Press Release | Houston Ship Channel Celebrates 100, Highlights Economic Impact - Past, Present and Future

November 10, 2014

HOUSTON – As the region prepares to celebrate the Houston Ship Channel’s milestone centennial it is appropriate to commemorate the considerable influence it has on the nation’s fourth largest city. 

“The Houston Ship Channel is the premier economic engine for our region,” said Janiece M. Longoria, Chairman of the Port of Houston Authority. “Because of the industry along the Houston Ship Channel, our state-of-the-art infrastructure, and ready access to foreign markets, Houston now outranks New York as the premier metropolitan export region in the nation.”

As one of the most active waterways in the world, the Houston Ship Channel has generated a number of industry firsts throughout its history:

  • The 52-mile long Houston Ship Channel was the first federal project to have a local cost-sharing component.  This revolutionary model is now standard practice for federal waterway projects.
  • The first direct shipment of cotton to Europe left from the Port of Houston in 1919.   
  • Synthetic rubber was mass-produced for the first time at Ship Channel-area plants in 1943 for use in World War II. 
  • The world’s first oceangoing container ship, the M/V Ideal X, was unloaded at the Port of Houston in 1956. 
  • In 1962, the National Aeronautics and Space Administration (NASA) selected Houston for its new headquarters, a decision influenced by the Ship Channel’s ability to transport bulky space vehicles.
  • Use of the double-stack train was introduced at the Port of Houston in 1981. By placing one container on top of another, transportation costs were greatly reduced.

In less than a century, the Port of Houston has grown to be the No. 1 port in the nation in foreign waterborne tonnage.  Ship channel-related businesses contribute over one million jobs throughout Texas, and generate more than $178.5 billion in economic impact and $4.5 billion in state and local taxes. Nationally, activity on the Houston Ship Channel creates 2.1 million jobs, $499 billion in economic activity, and $51.2 billion in tax revenue. 

“Houston is now home to the largest petrochemical complex in the nation, and second largest in the world,” added Longoria. “And because of our strategic location on the Gulf Coast, growth of our petrochemical industry, and access to foreign markets through an expanded Panama Canal, we are poised to continue to lead the nation in petrochemical manufacturing and exports. Our region is on the cusp of the next great economic expansion centered on energy.” 

Energy renaissance drives export growth

America’s “shale revolution” has been well-chronicled in terms of how it has revitalized U.S. energy production and created tremendous new export opportunities. Through the use of innovative technologies to develop its shale energy resources, the United States has reversed a nearly 40-year decline in oil production. In 2008, the U.S. produced 1.8 billion barrels of oil. In 2013, it produced 2.7 billion barrels, a 50 percent increase in five years.  And the growth will continue, providing prolific supplies for manufacture and export.

In natural gas and gas liquids production, the United States has nearly a 100-year supply for use as energy and chemical feedstock. The abundance of ethane and other natural gas liquids, which are the primary feedstock used to make chemicals in the United States, has prompted a wave of announced capacity expansions to make plastics and other essential chemical products for domestic use and export. 

Additionally, as the economies of China, India, and other developing countries grow, their demand for energy and chemical products will rise accordingly, resulting in greater U.S. exports of petroleum and petrochemicals.

Increased energy and petrochemical production has sparked a manufacturing renaissance along the Houston Ship Channel, greatly augmenting local economic development.  The U.S. chemical industry has announced almost 200 projects, representing investments of more than $100 billion.  Many of these projects are along the Houston Ship Channel.

ExxonMobil is constructing a multi-billion dollar petrochemical expansion at its integrated refining and chemical complex, the largest in the United States.  ExxonMobil is already one of the largest customers for the Port of Houston and has been working with the Port Authority to prepare for increased activity during both the construction and operation of the new units.

“The expansion, coupled with ExxonMobil’s global sales and technology support network, enables ExxonMobil Chemical to economically supply a rapidly growing demand, driven by the developing world, for high-value advanced plastic products,” said Steve Pryor, President of ExxonMobil Chemical Company. 

The project will employ more than 10,000 construction workers and will create 4,000 new jobs in the Houston area, including 350 permanent positions at ExxonMobil, which currently employs 6,000.  It is expected to increase regional economic activity by roughly $870 million per year and generate more than $90 million per year in additional tax revenues for local communities.

Enterprise Products Partners, L.P., a leading North American provider of midstream energy services, is developing the world’s largest refrigerated ethane export terminal on the Houston Ship Channel.  Ethane is a key component in the manufacture of plastic and other petrochemicals.

Investing in the Ship Channel and its communities transcends commerce for both ExxonMobil Chemical and Enterprise Products Partners.  They are respectively a title sponsor and a sponsor of the Houston Ship Channel Centennial.

Population growth creates higher import demand

Houston’s strengths in energy and related industries translate into a large and expanding pool of talent to support those operations.

Growth of jobs in these and other industries is a key driver in local population growth. According to the Houston-Galveston Area Council, the 8-county region will see a population increase in the next 30 years of more than 3.5 million people, with 2 million in Harris County. 

“Houston’s greatness is contagious; we get a new resident every four minutes, and the Bayou City’s projected population growth will be a driving force for increased trade through the Houston Ship Channel,” said Paul W. Hobby, the 2014 Chairman of the Greater Houston Partnership.  “Increased trade bolsters our economic development, strengthening businesses, encouraging entrepreneurs, providing a better environment for commerce and industry, and creating jobs and prosperity for residents.”

Houston is the premier location for the distribution of consumer goods, not only to its growing consumer base, but beyond, to facilities in Dallas and as far as Chicago.  The Port of Houston anticipates a significant increase in import cargo due to its market reach of 140 million consumers within 1,000 miles.

Panama Canal expansion provides more cargo opportunities

The Houston Ship Channel and the Panama Canal were dredged at the same time in history, and 100 years later, they are again coming together in virtual confluence.  Expected to be complete in 2015, the expansion of the Panama Canal will allow for the transit of ships carrying up to 12,600 20-foot shipping containers, more than double the current maximum of 5,100.  This expansion is particularly important for the Houston Ship Channel because the Port of Houston is strategically located in the Gulf for the receipt and distribution of containerized goods. 

With the recent shift in the energy sector, coupled with rapid growth in population, the Panama Canal expansion provides new opportunities for U.S. Gulf container trade.  Container trade between East Asia and Houston via the Panama Canal was virtually non-existent a decade ago. In May 2012, COSCO Container Lines and Hanjin Shipping began a new direct service from Asia to Houston.  Today, East Asian imports account for 27% of import container volume and represent the fastest growing trade lane.  With the expansion of the canal, opportunities for all-water service into Houston will certainly expand. 

Roger Guenther, Executive Director of the Port of Houston Authority, is confident in the Port of Houston Authority’s ability to meet the challenge of quickly increasing volumes. “We are ready to meet the demands of our customers and have invested in the infrastructure necessary to handle increased cargo across our docks.”  In a display of well-placed confidence he added, “We are ready today, and will be ready for what comes tomorrow and into the future.”

Chairman Janiece Longoria emphasizes the importance of continued partnership as we move into the next century of the Houston Ship Channel. “We owe a debt of gratitude to the visionaries that came before us. Let’s continue to work together to assure that the second century of the Houston Ship Channel is as remarkable as the first.”

 

About the Houston Ship Channel Centennial

Throughout 2014, the Houston Ship Channel Centennial will celebrate the accomplishments of its first 100 years, and set sail for another 100 years of progress and prosperity.  A series of events will honor this momentous anniversary, including: the Stories of a Workforce exhibit at the Julia Ideson Library, presented by the Houston Arts Alliance; a commemorative book; Centennial Family Fest at the Bayport Cruise Terminal; a historic documentary produced by Texas Foundation for the Arts, airing on Houston Public Media TV 8; the American Association of Port Authorities Convention; and a rededication ceremony. For more information, please visit www.promotehoustonshipchannel2014.org.