Two Rural Texas Towns Debate Whether Exxon's Proposed Steam Cracker Plant Would Be Blessing or Curse

Gregory Mayor Celestino Zambrano sees the Exxon petrochemical plant as a chance to revitalize Gregory.
Gregory Mayor Celestino Zambrano sees the Exxon petrochemical plant as a chance to revitalize Gregory.
Marco Torres

Mayor Celestino Zambrano eases his battered 17-year-old baby-blue pickup truck to the left side of the road on the very edge of Gregory’s city limits, a predominantly Hispanic, low-income town of fewer than 2,000 residents located just north of Corpus Christi. Zambrano, 67, stares at the naked black fields, usually planted with cotton or sorghum.

Growing up the son of migrant farm workers in Gregory, Zambrano picked cotton in these fields, sporting an oversize sombrero that protected him from the sun as he worked alongside his father, mother and seven brothers and sisters. Whenever he needed inspiration to keep studying as a boy — he was in school only about six months of the year because the family followed the harvest season, so he worked at a furious pace to ensure he could advance to the next grade — he would think of being out in the fields. Now he cannot stop studying this expanse.

The 1,400-acre tract is wedged between Gregory and Portland, just outside the city limits of both towns, in San Patricio County, on the bluff edge of the South Texas coast. The land has been owned by the same family for more than a century, but they’ve signed an agreement to sell the property to ExxonMobil Chemical, a subsidiary of the behemoth energy corporation, and Saudi Arabia Basic Industries Corporation, a massive chemical company partially owned by the royal family of Saudi Arabia.

Spurred by the glut of cheap natural gas on the market due to the gas-rich U.S. shale plays, the two companies, longtime partners in Saudi Arabia, want to turn this raw farmland into a new petrochemical plant with the world’s largest ethane steam cracker at its heart. Exxon is leading the effort, sending in its own people to represent the Gulf Coast Growth Ventures Plastics Project, the umbrella company created for the joint venture, in San Patricio County.

Zambrano can already picture the plant rising out of the soft, damp earth, an enormous intricate system of pipelines, compressors and tanks, with winking lights and the trails of steam and smoke billowing out of funnels. “You live for moments like this,” he says. He’s been working to make Gregory into a healthy town ever since he came back from serving in the Peace Corps in Peru and saw how shabby his hometown really was. “Gregory has been surrounded by prosperity, and it has come to everyone but us,” he says. “But this time, this plant is going to be good for our town. We’re going to get something out of this.”
The $10 billion petrochemical plant will convert ethane into ethylene, which will be used to make polyethylene, a base component for plastics, and ethylene glycol, for industrial chemicals such as antifreeze. Exxon says the $10 billion project will bring in more than 10,000 construction jobs, 600 permanent jobs and millions in property taxes for Gregory-Portland Independent School District and San Patricio County.

Many in San Patricio County, particularly those in the neighboring town of Portland, an idyllic community of about 16,000, mostly white, middle-class residents, are dismayed by the news. They insist the plant will destroy the community, which is known for its low crime rate, well-manicured parks, small-town atmosphere and excellent schools (shared by Gregory and Portland, and a source of pride for both towns). The proposed facility will be just over a mile from Gregory-Portland High School and within about two miles of a junior high, an elementary school and Wildcat Stadium.

A horse struts around the front pasture, and it’s so quiet on Larry Baker Jr.’s land, located off Wildcat Drive, directly across from Exxon’s preferred location, you can hear each hoof clop.

“For more than 40 years I’ve been able to live out here and hear the birds sing,” Baker says. “I don’t want a plant across the street. All that aside, though, there’s so much we don’t know. It seems like so much could go wrong, and it’s so close to Portland.” (He doesn’t mention that Gregory will be even closer.)

Exxon officials have not announced whether the company will ultimately build the plant here, but the chance that it will has carved a divide between Portland and Gregory. “This is the worst stress I’ve seen this area under since the free pancake breakfast got the 1990 Gregory-Portland High School football team kicked out of the state finals for a UIL violation,” Portland resident Mary Caldwell says.

***

The tension is palpable when the Gregory-Portland ISD school board convenes to discuss Exxon and Sabic’s requested tax exemptions on a balmy Tuesday night in January. Before the meeting starts, protesters and supporters array themselves outside the Gregory-Portland ISD Training Center. Those against the project are decked out in red “Portland Citizens United” T-shirts. Some sport air pollution masks and gas masks. The people in favor of the plant don green “United For Growth” T-shirts.

Chanting turns into yelling and nearly degenerates into a fight before the two groups pour into the boardroom to snag seats, those in red T-shirts seated on the right and those in green T-shirts on the left. A woman holding a green T-shirt strides down the aisle and slides into one of the last vacant seats on the right. Abruptly, a woman seated two places over, who’s sporting a gas mask, looks up, pulls off the mask and hisses. The two start to argue, their voices growing louder. A school district police officer hurries over and whispers sharply to both as the meeting begins. “She started it,” the woman in the gas mask tells the officer.

Portland resident Adair Apple, one of the founders of the grassroots opposition organization, Portland Citizens United, rises and speaks on behalf of those who are against the plant. As the right half of the room cheers and whoops, she insists the petrochemical plant will destroy Portland. Exxon and Sabic do not care about the dangers of putting this plant so close to town, she declares. “Would anyone who cares about kids build a steam cracker so close to schools?” she asks.

They have only to look at Corpus Christi’s Refinery Row across the bay to picture the worst-case scenario with the smells, the air pollution, the crowds and the pressure on infrastructure, she contends. “They act like we should be grateful Exxon wants to build here, but I don’t see why,” Apple says later. “They’re going to ruin everything good about this place.”

Rob Tully, Exxon’s project executive for the joint venture, starts out cool as he addresses the board. “We want to come in as a good neighbor,” Tully says. “We want people to say, ‘They really did try to blend in with the community and didn’t just stick a plant there.’”

“Liar!” someone yells from the back of the room.

Gulf Coast Growth Ventures sent out pamphlets showing the proposed plant nestled in the center of a bucolic man-made creation with gently curving walking trails wrapping around placid ponds on the half-mile perimeter around the facility.

During his speech, Tully builds on the image, highlighting how safety is an Exxon priority, an intrinsic part of the company culture, stating the plant will be a boon to the area. The audience continues to snicker as Tully, visibly rattled, finishes his pitch.

“Exxon isn’t used to having people go up against them like this, I guess,” Baker says, chuckling. “It shook him up a bit.”

Tully told the via email that he and other Exxon officials understand “the prospect of growth and change can be challenging,” but say many members of the community support the project because of what it could mean for the county. Tully maintains the facility will be perfectly safe.

However, San Patricio County Judge Terry Simpson, an ardent supporter of the project, admits that petrochemical plants always come with a risk. When something goes wrong at an ethylene facility, the consequences can be deadly. A U.S. Chemical Safety Board investigation found the 2013 explosion that killed two and injured more than 150 employees at a Louisiana polyethylene plant — similar to the one Exxon and Sabic want to build, and partially owned at that time by Sabic — was the result of human error. “The industry is highly regulated, and we depend on that to protect our citizens, but there are no guarantees,” Simpson says.

That lesson was underscored in mid-February when a natural gas pipeline in nearby Refugio County ruptured and caught fire. The flames soared into the sky and were visible from San Patricio County, 50 miles away.

Maybe this is why Exxon officials seem intent on fostering an agreeable environment. They’ve made careful presentations to the Gregory-Portland ISD school board and the San Patricio County Commissioners as they have requested tax abatements from both entities. They have also been solicitous of the officials in Portland and Gregory even though neither city has any say in the matter.

“The location is outside our jurisdiction, so we don’t have a lot we can do, but we have a good relationship with the companies so far,” Portland City Manager Randy Wright says. “We’re prepared to make the best of this no matter what happens. It’s the only choice we have.”

Exxon officials didn’t realize Gregory and Portland were separate entities until Zambrano asked for a meeting in January. Zambrano has been running Gregory off and on since he was first elected mayor at age 26 in 1976. He’s dealt with raw sewage flowing in the streets, the city nearly defaulting on its loans, and almost no tax revenue coming in. Exxon could change everything, Zambrano says.

Unless opponents manage to drive Exxon away.

On the other hand, Exxon is a multibillion-dollar company that survived the Exxon-Valdez oil spill public relations disaster; is currently facing charges on alleged human rights violations, including torture and murder; and routinely deals with the most corrupt and oppressive governments in the world. It’s possible a clutch of protesters in a small Texas town won’t make much of a difference.

Protesters are angry that the Exxon project site will be just over a mile from Gregory-Portland High School.
Protesters are angry that the Exxon project site will be just over a mile from Gregory-Portland High School.
Marco Torres
***

Gregory and Portland are not industry virgins. Both started out as farm and ranch communities in the 1890s, but in recent years industrial plants and factories began springing up nearby. Across the bay, Corpus Christi became a hub for refineries and petrochemical plants. But while the area teamed with oil and gas activity, San Patricio County was predominantly agricultural until Reynolds Metals opened in 1950.

More companies followed. “There were jobs before, but they weren’t high-paying,” Simpson says. “You could get by, but you could never buy a house or have a really big life.”

Over the past five years Cheniere, a liquefied natural gas exporter; TPCO, a Chinese corporation that crafts seamless steel pipe; and Voestalpine, an Austrian business specializing in producing high-quality steel for the German auto industry, have begun constructing facilities in the county.

Initial giddiness at the prospect of more jobs and the accompanying influx of tax dollars quickly gave way to frustration after Voestalpine’s plant, the first new one completed in more than a decade, opened last October. Built next to Northshore, one of Portland’s toniest neighborhoods, the facility is already seen by many as a nuisance. “It was supposed to be silent with minimal lighting. That’s what Voestalpine promised,” Tree Baker (no relation to Larry Baker), a Portland resident who moved away from Cheniere’s project site only to buy a home just over a mile from Voestalpine, says. “The thing is lit up like a Christmas tree and I can hear their machines inside my house.”

When Tree Baker learned about Exxon’s petrochemical plant, he was wary. “Some people are excited because it’s a big name,” Tree Baker says. “I don’t want to raise my children next to this stuff. That’s why we live here.”

Rumors swirled for months about a project codenamed “Yosemite.” It started with a blind request for information from an unnamed company submitted to the Corpus Christi Regional Economic Development Corporation by the Governor’s Office for Economic Development.

Lawyers representing the companies told Iain Vasey, the organization’s president, they were looking for at least 1,000 acres on the Gulf Coast, close to a deepwater port, near a commercial rail line and with access to natural gas pipelines. The right location would also offer a local workforce and provide tax break incentives to make building such a property more affordable.

Vasey and his team worked to find a property to fit the requirements, with little expectation. But since he was going to have to spend money on the mystery company, Vasey demanded to know who was behind the request. After he signed a strict confidentiality agreement, lawyers pulled back the curtain to reveal Exxon and Sabic. “When you learn it’s a company like Exxon, well, I didn’t mind spending the money then,” Vasey says now.

The duo has been building petrochemical plants together in Saudi Arabia since 1980, but the natural-gas-rich shale boom has prompted the two longtime partners to undertake this joint venture on the Gulf Coast. Plentiful, cheap natural gas, used as feedstock, has sparked the rapid growth of chemical plants and manufacturing facilities as companies work to put together the infrastructure to cash in.

Subsequently, there have been more than a dozen new ethane steam cracker projects constructed in the United States in the past decade. All but one have been located on the Gulf Coast, an area with a long history of producing petrochemicals, particularly polyethylene, the substance used to make various plastic containers and other products.

Workers are slated to break ground on the Exxon plant by 2020 and it could be online by 2021, according to documents filed by Exxon with the Texas Comptroller. The plant is expected to produce about 1.8 million metric tons of ethylene to be transformed into polyethylene in two facilities and into ethylene glycol in a third, all to be built on the site.

The only question was where to build.

At the end of July, Exxon took a step toward making the plant a reality by announcing it was then considering four locations: St. James Parish and Ascension Parish, both located near the petrochemical hub of Baton Rouge in Louisiana; Victoria, situated about two hours from Corpus Christi; and San Patricio County. The locations offer vacant land, a history with the petrochemical industry, access to water and a potential workforce to draw on. Officials from all four areas lobbied hard.

“Exxon represents jobs and prosperity and the potential for a future right in our backyard, but it also means the rest of the world has to sit up and take notice of us,” Foster Edwards, president of the San Patricio County Economic Development Corporation, says. “When Exxon moves in, the industrial community pays attention.”

There are drawbacks, Simpson acknowledges. “In the beginning it’s going to cost a significant amount of tax dollars because we’re going to have to beef up our infrastructure,” he says. With more people in the county, law enforcement will need to hire more officers or pay overtime. The construction crew trucks will be hard on the roads, which were originally designed to handle farm and ranch traffic, although both companies have said they will help rebuild the roads around the site. Simpson says the money added to the tax rolls — it is estimated property tax revenue for Gregory-Portland ISD alone will get an increase of more than $400 million — will easily offset the initial cost for taxpayers.

There’s also the water to consider, Ed Hirs, an energy economics professor at University of Houston, points out. The plant will get its industrial water from Corpus Christi and its drinking water from Portland and Gregory, but it will be drawing about 20 million gallons of water per day in an area that is already looking at building a desalination plant to supply its water needs in the coming years.

However, the jobs would come at a good time, Simpson says. Last year Sherwin Alumina, the company that bought Reynolds Metals, announced it was closing the factory. The facility used to employ about 600 people in its heyday. “Exxon means we’ll have a major long-term employer in our county. Young people will be able to get trained in high school and in community college here and they will be able to get jobs that will offer a future for them right here in San Patricio,” Simpson says. “We need this.”

It is a tantalizing prospect: More than 10,000 construction jobs and up to 600 permanent positions, that’s what Tully and the other representatives have touted repeatedly. However, Tully told the that 50 of the 600 permanent jobs will be filled by current Exxon employees brought in to oversee plant operations. On top of that, the tax abatement applications Exxon and Sabic submitted to the Texas Comptroller’s office offer much more conservative employment estimates. The Gulf Coast Growth Ventures application pledges to create 11,820 temporary jobs and 230 permanent positions, Sabic’s application promises 1,750 construction jobs and 85 permanent positions, and Exxon’s application says it will create 85 permanent jobs.

A plant is not the community savior it once was, Mark Muro, a senior fellow with the Brookings Institution’s Metropolitan Policy Program, explains. “In general, technology gains have made these plants far less labor-intensive than they were in the past, so plants have a different profile now. They are extremely capital-intensive, and that may well be good for the tax rolls, but they don’t offer the kind of employment they offered 20 years ago,” Muro says. “The recent discussion about bringing back manufacturing has elevated expectations of also bringing back millions of jobs. Unfortunately, that just is not in the cards.”

Bill Gilmer, director of the Institute for Regional Forecasting at the University of Houston’s Bauer College of Business, says the number of jobs Exxon is promising publicly is probably tactical. “Remember, those numbers are the ones Exxon uses to negotiate tax rates and concessions from the county. These are state-of-the-art facilities, and they will be automated. Those numbers matter, but only because of how they will be used in negotiations.”

There was an eruption of response, mostly from Portland residents, when people learned Exxon had optioned the McKamey farmland after Exxon submitted applications for tax abatement to the school board in September. The Facebook group, Portland Citizens United, quickly gathered more than 2,000 followers. Protesters have shown up outside city council, county commissioner and school board meetings ever since. A petition on Change.org, asking Exxon to pick a different location, has garnered more than 2,600 signatures.

Victoria Regional Economic Development President Dale Fowler was thrilled when he learned of the protests. “Victoria residents want the plant,” he says. “Things can always change. It’s not over until that company breaks ground.”

Zambrano insists companies like Exxon can benefit the community. Cheniere has not opened, but Zambrano has already parlayed the proximity of its factory into getting the Houston-based company to renovate Gregory’s Children’s Park, help repair the water tower, which is in danger of a Texas Commission on Environmental Quality violation, and give Gregory $1 million for the next 20 years. “It’s all in how you work it,” Zambrano says.

Gregory residents hope Exxon and Sabic building nearby will lead to more jobs in the area.
Gregory residents hope Exxon and Sabic building nearby will lead to more jobs in the area.
Marco Torres
***

But the plant may have other costs. Ever since his ten-year-old grandson started having asthma attacks as a baby, Dewey Magee has scrutinized everything from the paint in the boy’s bedroom to the wood used to construct his grandson’s furniture, intent on minimizing exposure to any toxins or allergens. (Magee crafted the child’s bedroom set himself.) The family lives in two houses on the edge of Portland — Magee built both — across the street from the petrochemical plant site.

It’s still unclear what chemicals the facility will emit. Exxon officials have told Magee they won’t know until they are further into the permitting process with the federal Environmental Protection Agency and TCEQ. “Change is inevitable. I know that. I’m not stupid. But this isn’t just change,” Magee says.

Magee has tried to figure out what could come out of the plant by reviewing air quality permits for similar Texas facilities, only to become more alarmed. Air pollution from an ethane steam cracker can include nitrogen oxides, sulfur dioxide and particulate matter. Steam crackers can also spew large amounts of ethylene, propylene and other volatile organic compounds, substances that can turn into ground-level ozone. Exposure to volatile organic compounds has been tied to various health problems, including respiratory disease and asthma. “I’m not a paranoid person. I’m just talking about the logical dangers of this thing,” Magee says.

Once the plant is built, what or how much is being vented still may not be spelled out, Neil Carman, clean air director for the Texas branch of the Sierra Club, says, because the state regulatory agency does not require companies to measure what they put into the air, only estimate.

The U.S. Department of Health and Human Services issued a report last year on the health effects of living near Corpus Christi’s Refinery Row. Although the study could not directly link illnesses to chemicals in the air around the ten-mile-long corridor of factories and chemical plants, the review of years of air quality data found people living in the area had higher rates of asthma, birth defects and cancer.

“There won’t be any health studies once the plant gets started, because TCEQ doesn’t do that,” Carman says. “Nobody is going to be looking at what this pollution actually does to the people living there.”
Exxon touts its safety record — its risk management team has even analyzed why employees get paper cuts — but there have been incidents at these types of plants over the years.

In October 1989 an explosion ripped through the Phillips 66 Company’s Houston Chemical Complex (located, confusingly, in Pasadena) after more than 85,000 pounds of highly reactive gas escaped from an open valve in a polyethylene reactor. The blast, which killed 23 people and injured more than 300, was equivalent to an earthquake measuring 3.5 on the Richter scale. Debris was flung six miles away.

These incidents are part of the deal with ethane steam crackers and petrochemical plants, Gilmer says. “There’s always a risk. Ethylene is a very dangerous gas,” Gilmer says. “But the odds are 30 years from now, that plant will be humming along so quietly people may forget it’s there.”

Nothing significant had ever gone wrong at the Williams Olefins Plant in Geismar, Louisiana, opened in 1968, until one morning in June 2013 when the plant — co-owned by Sabic, but run by Williams Olefins — erupted, shaken by a blast felt all through Ascension Parish. The plant was undergoing a $300 million expansion to produce more ethylene when the accident happened, killing two workers and injuring 167. It was chaos, with employees sprinting for the exits and scrambling over the gates, according to the New Orleans . More than 30,000 pounds of chemicals were released into the air and a shelter-in-place order was issued for a two-mile radius around the plant. The U.S. Chemical Safety Board investigation concluded years of safety management program deficiencies were behind the accident.

Hirs, the energy economist, took a sharp breath when he learned the Exxon plant would be located within two miles of the high school. “Mostly, these plants are fine and nothing ever happens, but I understand why people are upset. Putting it there is fine unless something happens.”

Exxon company officials insist there is nothing to worry about. “Health, safety and environmental protection are core values for ExxonMobil and Sabic, who are industry leaders in these areas. Both companies operate chemical facilities safely every day along the U.S. Gulf Coast and we will do the same for this project,” Tully told the . The project cannot be built without a TCEQ permit, Tully notes, adding the companies will work with the state environmental regulatory agency to ensure the “best available control technologies are implemented” at the facility, he says.

But Carman, a former inspector with the Texas Air Control Board, the previous iteration of TCEQ, dismisses the notion that state regulators will be effective. “They’re an industry-friendly agency in an industry-friendly state,” he explains. Even if TCEQ inspectors put out enforcement actions, they often do not issue citations for every infraction and fines are negotiated down. “It’s one thing if the plant is located out in the boondocks, miles from anybody, but this is a nasty situation,” Carman says. “You’ve got schools and communities right next to it.”

Larry Baker is struggling with what to do. He watched as workers put in a 48-inch-wide natural gas pipeline across the street from his home, pondering how the plant will transform the empty farmland into a site crisscrossed with similar pipelines. His granddaughters raise animals on his land to compete in livestock shows. There’s no telling what being exposed to chemical-laced air will do to cattle and chickens, he says, let alone him and his family. He is not even sure he can sell his place. “Who would buy me out so they could live next door to a plant?”

Still, Jessica Ortiz, a lifelong Gregory resident, is counting on the plant being built. In January another group sprang to life, We Are United For Growth. It has more than 1,000 Facebook followers. Ortiz has become one of the most vocal members. “People are quick to look at the bad side, but they aren’t considering the possibilities,” Ortiz says.

Once the facility is built, Ortiz is hoping other businesses will open offices in Gregory. She can already see the long-empty buildings gleaming with fresh paint and new signs. With the plant located less than a mile from Gregory, her daughter, slated to graduate with an associate’s chemistry degree this summer, could eventually work at the plant, close to home.

“In order to grow, you have to build,” Ortiz says. “People who have dreamed of bringing something new to town, even something small like an ice machine — we don’t have one in Gregory — could do it. Something larger, like a Buc-ee’s gas station, could be possible. With Exxon here, the rest might finally happen for us.”

The project site is outside of Gregory’s and Portland’s city limits, but Zambrano believes the towns can still benefit.
The project site is outside of Gregory’s and Portland’s city limits, but Zambrano believes the towns can still benefit.
Marco Torres
***

In early February, Larry Baker went to a meeting between Tully and some Portland locals. At the end, Baker pulled Tully aside and leveled with him. “I think you’re going to put your petrochemical plant here no matter what the school board or the county commissioners or anybody else does. I’d be remiss if I didn’t ask you face-to-face if that’s the case, though. Is that how it is?”

“Exxon needs the school district tax abatement,” Tully replied. He didn’t elaborate.
Exxon and Sabic have both stated they could make a “preliminary investment decision” on the plant in the next few months.

Baker sighs now, remembering the exchange. Despite the protests, he knows the school board should probably approve the tax abatement request, he says. Otherwise the district will lose bargaining power, the Exxon tax revenue will go to the state, and the plant may still be built. “I want them to fight, but I worked in oil all my life. I know it would be a losing battle.”

Since the tumultuous school board meeting in January, everyone has backed off. The county commissioners have yet to vote on the proposed tax abatement. The February school board meeting came and went without a word about Exxon.

Zambrano was once ashamed of being from Gregory, embarrassed by the dirt road in front of his house and the way Portland kids treated him. As an adult, he’s seized any opportunity to improve Gregory. He has not missed a beat this time around. The Portland City Council passed a nonbinding resolution asking Exxon to choose another location, but Gregory City Council voted unanimously to support the project.
Zambrano dismisses the concerns of Portland residents, but he was surprised and angry when Gregory residents commented about the vote on Facebook. “They call me corrupt, but they don’t say it to my face,” he says. “I don’t even know these people.”

People are leaving Gregory — the population has been falling since 2000 and was only about 1,900 according to the last census. About a fifth of the homes have been abandoned. A local diner, the last restaurant in the city limits, closed last year. For Zambrano, it is worth any risk to give Gregory another chance. “If the plant blows up, it blows up,” he says. “We were dying anyway.”


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