Home / Energy / Permian Basin saw major projects in 2015
A drilling rig operating in the Permian Basin near Farmington, New Mexico. (Image courtesy of Encana Corp)
A drilling rig operating in the Permian Basin near Farmington, New Mexico. (Image courtesy of Encana Corp)

Permian Basin saw major projects in 2015

Plummeting oil prices dominated the headlines in 2015, and to be sure, the economic fallout bled into other businesses. But the momentum of the waning boom still brought a number of major businesses as local businesses navigated the downturn.

Rapidly growing thoroughfares continued to grow, including major projects. New businesses entered the market or expanded their presence, developments that included two new grocery stores in Odessa. And the long delayed Texas Clean Energy Project would gain a breath of new life, when Summit Power Group announced a deal to sign contracts with the primary companies who will construct who will build the more than $2.5 million carbon capture and storage coal plant.

Housing developers also kept building homes, especially in northern and eastern portions of town.

Still, the losses from the downturn, including thousands of displaced workers and falling wages for those who kept their jobs, resulted in less spending citywide. And local businesses sought to adapt.

Texas Soul Cafe, a restaurant that opened in April at 947 N. Grandview Ave., was borne from the downturn.

Owners Derrick and Marcy Bush opened KHS Catering there last year, providing food to workers in the oil patch. But as activity in the oilfield rapidly declined, they came up with a new plan instead of laying off the 25 or so workers at the business and sitting tight on savings.

Major businesses pivoted too in the face of a slumping economy and oil sector.

In August, auto dealer Collin Sewell opened a Toyota dealership in Wichita Falls as part of an effort to diversify beyond the West Texas market vulnerable to the swings of oil and gas activity. The Wichita Falls location was the most eastern of Sewell’s dealerships and the first outside of the Permian Basin.

Related: Permian Basin Petroleum Association claims victory in ruling

But back home, Sewell followed with another development, announcing plans to break ground toward the end of 2015 on a new Sewell Ford-Lincoln dealership at the intersection of Parks Legado Road and Highway 191, just east of Sewell’s still growing Parks Legado Town Center. Estimated construction costs filed with the city amounted to about $15 million.

The project includes a 30,000 square feet dealership, including a cafe and retail area, and a 50,000 square foot service and parts facility, along with an outdoor area.

Sewell estimated the project would require adding about 50 more employees to the existing companywide staff of more than 350.

The development will join a series of other projects underway on Highway 191.

Other projects underway include the 90,000-square-foot Cinergy Cinemas entertainment complex that started construction about in July and will anchor ICA Properties’ 237-acre Dorado Center.

Regal Cinemas Permian Palace 11 also embarked on an expansion, taking out a $375,000 building permit to install an IMAX theater and expand food services.

In addition, the big-box retailer Target took out a permit for a major remodel of the store. A Petco and a 24-hour hour emergency clinic also opened.

Such projects abounded, and they weren’t just confined to Highway 191. At 1511 W. Interstate 20, Tractor Supply began building a 19,000-square-foot facility at an estimated cost of $1.4 million.

To the east, 87th Street also saw retail development, like a 41,000-square-foot retail strip that included a new Hops Scotch & Vinery liquor store, along with an Odessa Regional Medical Center emergency clinic, a donut shop and a pizza restaurant.

Nearby, housing developer Betenbough Homes continued building new homes and the Odessa Housing Finance Corporation began a nearly 48-acre neighborhood for affordable housing.

Other major projects included the new grocery stores, increasing access to food in the wake of the oil boom.

On Nov. 11, the Albertsons grocery at 42nd and JBS Parkway officially became Market Street, a higher-end grocery store with more employees.

In July, H-E-B opened a 98,000 square feet store at West Loop 338 and University Boulevard, which included broader offerings than the existing H-E-B on 42nd Street.

Industrial portions of town saw major developments too, despite the downturn.

Related: Permian Basin dominates rig counts

In November, Air Products formally opened its $33 million liquid nitrogen facility on South JBS Parkway, a development lauded by city officials who sought to attract the Fortune-500 company with incentives and by oilfield services customers in need of a local supply.

Meanwhile, the nonprofit economic development group Grow Odessa, better known by its former name the Odessa Industrial Development Corporation, worked to prepare about 500 acres surrounding an expansion of JBS Parkway for new businesses that economic development officials hoped to attract.

In October, officials at nearby Saulsbury Industries announced plans to scrap an expansion of company headquarters on JBS Parkway in favor of buying the facility left by SandRidge Energy when the oil company pulled back from the region earlier this year.

As it happened, the office building on Interstate 20 was nearly the size of the planned expansion, at 36,000 square feet. The deal also included five other facilities including maintenance, warehouse and fabrication buildings, according to the release.

Saulsbury Industries, which specializes in heavy industrial construction, cited cost savings as part of the reasoning behind the purchase.

At the same time in October, Saulsbury Industries executives said they expected to hire fewer employees locally than the 200 they project in 2014, as the company reevaluates plans during the oil rout.

In July, owners of another major business in Odessa, Odessa Pumps and Equipment, sold the company to National Oilwell Varco-spinoff DistributionNOW. In public filings, DistributionNOW reported the purchase price at about $170 million, subject to adjustment.

But no layoffs were expected among Odessa Pumps more than 300 employees as a result of the deal, and Odessa Pumps’ 15 locations in 13 cities would remain open under the same name. Owners Toby and Sondra Eoff planned to stay with the company and continue to help the company grow.

But the broader picture for the Odessa economy remained bleak.

Building permit valuations through October totaled about half as much as the same period of last year, according to the latest Odessa Economic Index in December, prepared by Amarillo economist Karr Ingham. Home sales are also down.

Sales tax revenue continues to fall. The December sales tax check the City of Odessa received from the state on Wednesday showed a decline of 15.9 percent from the same period of last year, to more than $3.33 million.

In December, the U.S. Bureau of Labor Statistics reported Odessa had the biggest one-year increase in unemployment out of any metropolitan area in the country, climbing 1.7 percentage points to a total 4.7 percent. The BLS report used data through October

The Summit project stood out in what is otherwise an increasingly bleak picture for the local economy amid the downturn in oil and gas activity.

On Dec. 7, Summit officials in Beijing signed contracts with the primary companies who will construct the Texas Clean Energy Project on a 600 acre site near Penwell.

The carbon capture and storage coal plant will sell power, CO2, urea and sulfuric acid. Summit still must raise funding to build the plant, and they are targeting financial closing in spring 2016.

But the contracts were seen as a major development for the project, wanted by city officials and economic development groups for the estimated 2,000 workers required to build it and the 150 full-time workers it would employ, in addition to property tax revenue for entities such as the Ector County Independent School District.

Summit, which during the boom suffered from soaring cost estimates, was one of the few projects to benefit from the oilfield decline.

“Actually this year has really helped us a lot,” Laura Miller, the Texas director of the Summit project, told the Odessa City Council a day after the contract announcement. “Because with oil prices sliding, we are not talking about building giant man camps anymore. We have local skilled labor where we didn’t before, so that’s also good for pricing. We have a bit of a tailwind, which is good right now.”

(c)2016 the Odessa American (Odessa, Texas)

This article was written by Corey Paul from Odessa American, Texas and was legally licensed through the NewsCred publisher network.