THE BIG STORY
A disaster in the gulf
At about 10 p.m. on Tuesday, April 20, they saw the lights go out. Moments later, they felt the explosion.
Transocean’s Deepwater Horizon oil drilling rig shuddered, and debris began falling as its occupants hit the floor and scrambled toward the lifeboats. Of the 126 workers who were working that night about 50 miles southeast of Venice, 115 escaped before the rig collapsed and sank into the Gulf of Mexico. The search for the other 11 was called off several days later.
Those presumed dead include Gordon Lewis Jones, 28, of Baton Rouge. According to his obituary, Jones was a Catholic High School and LSU graduate, and is survived by a son and a pregnant wife.
One of the deadliest offshore drilling incidents of the past half-century could end up being one of the most destructive. As of April 29, the well was leaking an estimated 5,000 barrels of oil a day. Some reports described an oil slick—bigger than Rhode Island and visible from space—creeping closer to Louisiana’s fragile coast and threatening shrimpers, oyster beds and tourist beaches as far east as the Florida Panhandle.
Crews using underwater robots had been unable to staunch the leak, and the Coast Guard planned a “controlled burn” to battle the slick. Rig operator BP was set to drill a relief well, an experimental process that could take months.
The explosion and its aftermath could have a negative effect on the industry as a whole, Louisiana Oil & Gas Association President Don Briggs says. Political momentum has been building to open more areas to offshore drilling, but the Deepwater disaster is leading some drilling supporters to have second thoughts.
“If we do in fact open up the eastern gulf, that will have a tremendous impact on our companies,” Briggs says. “Our companies are the ones that will be servicing that [territory], and they’ll be servicing out of Louisiana ports.”
Industry critics seized on the incident almost immediately.
“The oil industry in this state is not as careful as it could be or should be,” says Anne Rolfes, director of the Louisiana Bucket Brigade. “Peoples’ lives are at stake, and the industry needs reform.”
The group called the accident part of a “scary trend” of four incidents in the petrochemical industry in 15 days, including an April 14 fire at ExxonMobil’s Baton Rouge refinery.
Federal officials have pledged to investigate. At least two families have already filed suit against BP and Transocean. Officials have said a “blowout,” or uncontrolled release of oil or gas, is the likely cause of the explosion, but what caused the blowout is unknown.—David Jacobs
IN SHORT
All in the family
What was striking about the intervention filed by the Schwegmann family in the Perkins Rowe foreclosure suit late last month was not their contention that the $170 million mortgage on the project is invalid, but the revelation that the Metairie family owns 50% of the first phase of the project, which includes all of the retail outlets in the front part of the mixed-use development, the Cinemark theater and the condominiums.
Family patriarch John Schwegmann, a former public service commissioner and supermarket chain operator, says his family transferred the 26-acre tract to Tommy Spinosa for the development in 2000 and became silent partners in the deal, a move that gave Spinosa total management authority over the project.
But the Schwegmanns aren’t keeping their silence any longer. Their lawsuit names the main lender in the case, KeyBank National Association, as well as the eight smaller lenders and Spinosa. The suit claims Spinosa overstepped his authority by signing for the loan without the Schwegmanns’ knowledge, and then using the $170 million to finance Perkins Rowe I and Perkins Rowe II. The Schwegmanns’ LLC, Perkins&Bluebonnet, has no ownership in Perkins Rowe II, which allegedly benefited from the loan.
“There’s one note and one mortgage, but two separate pieces of property,” Schwegmann says, adding though Spinosa is named in the suit, it’s not intended to be adversarial against the developer, with whom Schwegmann says he maintains a cordial working relationship.
“I would like to think that what Mr. Spinosa has told me is true,” Schwegmann says. “He believes that everything he has done he has done with authority to do it.”—Stephanie Riegel
Holding out for a hero
Welcome to the new reality.
Bob Allsbrook, the chief economist for Regions Financial Corporation, predicts the next 10 to 15 years will not be pretty: a lagging recovery, sluggish real estate markets, a paralyzed business community and tight credit.
This scenario already is in place for consumers, business owners and state officials, Allsbrook says. And they’d better get used to it.
“We see only 2% long-term growth,” he says, “and we haven’t seen that since World War II.”
There are bright spots for Louisiana, however. One is its dependence on the petrochemical industry. The state has an advantage in that world demand for energy remains on target to exceed supply in the coming years. As demand increases, so will the price of oil. Allsbrook says it’s going to happen despite the potential impact of cap-and-trade legislation and emission-standard regulations.
But the petrochemical industry won’t shield Louisiana from below-average growth predicted for the national economy because of weak consumer spending, high debt-to-income ratios and unemployment. Business growth remains stagnant, with only modest increases in rebuilding inventories and investments in technology and equipment.
With little growth to offset a rapidly expanding national debt, Allsbrook says higher interest rates and more regulations from Washington, D.C., are likely.
“The consumer has always been the recovery hero. This time they won’t be,” he says. “We don’t have a hero going into next year. We do have below-average growth, however.”
To read a Q&A of Allsbrook, visit businessreport.com.—Emma James
BUSINESS OF POLITICS
Unfinished business
Scott Angelle’s expected move up the political ranks is bittersweet for the Breaux Bridge native. On one hand, he serves as lieutenant governor until a successor is elected later this fall. On the other, he must temporarily vacate his post as secretary of the Department of Natural Resources just after launching an aggressive campaign to create new incentives to encourage oil and natural gas exploration in south Louisiana. Industry leaders already are chomping at the bit. Angelle’s proposed package would, in part, target wells drilled to 15,000 feet or below in the coastal zone, making such wells an attractive option for exploration companies to spend their drilling dollars on. Louisiana Oil and Gas Association President Don Briggs says the proposal should draw interest from exploration companies. “We have to be competitive with so many states, and we are competing with so many resource plays,” Briggs says. The draft proposal also includes a provision requiring companies taking advantage of any related incentives to compensate for impacts to coastal wetlands at a rate of 125% of the habitat value of the wetlands, rather than the current rate of 100%.
Test time for streamlining group
Remember the Commission on Streamlining Government, which Gov. Bobby Jindal formed last year to make cost-savings recommendations? With the state facing a $1 billion shortfall in the 2010-11 budget year, Jindal charged the commission with identifying $802 million worth of reductions. Whether the effort is deemed a success might hinge on the regular session, says Sen. Jack Donahue, a Mande-ville Republican who served as the commission’s chairman. While the governor already has implemented a number of suggestions into the budget process, the more far-reaching proposals are still navigating the legislative process. “The jury is out until the end of the session,” Donahue says.
Grabbing the umbrellas
Senate President Joel Chaisson, a Destrehan Democrat, has a set of bills that would allow lawmakers to dip into the state’s rainy-day fund during times of fiscal need, thus solving a large part of this year’s budget headache. Jindal and some House leaders aren’t sold on the idea, however, and have suggested waiting to tap the fund until the budget picture worsens over the next two years. Crossing over to Chaisson’s side this session is the CARE Coalition, whose membership includes groups that represent nursing homes, dentists, pharmacies, emergency care providers and others. John Matessino CEO of the Louisiana Hospital Association, says the fund should be tapped now because it’s already raining. “Currently, unforeseen drops in federal funding, like the imminent reduction of stimulus funding and the pending decrease in federal money for Medicaid, are not calculated into the deficit for purposes of accessing the rainy-day fund,” he says.—Jeremy Alford
EXECUTIVE SPOTLIGHT
Michael O’Connor
Chairman/CEO
The Celtic Group
Hometown: Sanford, Fla.
Michael O’Connor feels comfortable with a fishing pole in the water. As the chairman and CEO of the Celtic Group, which contains a maritime company that O’Connor took global in 2001, it’s not surprising that one of his favorite pastimes is fishing. O’Connor now splits his schedule between the maritime company and a booming digital media industry. His greatest hope for Baton Rouge is the investment in education, infrastructure and technology as well as the revitalization of downtown and blighted areas. O’Connor’s suggestion for becoming the next great American city? “Utilization of the waterfront as a focal point for business and community growth?”
To read more of O’Connor’s Q&A, click here.
Renaissance surgery
With a flick of the wrist, Dr. Thomas Payne can manipulate an arachnid-like robot to perform laparoscopic surgery at Ochsner Medical Center-Baton Rouge—without his even touching the patient.
When Business Report wrote about the futuristic da Vinci Surgical device in its Aug. 14, 2007 story, “Paging Robo-Doc,” Ochsner was the only facility that employed the technology, which allows virtual operating. Soon after, Woman’s Hospital purchased one of the devices to use in gynecology procedures that involve dime-sized incisions instead of more invasive ones, which lets patients heal faster and get back to work sooner [for better or worse].
This spring, Ochsner published two studies on the technology and hopes to collaborate with Woman’s Hospital in the next year on a community study on the benefit of da Vinci precision afforded to surgeons who view 3D images of what they’re working on and move their hands, connected by loops to the machine, to operate the robot’s arms.
Payne says 64% of gynecologic surgeries nationally are done with large incisions, while Ochsner has reduced that number to 5%, thanks to the da Vinci device. “It’s better for the healing process,” he says. “With robotic-assisted surgery, we are able to cut blood loss by half, and hospital stays are one day or less, and return to work is two to four weeks instead of six to eight.”—Todd R. Brown
THE GOOD LIFE
Spain’s best-kept secret
Licor 43 is a Spanish-made liqueur that comes from a secret formula that dates to 209 B.C., when Roman legions conquered the city of Quart Hadas in the middle of the Carthaginian Mediterranean.
According to legend, the Romans discovered exquisite liqueurs that were being produced with astonishing properties. One became known as Mirabilis, or marvelous, because its aroma contained fruits and herbs from the area.
The Romans became so suspicious about this mysterious drink, they banned its production and demolished the locations where it was being made. Still, locals kept the recipe safe.
Eventually, the drink became popular among Rome’s high society and was exported to other Mediterranean cities, where it was enjoyed during special occasions. The formula has passed from generation to generation.
Today it’s known as Licor 43—Cuarenta y Tres—for the 43 ingredients used to produce the trendy, golden-colored liqueur, which tastes like vanilla with hints of citrus and has a warmth similar to a fine aged rum. Only three people from different generations of the family that owns the company currently know the formula, and they’re not telling.
For more information, go to licor43.com.—Scott Gremillion
Spanish margarita
2 parts Licor 43
4 parts tequila
6 parts sour mix
Juice of two orange wedges
Shake with ice; serve with a lime wheel.
Key lime pie martini
1 part vodka
1 part Licor 43
1 part key lime juice
1/2 part simple syrup
Pour the ingredients into a martini shaker and shake until cold. Dip the rim of the glass in graham cracker crumbs before pouring the drink into the glass.
Recipes courtesy Licor 43
ON THE BEAT
Spellbound
Brad Smith, the owner and president of Royal Nissan-Suzuki, is in the process of buying the VooDoo Grill and BBQ restaurant in the Drusilla Shopping Center, and he also has franchise rights to bring the chain into Lafayette. Smith worked at TJ Ribs before going into the car business. The deal helps VooDoo’s owners, who want to increase the number of locations.
Pellet-able
A wood pellet manufacturer announced plans to build a $124 million facility at the Port of Greater Baton Rouge, a project that will create about 100 jobs. Point Bio Energy will produce wood pellets for fuel generation, mainly used in European homes and industries. Point Bio Energy plans to start construction this summer, and deliveries of its wood pellets could begin toward the end of 2011.
Positive tests
Esperance Pharmaceuticals presented the positive results from the test of an anti-cancer drug at the American Association for Cancer Research’s meeting in Washington, D.C. Esperance, which has offices in the Louisiana Emerging Technology Center, is developing a drug that selectively kills cells that express nucleolin on their surface. Nucleolin is a protein that is overexpressed in a wide range of cancers and tumors.
Nationally ranked
Baton Rouge is ranked second by Southern Business and Development magazine among the top 10 mid-markets of the decade, based on the amount of new and expanded project wins over the last 10 years. Project wins that affected rankings must have consisted of 200 or more jobs and/or $30 million or more in capital investment. Forbes magazine says Baton Rouge is the second-best mid-sized city in terms of job growth.
Shopping spree
The Walmart Supercenter on College Drive has completed a million-dollar renovation, converting it into the retail giant’s next generation of stores. The College Walmart now has an expanded electronics department, a party supply section, wider aisles and a new interior paint scheme. Some sections of the store have been shuffled around. Store officials say these changes will make it easier for customers to shop in Walmart. The renovations took three months to complete.
A lot for a lot
A Lafayette Street parking lot that Advocate employees once used has been sold for $2 million. Marnie Land Co., a group headed by Gordon LeBlanc Jr., bought the 0.85-acre site from the Manship family in a deal that closed last month. The land, sandwiched between the Kress at Third & Main and the Little Village Restaurant, will remain a parking lot in the immediate future, but Marnie Land wants to develop the site eventually.
Adventures in science
Steven B. Heymsfield, the global director for scientific affairs and obesity at Merck & Co., was named executive director of LSU’s Pennington Biomedical Research Center on April 29.
Heymsfield, 65, replaces Claude Bouchard, who is returning to the faculty as a researcher on the genetic causes of obesity and diabetes. Heymsfield is a former director of the Human Body Composition Laboratory and Weight Control Unit as well as deputy director of the New York Obesity Research Center at St. Luke’s-Roosevelt Hospital. In addition, he was a professor of medicine at Columbia University College of Physicians and Surgeons and a visiting scientist at Rockefeller University and the Brookhaven National Laboratory at Long Island, N.Y.
Heymsfield described joining Pennington as “a great scientific adventure,” and pledged to expand partnerships and collaborations with state and federal organizations in attracting top scientists from the U.S. and abroad.
At the time of this announcement, Gov. Bobby Jindal also revealed a $10 million jobs-creation initiative designed to foster clinical trials and obesity-related research.
To receive the full $10 million state challenge grant, Pennington will be required to secure grants to create a payroll over the next seven years equivalent to 250 permanent, new positions based initially in New Orleans and later across the state. Plans also call for raising an additional $10 million in matching funds from philanthropic contributions. The 250 new positions will be in addition to the hundreds of new positions that will be created at Pennington in Baton Rouge after its current capital improvements program is completed.
Safety theater
The Safety Council of the Louisiana Capital Area has purchased the former United Artists Siegen Village 10 movie theater and plans to demolish the building to make room for its headquarters. The council, a nonprofit that focuses on improving workplace safety with industrial and utility companies, paid $2.45 million for the 5.5-acre site at Interstate 10 and Siegen Lane.
The demolition is scheduled to begin at the end of May, with the headquarters opening in a year to 18 months, says Melissa Sparks, vice president of the Safety Council. The organization currently is located on Siegen just south of the railroad overpass.
The new building will have additional office and retail space. Alex Knight and Chad Ortte with Donnie Jarreau Real Estate represented the sellers, while Bill Jeansonne and Ellis McKnight of Sealy & Falgoust represented the buyers. Siegen Village had been closed since June 2007, a victim of the move toward larger theaters with stadium seating.—Timothy Boone
