GALVESTON

Citing an increase in the number of ships running on liquified natural gas, a company has approached the Port of Galveston about building an LNG fuel facility on Pelican Island.

John Wayne Ferguson: 409-683-5226; john.ferguson@galvnews.com or on Twitter @johnwferguson.

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(18) comments

Michelle Aycoth

Sounds like a great opportunity for Galveston to bring in some revenue and support the cruise industry.

Bailey Jones

Cleaner fuel for cruise ships does sound like a good idea.

Ron Shelby

Wasn't this a huge issue up for consideration about 10 years ago? I think there were significant safety concerns by the community the last time it was proposed. Maybe I'm wrong.

Michael Woodson

Ron I remember that too. An article in the Daily News luridly described the giant fireball that would consume the island in case of a major accident, if memory serves.

Jose' Boix

A couple of comments: 1. It is interesting that Pelican Island developments continue and access to it is in question. How about the much debated and discussed Pelican Island bridge; I would presume this would be a key issue; and, 2. The article states that NextDecade "is building" an LNG facility in Texas City. What I believe is a more factual statement is that NextDecade has been involved in negotiations to build such facility in Texas City.

Charlotte O'rourke

Interesting topic on LNG that has financial potential.

Losing Ro/Ro cargo opportunities (agenda D2) hopefully will be reported in the GDN.

On agenda C5 part 1, there were excellent public comments explaining the issue and loss of jobs and revenue by the president of local 1665.

It is hard for me to understand why port management didn’t have transition plans in place ready to be implemented immediately following the signing of the new third cruise terminal lease. The Ro/Ro customer’s needs and contracts SHOULD have been waiting to be approved by the board.

I’m sure the Port of Freeport is thanking Galveston’s operational planning failures as our money and jobs are going to Freeport and other competitor ports.

On a positive note, net income at the port was reported as $11 million.

But since employee bonuses and pay raises are now based on net income, it is imperative to ensure that no transition/relocation or repair projects were held to get a better net income bottom line and the numbers and schedules are not manipulated in any way. Hopefully, it is good news on net income.

Mark Twain - there are 3 types of lies: lies, damned lies, and statistics.

Dan Freeman

Twain said a lot of things and he attributed this to Benjamin Disraeli in "Chapters from My Autobiography — XX", North American Review No. DCXVIII (JULY 5, 1907)

Carlos Ponce

Twain popularized the phrase. But sources indicate attributing it to Benjamin Disraeli as false.

https://www.york.ac.uk/depts/maths/histstat/lies.htm

Michael Moriarty

Great project for Galveston as long as Pilot LNG CEO Jonathan Cook agrees to move his family to the facility, full-time! BOOM! If it goes up in smoke, it will probably knock the American National building on its side and destroy or, at least, immediately render one of the largest medical complexes in the world unusable for some period of time. Put it somewhere around Kemah!

Michael Moriarty

One more observation, such a BOOM event would likely destroy most of the Port's waterfront assets and render the channel unusable for some extended period of time. But, as we all know, life is full of risk and we should collectively accept those risks for the benefit of a remote few!

Miceal O'Laochdha

Holy cow, I see the comments above about fireballs in the sky, destruction of our skyscraper (the ANICO building), loss of a major medical complex (UTMB) as well as loss of all port facilities and ship channel for unknown period of time. This must be incredibly dangerous stuff. Of the half dozen or so LNG terminals in the US, four of them are located in our neighbors/competitors' ports of Corpus Christi, Freeport, Port Arthur and just across the Sabine River at Cameron LA. How many of these massive explosions have occurred at those facilities? In fact, how many of these massive explosions have occurred in all of North America since Cove Pointe in 1979 (1 person killed)? If you run a red light at 7th and Harborside you could get killed a whole lot quicker. UTMB and ANICO people do that every single day.

Miceal O'Laochdha

By the way, the answers were : zero for the listed nearby facilities and one in all of North America since 1979 (2014 in Washington state).

Charlotte O'rourke

Dan, you are correct, thanks for posting the clarification.

Anyone have an opinion on the charter and ethical challenges of a public employee’s decisions and annual bonus and raise being based on a percentage of net income?

Susan Fennewald

I just can't imagine that cruise ships would consider it a plus that they're docking so close to an LNG facility. The other facilities cited were in heavily industrial areas (Freeport, Port Arthur, Cameron) or larger areas (Corpus Christie). An LNG facility will NEVER be a tourist selling point. I remember "feeling" one of the Texas City explosions in Galveston. I can't imagine what it would be like if an LNG facility had problems. Sure, they're unlikely. But it only needs to happen once. And the threat is always looming.

Miceal O'Laochdha

Susan: you mention your inability to imagine things several times here and doubtless that is true. While the facilities I mentioned at our competitor ports may not be close to major population centers, those in Boston, New York City, Savannah, and even quite near Washington DC certainly are. A little more imagination in matters that do not involve tourists is exactly what the waterfront, and Galveston in general, needs.

Susan Fennewald

We need to know the proposed taxing situation. If its a case that the $500M would NOT pay city property taxes because its a port facility - then its not even worth considering or fighting about.

Charlotte O'rourke

Miceal, I agree with your posts on the port, and agree with this one. But, Susan has a point on taxes and the benefit and safety to residents. If the port doesn’t ensure that the city gets its fair share of taxes on improvements or through a payment in lieu of taxes then the CITY shouldn’t consider it. That doesn’t mean that I don’t think the city or county should consider supporting the port through some steady revenue stream like HOT taxes. Nor does it mean that I think an LNG facility is unsafe on the north side of Pelican, and everyone could benefit from that opportunity.

The issue I see on this and the issue on charging a tariff for using the terminal facility in today’s paper is that the port has created an inherent conflict of financial interest by basing its staff raises and bonuses on net income.

One would hope the port management always has the best interest of the residents, port, and city in mind with a foremost safety-first aspect, but since raises and bonuses are now directly linked to port net income one could always speculate that a financial interest may impact decisions.

It makes me wonder if that is why cargo opportunities have not been negotiated and started prior to the 3rd cruise terminal, and the port appears to be pushing cargo to other ports. Anything that impacts net income on the income statement could be linked to the staff’s own financial interest.

I think this financial link would violate the charter or at least the spirit of it that excludes any decisions based on financial interest.

I wish the port board would rethink this decision and link raises and bonuses to other performance measures.

Just my opinion and not being an attorney, I leave violation of the charter to legal minds. But it raises potential conflict issues and makes me ponder potential financial motives even though I understand the port must recoup its investment by charging tariffs and making good ROI choices.

I would change the policy, net financial link, and remove the doubt based on self financial gain.

Miceal O'Laochdha

Charlotte, your concerns about employee bonuses based on net POG income seem well placed. Large corporations nowadays typically base annual bonuses on a split between: (A) individual performance as assessed by their supervisor and (B) the financial performance of the overall corporation. This part B is sometimes further subdivided by the employee's business unit performance, as well as the overall corporation. I would like to give the POG decision makers the benefit of the doubt, and consider that they (or some compensation consultant?) may have decided to bring the practices of private corporations into use in developing this plan. However, the POG is not a private, for-profit, corporation and as you clearly point out in the case of POG employees there is an inevitable conflict of interest on how they pursue various Port objectives. I think it would make more sense for the POG to include sufficient funds in their annual budgets to accommodate bonuses, based on KPI's of the individual's job performance only, thus placing all incentive on doing the best work for the Port on any assigned task, regardless whether those efforts are toward a profit-generating or a cost-generating objective. Thereby a great job in rebuilding deteriorated infrastructure that costs the Port money is rewarded just as a great job in bringing in new customers that add to the bottom line is rewarded. And I agree that Susan is right about an LNG terminal on POG property havng a lease structure that ensures ROI to the overall City, not just the POG. But, I think there tends to be too much focus in some quarters on property taxes regarding POG tenants. As you say here, some requirements of payment in lieu of taxes; perhaps coupled with a sliding scale of lease payment amounts based on level of business conducted by the tenant, which can in turn be committed to a payment scheme from the Port to the City, can achieve the same financial goal as property taxes.

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