$2 Billion Koch Deal
Koch Industries is betting big on two of the surest things in Texas’ economy these days: natural gas and plastics. The company announced Wednesday that its refining division, Flint Hills Resources, plans to buy Houston petrochemical processing company PetroLogistics LP in a deal worth $1.75 billion in cash and another $350 million in assumed debt, the Houston Chronicle reports. PetroLogistics’ propane dehydrogenation plant near the Houston Ship Chanel is the only of its kind in the U.S., according to the Chronicle—but Dow Chemical Co. and Enterprise Products Partners are preparing to open two more in the state in 2015.
The Bottom Line: By purchasing the facility, Flint Hills would be able to “funnel abundant and inexpensive shale natural gas and pump out nearly 1.5 billion pounds a year of propylene, a major building block of plastics,” the Chronicle reports. The company expects to complete the acquisition by the end of this year.
Just Say Nyet
A few measly international sanctions won’t stand in the way of Exxon Mobil’s bid to expand its operations in Russia, CEO Rex Tillerson told investors this week. In March the Obama administration imposed the sanctions against several Russian business leaders—including the head of Exxon’s business partner Rosneft—after the country annexed Crimea following its separation from Ukraine.
But Tillerson said it’s still “business as usual” for the two energy giants, which are working together on oil and gas exploration and production projects in Russia’s arctic region, the Associated Press reports. The CEO went on to criticize sanctions in general, characterizing them as “imprecise and ineffective” policy tools, according to the AP. And he’s taking his thoughts on the matter to Washington, meeting with unnamed government officials to ensure “our views are being heard at the highest levels.”
The Bottom Line: For those who were wondering what Ted Cruz thinks about all of this, the Houston Chronicle reports the Republican U.S. senator is critical of Exxon’s decision to do business with Rosneft, referring to the arrangement as “a question we need to look very closely at.”
Changes to federal visa rules are putting an economic strain on Texas border cities and the immigrants who do business there, the Texas Tribune reported this week. The E-2 visa allows entrepreneurs from Mexico to reside and conduct business in the U.S. for a limited period of time. The visas were once valid for up to five years, but in 2010 the maximum was reduced to just one year, requiring business owners to return to their home country annually for in-person renewal interviews. The application process can be expensive and time-consuming, often taking more than two months to complete—not to mention the risk of being stranded in Mexico if the renewal is denied.
Critics say the changes “create uncertainty and more hurdles for legal business owners,” and towns with large concentrations of Mexican-owned businesses—including El Paso, McAllen, Laredo, Eagle Pass, and others—could take an economic hit in the event of a mass exodus, according to the Tribune.
The Bottom Line: Despite the additional red tape, the updated regulations have not slowed the booming demand for E-2 visas in recent years. The government issued about 34,600 of them in 2009 and more than 50,000 last year, the Tribune reports.
Winner of the Week: SpaceX
A private spaceport in South Texas took a giant leap closer to becoming a reality this week, when the Federal Aviation Administration signed off on its final environmental review of the project. The agency determined that the launch site proposed by California-based aerospace company SpaceX would be “unlikely to jeopardize the existence of protected animal species and would create few unavoidable impacts,” the Associated Press reports.
While SpaceX still hasn’t definitively confirmed that it will build the facility at the site outside Brownsville, it has begun to publicly eliminate some of Texas’ major rivals in the bid, including Florida and Puerto Rico. A SpaceX official told the AP that “the decision will not be made until all technical and regulatory due diligence is complete.” The company also still needs to secure launch licenses from the FAA to allow the project to finally get off the ground.
Loser of the Week: Southwest Airlines
Federal transportation regulators dinged Southwest Airlines with a $200,000 fine this week after customers complained the Dallas-based carrier had advertised fares that were literally too good to be true, the Dallas Business Journal reports. A Southwest promotion last fall promised travelers a chance to fly from Atlanta to New York, LA or Chicago for just $59, but in a briefing released on Thursday, the U.S. Department of Transportation said the airline never actually offered or sold seats at that price. Under the DOT’s “full-fare advertising rules,” carriers are forbidden from deceiving consumers by promoting false ticket prices.
In addition to the $200,000 fine, the DBJ reports, Southwest will also have to pay another $100,000 penalty that the DOT had imposed and ultimately suspended after the airline committed the same infraction last summer.