM. “It’s going to work. You’re only going to increase your profit because you’re investing early in your people,” Loachridge says. “The reward is so much greater than the risk.”

career path for someone who has an interest in this space.” Workforce development programs continue to evolve. “As we learn, we make improvements,” Alvarez says. “We may bring in new jobs and assignments, or offer on-the-job training at different plants. We’ll continue to define what the best way to get these people trained is.” Dow believes the results of its 1012industryreport.com

efforts are already tangible. “For Dow, we’re already seeing the benefits,” Alvarez says. “Our production leaders—the people running the plants—will say, ‘I want that person.’ They know that, with the apprenticeship program, these are highly skilled people with the right view on safety doing things technically well. Long-term, that builds a very strong team, and keeps a plant running well and in a very safe manner.”

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NEWS: COMPANY PROFILE

A solid steel success

BY MEREDITH WHITTEN PHOTOGRAPHY BY DON KADAIR

Based in rural St. Helena Parish, Southland Steel Fabricators has put itself on the cutting edge of the steel fabrication business—and at the center of its community.

ust off the Zachary Taylor Parkway in Greensburg, sitting on 60 acres amidst the gentle hills, pasture land and piney forests of rural St. Helena Parish, you’ll find one of the region’s fastest growing and most successful businesses. From its 300,000-square-foot facility, Southland Steel Fabricators, a family-owned and -operated industrial steel fabrication company, serves the refining, power and chemical markets, among others, along the Gulf Coast, throughout the United States and, on occasion, overseas. Established in 1986 by Joseph E. Lombardo, who had worked in the steel industry for many years, Southland Steel offers a full spectrum 1012industryreport.com

of products and services related to the steel fabrication industry, from 3-D modeling to steel fabrication to fireproofing. The company combines top-of-the-line CNC equipment, a dedication to customer service, and an outstanding record for quality and safety. FROM SWEEPING TO LEADING From the beginning, Southland Steel has been a family affair. When he was 14 years old, Joey Lombardo started working summers for the

company his father founded. After finishing high school, he took on a project management role. He moved up the managerial ladder, serving as general manager and vice president before taking over as president of Southland Steel about three years ago. Lombardo also bought out his father’s ownership of the company. “I grew up in the shop,” Lombardo says. “My first job was sweeping the floor. That gave me a good perspective.” Under the younger Lombardo’s

“I grew up in the shop. My first job was sweeping the floor. That gave me a good perspective.” —JOEY LOMBARDO, owner, Southland Steel (above)

leadership, Southland Steel has experienced tremendous growth. In 2000, Southland Steel had annual revenue of about $3 million to $5 million. In the last three years, the company’s annual revenue has increased to around $50 million to $55 million. With a staff of 225 people, Southland Steel is the largest private-sector employer in St. Helena Parish. “Our growth has been steady,” Lombardo says. “We do more in a month now than we used to do in a year.” Some of Southland’s recent projects include a $29 million, 10,152-ton project for phases 1 and 2 of Sasol’s new North American chemicals complex in Westlake; a $42.8 million, 12,738-ton project for an OL3 expansion for Formosa

10/12 INDUSTRY REPORT • THIRD QUARTER 2017

NEWS: COMPANY PROFILE

RAMPING UP: Southland partnered with Austrian-based company Zeman to build the first robotic assembly system in the United States designed particularly for the structural steel industry. Fabrication capacity now exceeds 30,000 tons a year at the Greensburg plant.

Plastics in Baton Rouge; and a $21.2 million, 4,488-ton Freeport LNG project for CB&I. Southland’s growth can be attributed, in part, to the multitude of in-house services the company offers, including detailing using Design Data SDS/2 3-D modeling software, connection design with PE Stamp, and a complex coating facility with cryogenic, intumescent and cementitious fireproofing certifications. In fact, Southland is the only steel fabricator in the United States certified to apply fireproofing in-house. About 40 of the company’s employees work solely on these complex coatings, which are applied in a 20,000-square-foot, climate-controlled facility. This enables Southland to reduce costs and consolidate a project’s supply chain, greatly benefiting its customers. “What’s unique about Southland is we do fireproofing in-house,” Lombardo emphasizes. “We were having to sub that work out, but three or four years ago, we decided it was something we could try to do. We had to commit to it and get

people certified, but we saw it as an advantage. It’s worked out well, and now we’ve grown it into a sizeable part of our business.” TECHNOLOGY AND LEADERSHIP As with most industries, technology has greatly changed how the steel industry operates, and Southland has been progressive at incorporating technology into its fabrication operations. For example, Southland part-

40 10/12 INDUSTRY REPORT • THIRD QUARTER 2017

nered with Austrian-based company Zeman to build the first robotic assembly system in the United States designed particularly for the structural steel industry. The system, which became operational in fall 2016, already has improved worker safety, enhanced fabrication quality and increased Southland’s production capacity—without replacing any employees. Southland also is collaborating on building the first robotic part-sort-

ing system in the world designed for the structural steel fabrication industry. With the use of RFID technology, Southland is creating a smart factory, in which every detail of a part’s status is tracked in real time. “Things have changed quite a bit for us. When I first took over, our machines were not automated and robotics were not even thought of,” Lombardo says. “The hydraulic punch was an awesome thing, but automatic material handling was more common in Europe. Now, we load material on one of the largest automated lines.” Southland is quality-certified by the American Institute of Steel Construction (AISC) for fabrication, as well as the American Welding Society (AWS) and the Canadian Welding Bureau (CWB). The company’s fabrication capacity exceeds 30,000 tons annually. “They are one of the faster growing companies in the region in the past few years,” says Adam Knapp, president and CEO of the Baton Rouge Area Chamber. “That’s in 1012industryreport.com

SOUTHLAND STEEL, GREENSBURG

STEEL CRAFT: At left, a welder at work; above, an operator runs the CNC plate machine.

large part because of the leadership at the company. Joey has had quite an impressive track record since he took it on.” According to Knapp, the market in which Southland does business has also contributed to the company’s growth. “They have an ability to access clients that are part of manufacturing along the Gulf Coast, and Southland’s leadership has been smart about taking advantage of that opportunity.” Not every endeavor has worked out for Southland, however. “During the 2010-2011 downturn in our industry, we ventured into commercial work more than we had in the past,” Lombardo says. “That was a mistake. I learned that commercial work is not my forte. It’s not our niche. We’re more about relationships.” Indeed, Lombardo says the relationships Southland has with its employees, its customers and 1012industryreport.com

its community tie directly to the philosophy of hard work and ethical business practices on which his father founded the company and distinguish Southland from the competition. “We’ve grown a lot more than other fabricators in our area. We’re still a family-owned business, while a lot of our competition has been swallowed up by investment companies,” he says. “We’ve got a bunch of good people who work for us, and we hire great people. I’m most proud of that.” HANDS-ON APPROACH Some of Southland’s current employees worked for the company when Lombardo was first learning the ropes. “I work with people who first taught me how to read blueprints,” he says. “We have a large variety of people working here. One of the things I like about our business is I get to be involved with and

talk to everyone working here, from skilled labor to the janitor sweeping the floor like I used to.” This hands-on approach is pervasive throughout Southland’s management team. For example, Lombardo says, “When the robotic equipment came in, we were all out there helping to install it.” Similarly, Southland has built well-established relationships with its customers. “Even though we’re a big company now, we respond quickly to our clients,” he says. “Our direct management is involved a lot more than other companies that have more of a hierarchy. Our vice president works day to day with our customers.” Southland is deeply rooted in the local community and values its role in the region’s workforce development, Lombardo notes. “We’ve got a lot invested here in the town. It would be hard to walk away from it,” he says. “We employ

a lot of people, including entry-level helpers and skilled workers, and we do a lot of training. We also work with local high schools. We do have people who eventually move on to working in the field, so we see ourselves as a big trainer in the region.” Adds Knapp: “The commitment of buying into the community is so valuable. A lot of people have been impressed with their focus on safety, workforce training, vocational training and a commitment locally to their people. Southland’s success has been great for the [Greensburg] community and the rural community.” Lombardo says Southland’s growth is not finished yet. “We still see a lot of opportunities for improvement, so we’re always investing back into the company,” he says. “We’re nimble on our feet for our size, so we hope we can continue to grow.”

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42 10/12 INDUSTRY REPORT â&#x20AC;¢ THIRD QUARTER 2017

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ISTOCK

NEWS: EXPANSION

Getting ready for Round 2

BY SAM BARNES

Petrochemical owners and contractors ponder how to handle a second wave of Louisiana capital investment.

et ready for another round of petrochemical investment. Experts say the U.S.— and the Gulf Coast in particular—is due for another, albeit smaller, round of expansions. On the chemical side alone, about $185 billion in chemical manufacturing investment is either under construction or planned nationwide. In fact, the U.S. is poised to become the most competitive global manufacturer of chemicals, says Cal Dooley, president and CEO of the American Chemistry Council, speaking at the Downstream Engineering, Construction & Maintenance Conference in New Orleans this summer. “Fundamentally, the situation has changed,” Dooley adds. “Fifteen years ago, we were one of the highest cost manufacturers in chemicals. To1012industryreport.com

day, the U.S. is arguably one of the most competitive global manufacturers of chemicals, and it’s all because of hydraulic fracturing and the low cost of natural gas.” When the oil-to-gas price ratio is above 7, U.S. competitiveness is enhanced. While good for chemicals, it also positively impacts Louisiana’s natural gas market as it becomes the fuel of choice. In fact, some owners feel this will contribute to the state becoming a major liquefied natural gas hub by 2020. More than $88 billion in LNG projects are currently planned, being built or in operation across the U.S. So what’s the bad news? Industry leaders say owners, designers and contractors along the Gulf Coast should prepare now, rather than later, for the potential of labor shortages and productivity woes should a second wave become reality.

Manav Lahoti, commercial director for The Dow Chemical Company’s U.S. olefins market in Houston and a DECM conference panel member, says a second wave of industrial investment is all but certain. “But we don’t think the second wave is going to be as large as the first,” Lahoti says, adding that it’s probably a good thing. “We think the second wave, for us at least, needs to be smaller. It will allow us to leverage some of the skills and lessons learned from the first wave. We feel productivity will be better as a result.” Lahoti’s hopes will soon be put to the test. Dow recently announced that it will expand the 1.5 millionton-per-year ethylene production facility that it completed in Freeport, Texas, last spring. “The expansion will make it the largest ethylene

cracker in the world, at 2 million tons, by the time it comes on line in 2020,” Lahoti says. Dow announced completion of the current Freeport facility in March, reaching the milestone within one week of the planned completion date. The world-scale production unit is a central component of Dow’s $6 billion U.S. Gulf Coast investment program, designed to strengthen the competitiveness of its downstream businesses. It will feed Dow’s derivatives investments, which will come online during 2017 and 2018. “Our growth investments leverage the advantaged shale gas supply available in the U.S., and represent thousands of new jobs and significant economic value, including exports of approximately 20% of our U.S. production,” says Andrew Liveris, Dow’s chairman and CEO,

10/12 INDUSTRY REPORT • THIRD QUARTER 2017

NEWS: EXPANSION

THE ASSOCIATED PRESS

in a press release. At peak activity, the construction phase required more than 3,000 Dow employees and contractors.

“Our growth investments leverage the advantaged shale gas supply available in the U.S., and represent … significant economic value, including exports of approximately 3rd Qtr #1 production.” 20% of our U.S. AD WILL RUN AS IS

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FIRST WAVE LESSONS While planning for an adequate skilled labor supply and improving productivity ratios are critical to handling the next surge, Lahoti says effective project leadership should also be at the top of the list—a direct “takeaway” from the Freeport project. “I think productivity and leadership work together,” he adds. “What we realized was that while productivity was an issue, it wasn’t being highlighted enough because we didn’t have enough skilled project managers or leaders from the engineering and contractors to address those things. So, we really had to man up our owner teams [to compensate].” Dow leveraged internal capabilities by bringing in its own project managers from other projects that were wrapping up overseas. “We are able to create big owner teams for

oversight of our big projects as they were going through the construction and commissioning phases,” he adds. Still, he feels the responsibility of maintaining productivity should fall upon the shoulders of engineering and construction companies, and that they should develop the necessary management skills in preparation for a second, or even third, wave of investment. An inability to attract and train new talent is a big part of the productivity problem, says Ed Lehotsky, Cheniere Energy’s senior vice president of LNG engineering and construction and another DECM panel participant. Cheniere owns the Sabine Pass LNG terminal in Cameron Parish, where it will ultimately construct up to six liquefaction trains. “Cheniere and Bechtel (the project’s EPC contractor) have been in the middle of it,” he adds, pointing to weld failures as a leading indicator of productivity problems. “One of the metrics I watch for is the weld reject rate. I’m used to targeting below 2%, below even 1.5%, but

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GAME CHANGED: President Donald Trump holds up an executive order after signing it in the Oval Office in Washington, D.C., in February. Dow Chemical Chairman and CEO Andrew Liveris is at left. The executive order would establish regulatory reform officers and task forces within federal agencies as part of his push to slash federal government regulations.

we’re seeing as much as 6% or 12% weld rejects out there. It’s because the welders are not as experienced or as motivated.” Together, Cheniere and Bechtel fund a series of welder training programs in collaboration with trade schools and colleges in Louisiana and Texas, hoping to fill an urgent need for stainless steel welders. To date, about 90 welders have been qualified through the program to weld stainless steel.

Meanwhile, Henk Pauw, general manager with Orpic, an Omanbased oil refiner, feels the success or failure of a job hinges upon an adequate level of front-end planning and design. “Get it done properly and get it assessed,” he advises. “I think that is very important. Also, don’t be too optimistic in your delivery. We have a project that’s currently six months behind because they were too aggressive in their schedule. In the end, you’ll be forced to do

things in parallel. Then, productivity drops critically and safety gets impacted.” The larger and more experienced the company, the more likely they’ll be able to handle whatever comes down the road, Lehotsky says. “My current team has more than 1,700 years of experience in oil and gas, and something like 900 of those years in LNG. We’ve run across a lot of the problems that we’re running across now, and we solve those quickly. We also work well with Bechtel because I think they respect our experience and our know-how. I think that’s key to having a good leadership team.” Maintaining that necessary level of experience, though, is a challenge. “All those experienced people are going to retire soon,” he adds. “I think the industry is seeing that not only in its leaders, but in the crafts. That’s something that we need to work on if we can continue to build these megaprojects on time and on budget.” Orpic’s Pauw agrees. “It’s about getting experienced people who have

TAKING COUNT

Current and planned chemical investment in the U.S. considered foreign direct investment

Amount of manufacturing investment in 2016 that came from the chemical industry SOURCES: American Chemistry Council, U.S. Department of Commerce

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done it before, and also assembling a team that can solve problems. It’s about having a dialogue with your contractor and not throwing the book at them every time.” TRUMP’S RIPPLE EFFECT Whatever lies ahead, there’s a sense in the industry that owners and contractors need to create more long-term, sustainable solutions for handling future surges in investment. ACC’s Dooley predicts the policies of President Donald Trump could propel the petrochemical industry way beyond a second wave. “We’ve never had a political environment that is more sensitive and more supportive of the regulatory policies needed to maximize our competitive advantage,” Dooley says. “Therefore, we have an opportunity to ensure we have the right energy and tax policies. We need to encourage reforms of our corporate tax codes and push for a more competitive tax rate to encourage the continued flow of new investment.” He sees Trump’s rhetoric on trade as a potential fly in the ointment. “When you have this flood of new investment that’s coming into the U.S., it’s not solely to serve the domestic market; it is to serve a global

marketplace. Our industry today and in the future will benefit from trade liberalization and policies that ensure that we have greater access to the marketplace, whether that be through NAFTA, the Trans-Pacific Partnership or other bilateral agreements.” According to ACC statistics, more than 62% of current and planned chemical investment in the U.S. is considered foreign direct investment. Additionally, U.S. Department of Commerce statistics show that 48% of all 2016 manufacturing investment came from the chemical industry. This is evidence, Dooley says, of the country’s increasingly attractive platform for serving the demand for chemicals. “It’s another validation of what we see happening in the chemical sector, which is unprecedented,” he says. “We estimate almost 20% of current money invested is already completed, 30% is under construction, and we’re confident that the balance of that currently in the permitting phase will also come online. We shouldn’t be talking about the second wave, because it’s not going to be just another wave. It’s going to be a continued flow of investment for a long time.” 1012industryreport.com

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NEWS: REGULATIONS

The new EPA

While industry is encouraged by regulation postponements, DEQ fears funding cuts might slow permitting.

he person leading the EPA’s Region 6 in Dallas is nearly as important to Louisiana industry and the state’s Department of Environmental Quality as the appointment of Scott Pruitt to the agency’s top administrative post. After all, that’s who they typically deal with on a day-to-day basis. While Sam Coleman is current acting administrator for the region—comprised of Louisiana, Texas, Arkansas, Oklahoma and New Mexico—no announcement has yet been made about a permanent replacement. DEQ Secretary Chuck Carr Brown says that’s not unusual. “That has been the talk of everyone in this industry,” Brown says, “but the administrator [Pruitt] is not far behind when it comes to appointments, from a historical perspective.” Meanwhile, Brown is glad Coleman remains in place. “He and I go back to pre-Katrina days, so we’ve got a great working relationship, and to be honest with you Louisiana has his ear. We’ve had some good interactions with him with requests, clarificaSa m tions or assistance Co lem an in certain areas.” State leaders from the Region 6 states are scheduled to meet with the acting regional administrator—whomever that might be at the time—in August. Brown hopes to maintain a close relationship with Region 6 leadership, but much is in limbo as an environmental paradigm shift in Washington begins to impact regional offices. Some EPA actions have already ruffled the feathers of environmental groups. On June 9, Pruitt’s EPA delayed the effective 1012industryreport.com

date of the agency’s Risk Management Plan (RMP) Rule until Feb. 19, 2019. The rule, one of the agency’s last actions under President Obama, requires facilities to develop and submit an RMP every five years and was meant to address issues raised by a June 2013 explosion at Williams Olefins in Geismar and an April 2013 Texas fertilizer plant explosion. The EPA says the rule’s postponement was necessary to review objections raised by petitioners to the final rule and to consider other issues. Louisiana Chemical Association President Greg Bowser says the RMP rule’s postponement is a good thing, adding that future regulations should be based upon science rather than emotion. “The greatest concern is that we end up proposing rules that are not necessarily science-based,” Bowser adds. “I think there must be a dialogue, and we should go where science takes us. When you start getting these emotional reactions and there’s no reason to do it other than to appeal to a certain constituency, I think that creates a problem. Not just for our industry, but for business in general.” The EPA’s Clean Power Plan also took a hit recently, when Pruitt asked judges to postpone deliberations on the plan’s legitimacy until the agency could determine how to move forward. In 2015, 29 states— including Louisiana—sued the EPA following the plan’s promulgation, prompting the U.S. Supreme Court

DON KADAIR

BY SAM BARNES

“We’re no longer under the constant threat that we’re going to wake up tomorrow and the most important factor in industry is going to be banned or outlawed.” —GIFFORD BRIGGS, vice president, Louisiana Oil and Gas Association

to issue a stay of its implementation pending a judicial review. The Clean Power Plan calls for electrical generators to cut CO2 emissions by 30% by 2030. While it is typical for the EPA to regulate a pollution source, the Clean Power Plan goes a step further, mandating that electrical generators increase their emphasis on energy efficiency and renewable energy. Industry has long asserted that power plants will eventually turn to natural gas regardless of government involvement. A MINDSET CHANGE While DEQ’s Brown is wary of the impact that changes in Washington will have on environmental funding and processes, he agrees with

local industry that some regulations should undergo a cost-benefit analysis before implementation. “There are some regulations where you spend a lot of money to meet those goals, but the amount of environmental benefit is negligible,” Brown says. “I think that’s where you have to have a common-sense approach to environmental oversight.” He points to the EPA’s stance on ozone attainment as an example. Despite significant strides made by the Baton Rouge area in reducing ozone levels in the last decade, Brown says the agency “keeps moving the bar.” He therefore supports the EPA’s recent decision to postpone the 2015 National Ambient Air Quality Standards (NAAQS)—reducing

10/12 INDUSTRY REPORT • THIRD QUARTER 2017

NEWS: REGULATIONS acceptable ground-level ozone to 70 parts per billion—until Oct. 1, 2018. “We’re breathing the cleanest air in the five-parish area around Baton Rouge since the Industrial Revolution, and then they make another adjustment to the standard,” Brown adds. “To achieve [the new standard], how much would have to be invested? It’s unclear how much environmental gain you get.” At present, the Baton Rouge area meets the 2008 standard of 75 parts per billion. According to a statement released by the EPA, the additional time will allow it to evaluate the role of background ozone levels; develop additional flexibilities for states to comply; consider designation recommendations provided by state governors, including exceptional events impacting designations; and provide new agency officials time to review the new standard. HITTING THE BRAKES Lee Vail, an attorney at Kean Miller LLP in New Orleans who

“The greatest concern is that we end up proposing rules that are not necessarily science-based. We should go where science takes us.” —GREGORY BOWSER, president, Louisiana Chemical Association

assists clients with environmental compliance, expects the EPA to continue putting the brakes on other regulations. Prior to becoming an attorney, Vail worked for more than 26 years at Murphy Oil. “If you’re a facility and you need to get a permit, you’ll still go through the same process you would’ve gone through last year,” Vail adds. “The difference is that the EPA has put a lot of stays on rule changes. The question will be, is it warranted to slow these things down? That’s going to be determined on a case-by-case basis.” Another change Vail sees coming: The EPA will not bend as easily to the will of environmental groups. “There was an old practice where the environmental groups would sue the EPA. Then these groups and the

50 10/12 INDUSTRY REPORT • THIRD QUARTER 2017

EPA would settle that lawsuit, with the EPA committing to do something. Why does an environmental group need to sue them to get them to do their job? Then everyone else is outside of the discussion.” Only time will tell how much, fundamentally, will change at the agency. “It’s sort of like hitting the brakes on a train,” DEQ’s Brown says. “It’s going to take a mile or two before it stops and then if you try to go backward, it’s going to take even longer. Then the next thing you know, we’ll be in election season again. It just doesn’t happen that quickly.” LCA’s Bowser expects the current EPA administration to more closely

review emergency provisions that were put in place under the previous administration, but he doesn’t expect a massive rollback of regulations as feared by environmental groups. COOPERATIVE FEDERALISM Brown says he’s concerned about the “cooperative federalism” rhetoric

1012industryreport.com

DON KADAIR

COURTESY LOUISIANA CHEMICAL ASSOCIATION

“Louisiana has his ear.” —CHUCK CARR BROWN, secretary, Louisiana Department of Environmental Quality, of EPA Region 6 acting administrator Sam Coleman

coming out of Washington, fearing it could lead to significant funding cuts and permitting delays. “They want the states to do more regarding environmental oversight,” he explains. “That’s fine until the budget gets cut. The president’s initial budget cuts 21% out of the

EPA’s budget—almost $2.3 billion and 3,200 people. He’s also making cuts to the states’ performance grants. So, the EPA is saying we’ve got to handle air and water permitting, and the oversight of hazardous waste, but they’re going to cut the budget by 45%.” Since the Louisiana

DEQ currently receives about $18 million annually from the EPA, that creates an $8 million funding gap. “We can’t take that kind of cut in a state where we don’t get general funds. We generate all of our operating funds through fees.” Should cuts impede DEQ’s ability to function, there would likely be negative repercussions for industry, most significantly through a slowdown in permit reviews and approvals. “It’s going to have a domino effect, I can tell you that.” Brown remains hopeful that federal aid will be restored. If not, “it’s either going to be people or programs that will suffer.” Gifford Briggs, vice president of the Louisiana Oil and Gas Association, says oil and gas industry concerns about a ban on hydraulic fracking have virtually disappeared under the new EPA. “We’re no longer under the constant threat that we’re going to wake up tomorrow and the most important factor in industry is going to be banned or outlawed,” Briggs says. “We’re no longer under attack on a daily basis.”

These days, the oil and gas industry is more focused on offshore regulations—particularly the tougher bonding, financial assurance and risk management requirements imposed in 2016 by the Bureau of Ocean Energy Management. “We’ve been closely eyeing the BOEM appointment in D.C.,” Briggs says. “We’re optimistic that we’re going to see some real reform in the Gulf of Mexico that could have the potential to allow for some exploration to happen.” The chemical industry is equally hopeful. Speaking at the Downstream Engineering, Construction & Maintenance Conference in New Orleans June 15, American Chemical Council President and CEO Cal Dooley said the U.S. chemical industry stands to reap significant benefits from the new regulatory environment. “We have never had a political environment more sensitive and supportive of the regulatory policy needed to maximize the competitive advantage in the U.S.,” he said.

800-626-4431 • DonahueFavret.com

Pontchartrain Housing Corp. Office, New Orleans

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FOCUS CONSTRUCTION & DESIGN

The brave new world of industrial design BY SAM BARNES

The desire for cost efficiency and speed pushes engineers and contractors into futuristic territory.

Fluor is one of the established “big boys” in the world of EPC and is no stranger to pioneering new approaches to meeting project goals. The company is currently designing the 180,000 MMBTUper-day South Louisiana Methanol plant in St. James Parish. Somewhat counterintuitively, Fluor begins with the end in mind, looking first at how it plans to commission and hand over a project, then how construction will get the project there. “We drive that back into the procurement and then engineering design. We then take it all the way back to feasibility,” Menegaz says.

To corral the project schedule, contractors are now getting involved during design, and owners more often turn to EPC companies such as Fluor to get the job done. In the past, engineering and procurement deliverables would be out of sync with construction, causing project delays and avoidable cost inefficiencies. Lee Mayeux, vice president of operations for Cajun IDC LLC

USED WITH PERMISSION FROM MICROSOFT

uch futuristic buzzwords as augmented reality, immersive mixed reality, building information modeling and digital laser scanning have taken the place of more traditional design jargon in the world of industrial design. These high-tech tools and processes have become necessary for designers to meet the increasing demand for projects to be built faster, less expensively and more productively. Perhaps more noticeably, there has been an unmistakable paradigm shift in the way industrial owners approach design and construction altogether, as they seek to marry the two disciplines to achieve project goals. Denis Menegaz, a vice president of project management at Fluor and project director during the $11 billion Sasol project’s front-end engineering design (FEED) stage in Lake Charles, says a desire for cost efficiency is the driving force for much of the change. “Owners are more careful with their capital these days,” Menegaz says. “They spend a lot more time in the pre-FEED and FEED phases of the project, making sure they get it right. Once they get the approval to build, they want to go as fast as they can to get the return on capital. They can’t do that until they start making product.”

BEYOND VIRTUAL REALITY: Immersive mixed reality enables designers to literally immerse themselves into their designs and perform remote walk-throughs in an environment “blended” with the new design. The centerpiece of the technology is a self-contained holographic computer headset called a HoloLens, developed by Microsoft.

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in Baton Rouge, says owners and EPCs have developed collaborative partnerships to circumvent scheduling problems down the road. “We want them [owners] pulling in the same direction that we’re pulling in and vice versa,” Mayeux says. “We’ve found that when we can get owners involved at the top level, we’re able to work through and eliminate a lot of stumbling blocks. We can resolve most things in a single conversation.” In the last five years, earlier contractor involvement has begun to change the sequence and manner in which designs are delivered to the project. At the end of the day, Mayeux says, the owner wants predictability. “They hate uncertainty or last-minute changes. They want an EPC partner that can go out there and execute.” David Eccles, vice president – operations manager at Hunt, Guillot & Associates, agrees that earlier project team involvement is by far the biggest change of the last five years. HGA’s Baton Rouge office provides engineering services primarily to the petrochemical and oil and gas mar1012industryreport.com

South Louisiana Methanol site, we got into a technical issue that was beyond the capabilities of the Houston office, and we could immediately bring the right people into the project and have them execute ‘side by side’ with us from a remote office,” says Matt Reisdorf, Fluor’s department manager of process engineering in Sugarland. Advances in communications technology are an equally important contribution, says Boyd Boswell, industrial market sector leader in T. Baker Smith’s Lafayette office. Based in Houma, T. Baker Smith plans, designs, builds and operates pipeline, oil and gas exploration, and industrial projects. “Just five years ago we had Skype and other services, but we still had to meet a lot in person,” Boswell adds. “Today, there are so many ways to work together and collaborate that you can have people working across offices and companies in different time zones.” Going forward, communication will be particularly important to T. Baker Smith, as it recently opened an office in Mexico.

“We can take as many as a dozen people at different locations around the world, and they can go inside the same model with their own avatar.”

kets. “We’re getting involved much earlier in the whole project concept,” Eccles says. “The earlier you make decisions the more control you have over cost and schedule. The longer you go down the line, the harder it gets.” Menegaz says this ultimately leads to a more efficiently executed project. “It was much easier [for engineers] to just design it and let somebody else figure out how to build it, but the collaborative approach is exceedingly better because the construction phase is the most expensive, most critical and riskiest aspect of the project.” AN INTEROFFICE APPROACH The bigger the project, the more important early collaboration, along with innovative processes and tools, become. The larger designers have a decided advantage on megaprojects with tight timelines, since they can leverage their size to help meet efficiency goals. Fluor coordinated Sasol’s design through multiple offices, including three North American offices and its Global Execution 1012industryreport.com

Center in the Philippines, a low-cost engineering site. Having the global location, along with others in Poland and India—all wholly-owned Fluor entities—enables engineers to perform 24/7 design. Technology is at the heart of this interoffice collaboration, as the design industry has moved beyond drawings to a shared digital design model. This reaps big benefits, as contractors in the field can view drawings from a common platform. “If you walked into that office [in the Philippines], you couldn’t tell whether you were in Sugarland or the Philippines,” says Fluor’s Menegaz. “It operates the same. At Sasol, we set up all the systems and tools, the project design, on one common platform. Everyone is working off the same system.” Fluor uses Intergraph’s SmartPlant P&ID system for design modeling at Sasol and other projects. Fluor’s global approach also helps it to pool resources and quickly find needed design expertise. “At the

VIRTUAL WALK-THROUGHS Engineers are finding no shortage of high-tech gadgets to help them in their efficiency quest. While some tools have become commonplace— laser scanning and building information modeling (BIM), for example— others such as augmented reality and immersive mixed reality are just now making themselves known. HGA’s Eccles says his 45-person office in Baton Rouge (the company is headquartered in Ruston) relies increasingly upon Leica laser scanning. “We scan an entire site from different perspectives to generate a

“What used to take weeks on end, trying to determine what’s on site, can be taken care of in a day with a 3-D scanner.” COLLIN RICHIE

SAM BARNES

SCOTT ALDRIDGE, leader, Innovation and Disruptive Technology Group, CDM Smith

LEE MAYEUX, vice president of operations, Cajun IDC

360-degree point cloud,” Eccles says. “We then have programs that create a model using that information, then superimpose new equipment onto the model. We can look at where everything is located relative to the existing environment.” The software renders the surroundings in a 3-D model that can be rotated and tilted in any direction, enabling a virtual walk-through of the site. Human error is virtually eliminated as a result. “If you went out there and did it by hand you would have to measure all your tiein points and locate them all in space by hand measurements. Whereas if you scan the area and everything around it, you have significantly more information in much less time. We can go out there and scan a tremendous area in half a day.” Laser scanning is a big asset for Cajun as well, Mayeux says. “It just saves an incredible amount of time,” he agrees. “What used to take weeks on end, trying to determine what’s on site, can be taken care of in a day with a 3-D scanner.” The technology enables Cajun to work in the model and more efficiently develop advanced work packages, thereby marrying the construction sequence with engineering deliverables. Taking a big futuristic step forward, CDM Smith, a Boston-based design and construction consultant with an office in Baton Rouge, introduced the concept of immersive mixed reality during the Downstream Engineering, Construction and Maintenance Conference June 15 in New Orleans. While virtual reality is certainly not new, IMR enables designers to literally immerse themselves into their designs and perform remote walk-throughs in an environment “blended” with the new design. The centerpiece of the technology is a self-contained holographic computer headset called a HoloLens, developed by Microsoft. The technology allows multiple remote users, through avatars, to engage with the digital content and interact with holograms in the world around them. “With the HoloLens, you can experience 3-D in the real world,” says Scott Aldridge, leader of CDM’s Innovation and Disruptive Technology Group. “We’ve gone from taking things off the paper to 2-D on the 2-D screen, to 3-D on a

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COURTESY GALLIFORD COSTAIN ATKINS

FOCUS: CONSTRUCTION & DESIGN

IMPROVED COLLABORATION: Building information modeling, or BIM, is an intelligent 3-D model-based process that gives architecture, engineering and construction professionals the insight and tools to more efficiently plan, design, construct and manage buildings and infrastructure.

OTHER TOOLS From a technological standpoint, better project visualization is undoubtedly the wave of the future, enabling and improving real-time collaboration among project stakeholders. Although certainly not new, BIM continues to gain traction in the industrial market as its capabilities continue to grow. BIM is an intelligent 3-D model-based process that gives architecture, engineering and construction professionals the insight and tools to more efficiently plan, design, construct and manage buildings and infrastructure. 54

Today, BIM is embracing the power of cloud technology to yield better design outcomes. This cloud-connected BIM enables improved collaboration and immersive visualization. T. Baker Smith’s Boswell points to the use of aerial drones as another game changer in the world of petrochemical design. The Federal Aviation Administration issued rules for the commercial use of these small, unmanned aircraft systems in 2016. Even before the new rules were released, however, the FAA was already granting exemptions for commercial use. “A large percentage of exemptions covered applications in aerial surveying, construction and infrastructure,” Boswell says. “Drones can be used to perform aerial surveying of a site, monitor worker productivity and safety, and conduct inspections on bridges 3-D WORLD: A proof-of-concept image for a plant design using AutoCAD Plant 3D with 3ds Max software. and tall buildings.” Of course, there’s a price tag assoAs a result, some designers and benefits of technology and insist ciated with any new technology. An project team members are turning to upon doing things the same way. encrypted HoloLens development leasing rather than buying the newer “The use of technology is ever-inkit marketed by CDM averages gadgets available in the market. creasing. It’s here. It’s not going away. $5,000 per apparatus, and drones Still, Boswell says it’s foolish for If you want to get in, you have to be can also cost thousands of dollars. a company to completely ignore the willing to pay that cost.”

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COURTESY AUTODESK

2-D screen, to immersing ourselves in the model. What we’ve done is created a mixed reality platform. “We can take as many as a dozen people at different locations around the world, and they can go inside the same model with their own avatar,” he adds. “They can hear each other and walk around the model and review it at scale … all live. It’s a great tool for design review, and really throughout the project, from construction to operation. “When we immerse ourselves inside these models, we’re able to more quickly and effectively see things and experience things.”

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10/12 INDUSTRY REPORT • THIRD QUARTER 2017

FOCUS: CONSTRUCTION & DESIGN

Bright ideas

STAFF REPORT

A look at some of the latest design innovations in Louisiana industry.

EXPERION ORION CONSOLE – HONEYWELL, GEISMAR Honeywell’s Experion Orion Console, which runs Experion Process Knowledge Solution, is the automation software that runs the Solstice yf production line at the company’s Geismar plant. [See pages 22-23.] The console increases operator effectiveness over a greater scope of responsibility by providing faster response, reducing fatigue and increasing situational awareness. The award-winning technology was selected by automation professionals to receive the Control Engineering 2015 Engineers’ Choice award in the Hardware — HMI, Operator Interface, Thin-client category. The Experion Orion Console combines a highly crafted modular ergonomic industrial design with advanced visualization technology, touch-based operation, automated procedures, integrated alarm management and unique alarm lighting to deliver a key piece of the control room of the future. The entire package reduces operator fatigue, improves operator effectiveness and meets the changing needs of customers facing skills shortages and challenges, attracting the next generation of operators.

T. Baker Smith provides professional services to facilities and terminals across the Gulf Coast. An innovative solution TBS has implemented to provide more cost-effective, efficient and scalable services to clients is 3-D laser scanning and modeling for spill containment engineering and administrative controls. Traditionally, the measurement of existing containment walls was performed through either traditional land survey techniques or simply with a tape measure and ruler. This could either be more time consuming and produce less data or, as per the latter method, be potentially inaccurate, leading to both regulatory and operational hurdles. Through the use of laser scanning, TBS can digitally capture more data in a time-efficient and safe manner. The firm utilizes 3-D

laser scanning technologies to scan and determine volumetric and tank containment capacities to help ensure state and federal capacity regulatory compliance. The data is collected in a scanned point cloud and can be used to create an as-built or as-is 3-D intelligent model to compare with the original tank containment capacities. Additionally, the data can be used to display the flow pattern to assist in determination of areas to increase or decrease fill or to place a sump for easier removal of any product. TBS also utilizes this data to work with clients’ environmental and regulatory groups for updating the emergency/spill, facility response and any site-specific operational plans to meet the requirements set forth by the U.S. EPA, the state-specific regulatory authority and the U.S. Coast Guard as applicable at each facility.

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Laser scanner and example of flow data deliverable.

COURTESY TBS

SPILL CONTAINMENT – T. BAKER SMITH

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MOBIL DATA COLLECTION – BASF, GEISMAR

COURTESY HONEYWELL

DON KADAIR

BASF Utilities Operators Stephen Dugas and Scott Laurence were part of the site’s mobile data collection pilot, which introduced mobility tablets in place of clipboard and paper inspection forms. The tablets improve asset integrity and reduce the risks of process safety incidents while saving time and decreasing costs.

PIPE ROUTING – HUNT, GUILLOT & ASSOCIATES, LLC

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COURTESY HGA

Hunt, Guillot & Associates has optimized the use of high-definition laser scanning in industrial design. As shown here, piping, equipment and structures are modeled and displayed within a laser-scanned point cloud. The point cloud is used in checking the design for clashes and interferences. This method also enables the project team to conduct operational and constructability reviews early in the design stage.

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INSIGHT The skills gap: Does it exist in Louisiana?

CONNIE FABRÉ

he skills gap is a topic that has gained increased attention over the last 10 years. The issue described is one where potential employees cannot find the type of employment they’d like to have and employers cannot find the type of employees they’d like to hire. Mike Rowe of the TV show Dirty Jobs has done a good job of highlighting the problem, as have leaders from many industry sectors. Louisiana state government from the governor to the Louisiana Community and Technical College System, the Louisiana Workforce Commission and the Department of Education responded with action, and since 2007 the skilled workforce has grown tremendously. But are employees earning more today? Are employers happier? According to the U.S. Census Bureau, Baton Rouge’s median family income rose by 9.88% from 2012 to 2015. In the same time frame, the U.S. median family income rose by only 5.75%. In addition, Louisiana as a whole increased by only 5.66%. This shows that something happening in the Capital Region was dif58

ferent. At the Greater Baton Rouge Industry Alliance, we like to think that significant industrial investment of about $40 billion in the region is in large part the reason. GBRIA was formed in 1970 as an answer to industrial managers’ need for a competitive, skilled workforce and safe operations. In 2006, members made a decision to increase the number of qualified workers by investing in Louisiana’s education system. Industry members worked through GBRIA with state agencies and the governor and Legislature to increase funding to Louisiana’s community and technical colleges, supported change of the Louisiana high school diploma to include industry-based certifications, and initiated outreach to youth and adults to let them know about the great careers in industry. Today, GBRIA continues efforts to improve the area’s pipeline of talent, ensuring access to skilled, local workers, as well as to provide opportunities for individuals in the greater Baton Rouge area to establish steady, well-paying careers. In the last year, LCTCS grew its credentialing capacity to 5,000 National Center for Construction Education and Research (NCCER) Level 1 credentials per year. LCTCS has also increased its number of industry partnerships and skilled labor programs such as The Dow Chemical Apprenticeship Program. [See pages 34-37 for more on the latter.] Baton Rouge Community College has also just announced a public-private workforce training and career opportunity effort with an $8 million expansion and renovation of its North Acadian Thruway campus to offer dual enrollment courses on

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industrial skills to East Baton Rouge high schools, including Istrouma High School. Istrouma is not the only high school introducing students to craft and technical skills. An increasing number of high schools in Baton Rouge and surrounding parishes are reintroducing craft and technical skills training programs into their curricula. By introducing welding, electrical and carpentry skills to high school students, the schools provide these young people with exposure to more career opportunities. In addition, many high schools have adopted Jump Start Program pathways, which require students to attain industry credentials in order to graduate high school. Some students may even receive NCCER certifications by the time they graduate, which makes them eligible to begin work at the age of 18 making a competitive wage, usually in the range of $12/hour-$15/hour, depending on the craft. According to the year-end 2015 GBRIA Industrial Craft Wage Survey of members, the average top-level wage is just over $30/hour, or $62,400 per year. Often, skilled workers have the opportunity to earn more by working some overtime or traveling to jobs outside the region. GBRIA hosts an annual Craft Workforce Development Awards banquet to promote skilled craft careers and to foster continuous improvement in the quality of skilled workers. GBRIA recognizes area high schools that have implemented craft or technical skills programs, industrial contractors, and individual “Workforce Development Champions” who have demonstrated special initiatives or accomplishments in craft workforce development.

This awards program has asked local contractors to explore and improve their workforce development programs and, in some cases, even implement new elements of a workforce development program. For example, in the area of assessments, contractors must answer how they recognize employee feedback with respect to training and workforce development. In 2007, when asked whether a contractor had a suggestion box system, only 30% reported that they do; during 2016’s award program, 80% reported that they do. GBRIA creates the environment to facilitate collaboration between industry leaders, contractors, education officials, and state and local government. Most high schools that have implemented craft training have been able to do so due to their partnerships with local contractors and plants, who sponsor nearby schools. Industry members also steer advisory committees in area two-year and four-year universities to meet industry’s needs. So does the skills gap still exist? Industry members currently report good availability for most crafts, with electrical, instrumentation, welders, pipefitters, millwrights and scaffold builders in highest demand. And from employees’ perspective, wages are up in our region; however, there surely still is a skills gap, and of course industrial skills are not the only gap that exists. But we believe that the gap has narrowed significantly through the combined efforts of many stakeholders. Connie P. Fabré is the executive director of the Greater Baton Rouge Industry Alliance Inc. Jessica Pranjic, the manager of communications and workforce development for the alliance, also contributed to this column. 1012industryreport.com

A summer of discontent

DAVID DISMUKES

ummer weather forecasts in south Louisiana are often not very difficult to predict: “hot, humid, with a high probability of afternoon thunderstorms.” The same can be said in describing this summer’s crude oil price trends: “high levels of storage, surging U.S. production, with little opportunity for price increases.” These trends, coupled with a relatively ho-hum demand outlook for gasoline and other refined products, is leading many analysts into referring to this summer as one of “discontent,” as producers struggle with a late spring price correction that dropped prices back into the mid-$40 range with little opportunity for upward movement. A quick look at the fundamentals underscores and provides the justification for this summer malaise. First, consider crude oil production. U.S. production has once again proven its innovation and resiliency by bouncing from its post-OPEC-induced price squeeze low of around 8.5 million barrels per day (MMBBls/d) to its prior recent record production level of around 9.7 MMBBls/d. Drilling and well productivity continue to increase in the country’s most prolific basins, like West Texas and the Eagle Ford, and these two regions alone could drive U.S. production past the 10 MMBBls/d mark before year’s end. The second fundamental is storage. The U.S., as well as most

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developed nations around the world, are still reporting crude oil storage levels that are at or near record levels. In the U.S., those storages levels are moving in a “positive” (lower) direction, but are still stubbornly high relative to U.S. and world demand. Quite simply, U.S. and global crude oil prices will continue to face flat to downward pressure so long as these crude oil storage levels stay at high levels relative to their overall five-year averages. Lastly, there are the “ducks.” No, not the ones that fill our gumbo bowls, but the thousands of “drilled but uncompleted” (DUCs) wells that require only a limited amount of additional completion activities in order to bring their production online. These DUCs represent a type of “well-inventory,” as well as a type of supply “trip-hammer,” that, if developed quickly, could lead to an exceptionally destabilized supply outlook for the market. Fortunately, if there is any good news in this story, to the extent this can be thought of as good news, it is the fact that service companies and operators are having a hard time securing crews to complete these wells, temporizing the degree to which this “just-intime” production inventory can be brought to market. So, like the summer weather in south Louisiana, summer energy prices have suffered from their own set of doldrums, an outlook likely to extend into the fall and for the balance of the year. Unfortunately for many, this will not be the year of recovery for crude oil prices, and producers are likely going to have to wait until 2018, and possibly even mid-2018, until any semblance of upward price pressure arises. David E. Dismukes is a professor and the executive director of the Center for Energy Studies at Louisiana State University. He holds a joint academic appointment in the department of environmental sciences, where he regularly teaches a course on energy and the environment.

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10/12 INDUSTRY REPORT • THIRD QUARTER 2017

Strategic planning: Fact and fiction

DR. WILL WILLIAMS

Michael D. Hunt

Baton Rouge Dallas/Fort Worth Gulfport Mobile New Orleans Raleigh Tampa

INSIGHT

Houston Jackson London Tupelo phelpsdunbar.com

hat is strategic planning? A written strategic plan, when done well, is both the road and the map itself. Fact: Simply put, it is a tool an organization uses to clarify its vision of the future (The Map) and then lay down the clear, concrete actions needed to get there (The Road). Fiction: It is a theoretical, pie in the sky, feel-good company retreat that discusses vision without addressing the action necessary to get where you want to go. It may seem self-evident that a business knows where it’s going and how to get there, but that is often not true, or certainly not true of the entire organization. Most organizations today are lean, busy and mostly focused on today’s priorities. So, what good is the strategic planning process? Useful: The result of a good strategic planning process is clear direction and priority—a prerequisite for strong, effective organizational performance. A good strategic planning process also identifies the resources needed to complete the strategy. Management has clarified its understanding of the business environment, the organization’s strengths and weaknesses, and the direction it is going so it can respond correctly

and rapidly to threats and opportunities, continuously tuning operations to maintain progress toward the goals. Clarity of purpose and path make it easier to communicate this vision and direction to all employees, enhancing morale and their ability to do their work effectively. Two major objectives are achieved through the strategic planning process. First, the business strategy is reviewed—and confirmed or modified with a 3- to 5-year time horizon. Detailed steps to reach established goals are delineated, with metrics to monitor progress put in place. Next, and sometimes more important, it serves as a team-building process and gets the team members aligned toward a believable future and a common understanding of the work ahead. Useless: A poor strategic planning process produces a fuzzy goal with no solid plan on how to reach the targets. This leads to confusion in the organization about what the direction is and what each person is supposed to do. Often a change point in the company triggers the need for strategic planning. These change points include: 1. retirement or change in key personnel; 2. growth of an organization’s size so systems breakdown; 3. desire to go to the “next level”; 4. ownership change, generational change; 5. stagnation of profits or growth; 6. business environment has changed; 7. feeling of loss of control by the management; 8. breakdown in morale. KEY POINTS • Bring the team to the same understanding of how the company operates and its business environment. • End up with the same ideas on where it is going, how it will get there and “what I need to do.” Dr. Will Williams is a partner at SSA Consultants. 1012industryreport.com

CLOSING NOTES EXECUTIVE MOVES

EL KOUBI

ASHERMAN

ONE ACADIANA One Acadiana, the business development arm of the nine-parish Acadiana region, hopes to hire a new director and CEO by the end of the year, The Advertiser reports. Chairman Frank Neuner says leaders of the organization began meeting July 25 about the vacancy, following former president and CEO Jason El Koubi’s departure for a new position in Virginia. His last day was July 21. He is joining former LSU Foundation president and CEO and former secretary of Louisiana Economic Development Stephen Moret at the Virginia Economic Development Partnership. Neuner says the organization is not seeking “a change agent,” but rather someone who can execute established plans. CB&I CB&I’s Supervisory Board of Directors announced it has approved the retirement of Philip Asherman from his role as president and CEO of CB&I and as a member of the company’s board effective July 1. The board also announced the appointment of Patrick Mullen to president and CEO, effective the same date. Mullen will stand for election to the company’s board in May 2018. Asherman, 66, is widely credited for transforming CB&I from a specialty tank subcontractor to a global technology and energy infrastructure corporation, which at its peak has employed more than 50,000 employees in 85 locations around the world with a backlog of business exceeding $20 billion. He is also regarded as a leader in safety for the industry and in 2015 was a recipient of the National 1012industryreport.com

MULLEN

PUGH

Safety Council’s prestigious Green Cross for Safety award, the first ever received by an engineering and construction company. Mullen, 52, was named chief operating officer of CB&I in 2016. Previously, he served as executive vice president and president of CB&I’s engineering & construction operating group, where he was responsible for all engineering and construction for CB&I’s worldwide operations. He joined CB&I in 2007 through the company’s acquisition of Lummus Global and has worked in operational and commercial leadership roles throughout the company. GREENBERRY Jarrett Pugh has joined Greenberry Industrial LLC as chief financial officer. He will report to Jason Pond, Greenberry’s president. Pugh will be responsible for providing financial direction and leadership. Prior to Greenberry, Pugh had an extensive background of senior financial management positions on the Gulf Coast, where he recently worked as the manager of finance and project accounting in the oil, gas and chemical division at CDI Corp. Pugh has a bachelor’s degree in accounting and business management from Southeastern Louisiana University, an MBA from LSU, and a certificate in auditing from LSU’s Center for Internal Auditing. Additionally, he is well-versed in financial analysis and strategic forecasting and formulating system optimization structures. FRANK’S INTERNATIONAL Frank’s International has named Kyle McClure as senior vice

MCCLURE

ZAMARIN

president and chief financial officer. McClure previously served as the company’s senior vice president of finance and treasurer since March 2015, with responsibility for global treasury, insurance, investor relations, and financial planning and analysis. In August 2016, he assumed additional responsibilities for finance leadership of the Western Hemisphere business. In March 2017, he was appointed as the interim CFO in addition to his other duties. Prior to joining Frank’s International, McClure served as treasurer for Ascend Performance Materials, a specialty chemicals company, where he was responsible for capital funding, cash and liquidity management, insurance, credit and treasury operations, and controls. WILLIAMS COMPANIES The Williams Companies Inc. has appointed Chad Zamarin as senior vice president of corporate strategic development. Zamarin previously served as senior vice president and president, pipeline and midstream, at Cheniere Energy Inc. He has significant experience in delivering strategic growth across different segments of the energy industry, especially in pipeline transportation and in the development of LNG exports. He will succeed the retiring Frank Billings. In his new role, Zamarin will be responsible for enterprise-level strategy, business development and customer-relationship management. He will also have additional responsibility for government affairs and project analysis, and will report to the president and CEO of Williams, Alan Armstrong.

BARGAS

ASSOCIATED BUILDERS & CONTRACTORS – PELICAN CHAPTER Alvin Bargas has retired after 15 years as president of the Pelican Chapter of ABC. “Our commitment to excellence continues as we have invested both time and financial resources in the development of a strategic plan that will take the Pelican Chapter into the next five years and beyond,” Bargas said in a statement. “While this plan outlines specific benchmarks, it is a flexible plan that will provide a road map for success.” ABC has appointed a committee to conduct a search for a successor. ENLINK The EnLink Midstream companies announced that Rhonda Price is succeeding Jennifer Johnson as senior vice president of human resources. Johnson is retiring, effective Sept. 1, after more than 13 years of service to EnLink and its predecessor, Crosstex Energy. Price has more than 30 years of global and national-level HR experience, including seven years as vice president of HR at EnLink, during which she has been involved in every M&A transaction and set EnLink’s employee benefits strategy. Prior to her career at EnLink, she served as vice president of HR at Centex Corp. EnLink provides integrated midstream services across natural gas, crude oil, condensate and NGL commodities. Submit items for Executive Moves by emailing a press release and a highresolution headshot to editor@ 1012industryreport.com. Executive Moves is limited to senior management and board positions only.

10/12 INDUSTRY REPORT • THIRD QUARTER 2017

CLOSING NOTES: COMPANY NEWS NORANDA UPGRADING ST. JAMES PLANT Gov. John Bel Edwards and Noranda Bauxite & Alumina CEO David D’Addario announced the company will invest $35 million to expand and upgrade its alumina refinery in St. James Parish. The company also plans to establish its company headquarters at the Gramercy complex. The project will create 65 new direct jobs, including 15 corporate headquarters jobs, at an average annual salary of $90,000, plus benefits. In addition, the project will retain 395 existing jobs at the refinery. The plant, built by Kaiser Aluminum & Chemical Corp., has operated in St. James Parish since 1958. It is located on the east bank of the Mississippi River, less than a mile downriver from the Veterans Memorial Bridge. The project will include the design and installation of equipment to increase the production, storage and shipping capabilities of chemical-grade alumina. AECOM WINS LNG CONTRACT Monkey Island LNG has selected

AECOM to coordinate the environmental analysis and engineering services for its Federal Energy Regulatory Commission pre-filing review process and application. Monkey Island LNG, formerly known as SCT&E LNG, is constructing a 15.75 million tonneper-year LNG export facility on Monkey Island in Cameron Parish. FERC is the siting and construction authority for the facility. AECOM will prepare the permitting strategy for the project and commence the application process with FERC. AECOM previously carried out the Phase 1 environmental study for the Monkey Island site. The firm will provide support for the project from its offices in Houston, Baton Rouge and New Orleans. CHRISTIAN JOINS RAILROADSHIPPER COUNCIL The Port of New Orleans announced that president and CEO Brandy Christian has been appointed to the Railroad-Shipper Transportation Advisory Council. A council created by statute under

the Surface Transportation Board, RSTAC provides advice on regulatory, policy and legislative matters to the board members, the U.S. Secretary of Transportation, the U.S. Senate Committee on Commerce, Science and Transportation, and the U.S. House Transportation and Infrastructure Committee on railroad-transportation policy issues. Christian’s appointment to RSTAC comes after the Board of Commissioners of the Port of New Orleans recently approved a resolution to begin negotiations with the New Orleans Public Belt Railroad and the City of New Orleans to realign

the Public Belt and its assets under the port. SHAMROCK WINS OFFSHORE SAFETY AWARD Shamrock Energy Solutions has been named the recipient of the 2016 AEU Offshore Safety Award. The American Equity Underwriters Inc. presents the award each year to the American Longshore Mutual Association member with the most effective safety program in its category. Award winners are separated into four categories: Marine Cargo Handling, Shipyards, Offshore Industry and Marine Contracting. Shamrock’s

SAFER THAN THE REST: Shamrock employees celebrate the company’s AEU Offshore Safety Award.

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safety program outperformed 30 other companies in the Offshore category. Shamrock’s HSE director was asked to speak on the topic of “Celebrating Milestones and Successes in Safety” at the AEU Safety and Claims Forum in Houston in May. Shamrock Energy Solutions is a diversified services provider for the oil and gas industry. Headquartered in Houma, Shamrock offers contract production personnel, I&E services, mechanical services, valve and wellhead services, rental generator packages and more. HUNTSMAN SIGNS SUPPLY DEAL WITH AIR PRODUCTS Air Products and Huntsman have signed a long-term agreement for Air Products to build, own and op-

AIR SUPPLY: An existing Air Products production facility near Convent, Louisiana.

erate a new steam methane reformer and cold box in Geismar, Louisiana. The Air Products facilities, targeted to be onstream in January 2020, will supply hydrogen, carbon monoxide (CO) and steam to Huntsman’s Geismar operations. The new facility, to be located on land leased from Huntsman, will produce approximately 6.5 million standard cubic feet per day (MMSCFD) of CO, 50 MMSCFD of hydrogen and up to 50,000 pounds per hour of steam. Geismar is one of Huntsman’s three world-scale MDI production facilities, which primarily serves North and South America. Beyond supply to Huntsman’s production facility, Air Products’ new plant will also be connected to its Gulf Coast hydrogen pipeline and network system (GCP). Dedicated in 2012, the 600-mile pipeline span is the world’s largest hydrogen plant and pipeline network system. H&E ACQUISITION DOUBLES NUMBER OF LOCATIONS Baton Rouge’s H&E Equipment Services is acquiring Neff Corp., a

regional equipment rental company based in Miami, in a deal valued at $1.2 billion that will double its number of branches. H&E says it will pay $21.07 in cash per share for Neff. The deal also includes about $690 million in debt, a news release says. “This transaction will bring together what we believe to be two highly complementary businesses that share a commitment to addressing the increasingly complex equipment needs of our customers,” H&E CEO John Engquist said in a statement. The companies have already signed a definitive merger agreement and their boards have approved the deal, which is expected to close late in the third quarter or early in the fourth quarter.

Mauser Group—will operate a 40,000-square-foot packaging and logistics facility on La. 30, between Interstate 10 and River Road. The operation will be located on a 5-acre site in Talon Industrial Park. The project’s initial phase will create 28 new jobs. Mauser USA’s initial project phase will support the packaging needs of chemical manufacturing customers in the Geismar area. The project has the potential to expand with a second phase that would yield 19 additional jobs. The company will produce custom-engineered plastic containers for shipment of industrial chemicals. Additional phases of the project could include steel and other forms of packaging in response to industry demand.

PACKAGING PLANT TO SERVE CHEMICAL MAKERS Mauser will make a $10 million capital investment in a new Louisiana packaging facility in Geismar, near its major industrial customers in Ascension Parish. Mauser USA LLC—part of the German global industrial packaging company,

PINNACLE WINS HUMANA AWARD Pinnacle Polymers, a Louisiana-based manufacturer of polypropylene for injection molding, fibers and extrusion, has been presented a Total Health Thriving Together Award by Humana Inc. for building a culture of health and well-being for its employees. Humana’s Total

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10/12 INDUSTRY REPORT • THIRD QUARTER 2017

COVERING INDUSTRY IN LOUISIANA

Connect With Your Top Customers! 10/12 Industry Report covers the latest developments in the corridor as the industrial growth continues. We will take a close look at the people and the projects making all the news in industry and construction.

To reserve your space email jill@1012industryreport.com or call us at 225.928.1700.

A publication of

64 10/12 INDUSTRY REPORT â&#x20AC;¢ THIRD QUARTER 2017

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CLOSING NOTES: COMPANY NEWS Health Thriving Together Award is a national honor recognizing companies for achieving one of the best wellness engagement rates in the country. Pinnacle Polymers has engaged 80% or more of its employees and family dependents in Go365, a wellness and rewards program that helps individuals focus on personal health and well-being. Pinnacle operates one of the most modern Unipol™ facilities in North America. Built in 1999, the company’s two production lines, located in Garyville, Louisiana, can produce more than one billion pounds of polypropylene per year.

savings to customers, Entergy said. The plant, which is scheduled to be in service by June 2020, will cost approximately $872 million to build, including transmission and other project-related costs and contingency. The plant will employ approximately 30 people.

SAFETY SPECIALIST JOINS NATIONAL COMMISSION Lu Yuan, interim head of the Southeastern Louisiana University Department of Computer NEW ENTERGY PLANT GETS Science and THE GREEN LIGHT FROM PSC Industrial The Louisiana Public Service Technology, Southeastern Professor Lu Yuan Commission voted in June to has been reapprove construction of the Lake appointed to a term as commission Charles Power Station, a 994-megamember for the ABET Applied and watt combined-cycle power plant Natural Science Accreditation Comin Westlake. The natural gas-fired mission, one of the nation’s foremost plant is a key element of Entergy academic accrediting bodies. Yuan, Louisiana’ s plan3Q to provide clean, Issue Date: AugusttheAd2 proofan #7associate professor and certified • Please by e-mail or faxto with your approval or minor revisions. effi cientrespond energy needed power safety professional, will participate • AD WILL RUN AS IS unless approval or final revisions economic growth and bring more in scheduled commission meetings are received by the close of business today. • Additional revisions must be requested and may be subject to production fees.

and serve as team chairman for one or more site visits to institutions seeking accreditation or reaccreditation. CB&I WINS DUPONT EPC CONTRACT DuPont has awarded CB&I an approximately $40 million contract to provide engineering, procurement and construction for an ethane cracking furnace expansion at DuPont’s Sabine River Works ethylene plant in Orange, Texas. “This award adds to CB&I’s winning streak of ethylene projects on the U.S. Gulf Coast,” Luke V. Scorsone, executive vice president of CB&I’s Fabrication Services operating group, said in a company statement. According to CB&I, the new cracking furnace will boast an ethylene capacity of 200 million pounds per year and apply the company’s SRT (Short Residence Time) pyrolysis heater technology. REG BUYS GEISMAR PROPERTY Renewable Energy Group Inc. announced it has completed the $20 million acquisition of approximate-

ly 82 acres of land at its Geismar, Louisiana, biorefinery from Lion Copolymer. The purchase includes land REG previously leased for its Geismar operations and approximately 62 additional acres in parcels adjacent to and near the facility. The company plans to improve and utilize the new acreage to support existing production capacity and future expansion opportunities. The purchase of the previously leased property will save REG approximately $35 million in future lease payments through 2033. REG Geismar is a 75 MMgy biorefinery that produces renewable hydrocarbon diesel, along with renewable naphtha and LPG. Send news to editor@1012industryreport.com. News that will be considered includes new promotions, hires and transfers at the executive level; product announcements; office openings and moves; project and contract announcements; and awards. Personnel news should be accompanied by a 300 dpi, color photo of the executives involved.

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10/12 INDUSTRY REPORT • THIRD 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 Diamond Green Diesel $190M | N/A Status: engineering underway; major equipment ordered 3 Entergy $187M | N/A Location: Cameron, Calcasieu parishes Status: permitting 4 Indorama Ventures $175M | 125 jobs Location: Calcasieu Parish Status: commercial startup projected before end of 2017

11 Advanced Refining 20 Virdia $60M | 81 jobs Technologies Location: Lafourche Parish $135M | 325 jobs Status: complete Location: Calcasieu Parish Status: project has been placed 21 Epic Piping on hold, but is not canceled $45.3M | 566 jobs Location: Livingston Parish 12 Matheson Gas Status: complete $130M | 40 jobs Location: Calcasieu Parish 22 Boise Cascade Status: under construction $43M | 400 jobs 13 Praxair $100M+ | N/A Location: Ascension Parish Status: completion expected second half of 2018

14 Cleco/Cabot Corp. $80M | 20 jobs Location: St. Mary Parish Status: broke ground October 2016

5 Tennessee Gas Pipeline Co. (Kinder Morgan) 15 Florida Fuel Connection, LLC $170M | N/A $75M | 50 jobs Location: Northeast Louisiana Location: Orleans Parish to southwest Louisiana Status: moved from East Status: Construction began Feliciana Parish; pursuing March 2017; expect completion opportunities at Port of New Feb. 2018 Orleans 6 NOLA Oil Terminal $162M | 54 jobs Location: Plaquemines Parish Status: under construction 7 Kinder Morgan La. Pipeline expansion $151M | 0 jobs Location: Southwest La. Status: permitting

16 Southwest Louisiana Bioenergy $69.3M | 41 jobs Location: Allen Parish Status: under construction 17 Momentive Specialty Chemicals, Inc. $66M | 68 jobs Location: St. Charles Parish and Ascension Parish Status: expected to begin construction in 2016

8 Occidental Chemical $145M | 12 jobs Location: Ascension Parish Status: construction May 2016- 18 Hunting Energy Services late 2017 $62M | 123 jobs Location: Terrebonne Parish 9 Regency Energy Services Status: complete $144M | 6 jobs Location: Webster Parish Status: under construction

10 Bunge North America $140M | N/A Location: St.Charles Parish Status: under construction

19 Stepan Company $60M | 33 jobs Location: Ascension Parish Status: hiring to begin as early as 2017

66 10/12 INDUSTRY REPORT â&#x20AC;˘ THIRD QUARTER 2017

RED RIVER

DESOTO

NATCHITOCHES SABINE

Location: Sabine Parish Status: completion projected for 2017

23 Graphic Packaging International $41.5M | 1,340 jobs Location: Ouachita Parish Status: under construction

VERNON

24 Balchem and Taminco $40M | 110 jobs Location: Iberville Parish Status: expected to begin construction in 2015 25 PCS Nitrogen $40M | 0 jobs Location: Ascension Parish Status: permitting

BEAUREGARD

26 Bayou Cos. $39M | 15-20 jobs Location: Iberia Parish Status: complete 27 TCI Plastics $36.5M | 280 jobs Direct jobs: 280 Location: Orleans Parish Status: under construction

30 Huntsman/Rubicon 400K mt production expansion for MDI Location: Ascension Parish Status: On hold awaiting construction

CALCASIEU

28 Noranda Alumina $35M | 65 jobs Location: St. James Parish Status: announced May 2017 29 SB International $32.5M | 134 jobs Location: Bossier Parish Status: under construction, completion projected for 2017

3 CAMERON

BLUE = NEW PROJECT

1012industryreport.com

UNION

MOREHOUSE

WEST CARROLL EAST CARROLL

LINCOLN

OUACHITA

RICHLAND

MADISON

JACKSON

FRANKLIN

CALDWELL

TENSAS WINN

CATAHOULA LASALLE GRANT

CONCORDIA

RAPIDES

AVOYELLES WEST FELICIANA

WASHINGTON

EAST FELICIANA

ST. HELENA

EVANGELINE ALLEN

POINTE COUPEE

TANGIPAHOA

ST. LANDRY WEST BATON ROUGE

ACADIA

ST. TAMMANY LIVINGSTON

8 13 19 30

ION NS

LAFAYETTE

IBERVILLE

ST. MARTIN

CE AS

JEFFERSON DAVIS

EAST BATON ROUGE

ST. JOHN THE BAPTIST

28 ST. JAMES

17 2 ST. CHARLES

IBERIA ASSUMPTION

26 VERMILION

ORLEANS

27 JEFFERSON ST. BERNARD

ST. MARTIN ST. MARY

20 18

IBERIA

LAFOURCHE

PLAQUEMINES

TERREBONNE

Sources: LED, La. Economic Outlook, 10/12 research

1012industryreport.com

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

CLAIBORNE

CLOSING NOTES: PROJECT MAPS BOSSIER

Project by project

CADDO

WEBSTER

($250M and up)

BIENVILLE

Louisiana industrial projects announced or proposed since 2009 with projected capital investment of $250 million or more. Second line shows projected capital investment and direct new jobs. List is representative, not complete; project statuses change frequently. (LNG = liquefied natural gas export project) 1 Sasol Ltd. $21.2B-$24.2B | 1,253 jobs

19 Marathon Petroleum $2.35B | 65 jobs

2 Sabine Pass LNG (Cheniere Energy) $20B | 400 jobs

20 CF Industries Nitrogen, LLC $2.1B | 93 jobs

3 Driftwood LNG $13B-$16B | 400 jobs 4 G2 LNG $11B | 250 jobs 5 Sempra Energy/Cameron LNG $10B | 190 jobs 6 Formosa (St. James Parish) $9.4B | 1,200 jobs 7 Lake Charles LNG (aka Trunkline LNG; BG Group and Energy Transfer Partners) $9B | 250 jobs 8 Monkey Island LNG (Southern California Telephone & Energy) $9B | 200 jobs 9 Venture Global LNG (Plaquemines) $8.5B | 250 jobs 10 Cambridge Energy FLNG $8B | N/A 11 Delfin LNG $7B | 400 jobs 12 Magnolia LNG $4.35B | 50 jobs 13 Venture Global LNG (Calcasieu Pass) $4.25B | 100 jobs 14 Lake Charles Methanol, LLC $3.8B | 200 jobs 15 Nucor Steel Up to $3.4B | 1,250 jobs 16 Axiall/Lotte Chemical $3B | 250 jobs 17 Lake Charles Clean Energy (Leucadia Corp.) $2.5B | 215 jobs

38 Entergy (St. Charles) $865M | 27 jobs

39 Lake Charles Cogeneration, LLC $820M | 210 jobs 21 Live Oak LNG (Parallax Energy) $2B | 100 jobs 40 Energy World USA $800M | N/A 22 Yuhuang Chemical, Inc. $1.85B | 400 jobs

NATCHITOCHES SABINE

41 Petroplex $800M | N/A 42 Shell Chemical $717M | 20 jobs 43 Valero Refining – New Orleans, LLC $700M | 24 jobs VERNON

44 Bayou Bridge Pipeline $670M | 12 jobs 45 Louisiana LNG Energy, LLC $646.6M | 44 jobs 46 Pin Oak Terminals $600M | 70 jobs

28 AM Agrigen Industries $1.2B | 150 jobs

47 Southern Cross Transmission Project $600M | N/A

29 Wanhua Chemical Group $1.12B | 170 jobs

48 Methanex Corp., Methanex 1 $570M | 35 jobs

30 Castleton Commodities International $1.2B | 50 jobs

49 Methanex Corp., Methanex 2 $570M | 120 jobs

18 Revolution Aluminum $2.4B | 1,450 jobs 68 10/12 INDUSTRY REPORT • THIRD QUARTER 2017

RED RIVER

DESOTO

50 BASF (Geismar) $500M | 100 jobs

CALCASIEU

66 1 37 7 16 17 60 12 23 39 14 21

51 Sundrop Fuels $450M | 150 jobs 52 Westlake Chemical (Geismar) $425M | 70 jobs

53 SE Tylose (Shintech) $420M | 88 jobs 54 Shintech (ethylene expansion) $400M | N/A 55 Hazelwood Energy Hub $400M | 120 jobs

BEAUREGARD

5 CAMERON

4 2

13 11

8 23

56 Williams Olefins $400M | 5 jobs 57 NuStar Energy $365M | 32 jobs

RED = PROJECT KILLED BLUE = NEW PROJECT

1012industryreport.com

UNION

MOREHOUSE

WEST CARROLL EAST CARROLL

LINCOLN

58 Syngas Energy $360M | 86 jobs