Saturday, Dec 29 2012 08:00 PM

Year in review: Oil, housing lead list of top local business stories

BY JOHN COX Californian staff writer

Much as they might like to, Kern County oil executives won't soon forget 2012.

This was the year California petroleum producers witnessed the beginnings of what will likely be whole new sets of regulations on everything from hydraulic fracturing, or "fracking," to underground waste disposal to environmental reviews of oil projects.

Ironically, especially in light of oil's towering influence here, this regulatory uncertainty has come at a time when the local economy is generally, if not uniformly, on the upswing. Some of that improvement can be attributed to high oil prices and the local jobs they bring.

In any case, some interesting and impactful news events took place in Kern's business community in 2012. Here's our list of the tops among them:

Oil industry braces for new rules

Several factors have combined over the last two or three years to create what looks like a flood of new state and local regulation coming down the pipeline for California oil producers.

To start with, the U.S. Environmental Protection Agency audited the state's underground injections program and found it wanting. There was also the sinkhole death of a Chevron supervisor in an oil field near Taft. Meanwhile, increased drilling in the Shafter area has angered some well-connected farmers there.

These events, together with national fears that fracking could taint groundwater, prompted lawmakers and regulators in Sacramento to take a look this year at longstanding rules on the oil industry. In many cases, decisions were made to update those rules as soon as 2013 and 2014.

Nowhere will the effects be felt as keenly as in Kern County, where the industry is already closely involved with regulators to make sure the rules make sense and do not slow down production -- or bring about layoffs -- unnecessarily.

Housing experiences mini-boom

For the first time since the housing bust, optimism returned to Bakersfield's homebuilding industry in 2012.

Tracts left unfinished in 2007 buzzed with construction in the second half of the year, with local building permits easily on pace to surpass 2011 and 2010 totals.

Low construction costs have contributed to the increased activity, but so has demand from successful farmers and transplanted oil people.

There's some question as to how long the surge can last: Creating a new subdivision costs a lot more than filling out one that was half-empty. But homebuilders are encouraged that many of the new homes are pre-sold, which reflects true demand as opposed to speculation.

Hospitals compete on cancer care

Bakersfield's already highly competitive hospital market got even more so in 2012 as San Joaquin Community Hospital's new cancer center spurred a competing proposal by four other local institutions.

San Joaquin said its AIS Cancer Center, opening soon on Chester Avenue, was a response to strong local demand for services -- not an attempt to take business from the Comprehensive Blood & Cancer Center on Truxtun Avenue.

But shortly before construction of the center was complete, CBCC and three Dignity Health hospitals in Bakersfield announced that they, too, plan to open a comprehensive inpatient cancer center.

Paramount goes big on cuties

In local business, there are large investments and then there are mega projects such as the 640,000-square-foot packing plant Paramount Citrus recently opened in Delano.

The 500-employee plant ships only cuties, the golfball-size fruit Paramount expects to triple sales by 2017.

This is no regular warehouse. Built of concrete and stainless steel, it combines advanced production monitoring with a highly trained seasonal workforce.

Local observers say the project is an example of the bold investments being made in Kern's food processing and industrial real estate industries.

New owners propose Blaze stadium

Eight months after buying the Bakersfield Blaze baseball team, a pair of local oilmen announced plans Nov. 1 for a privately financed baseball stadium to be part of the Bakersfield Commons mixed-use development project.

The $20 million, 3,500-seat stadium at Coffee and Brimhall roads would be the centerpiece of a family entertainment complex with a movie theater, dining and shopping.

While the project holds opportunity for Blaze owners Gene Voiland and Chad Hathaway -- the team hopes to sell advertising at the stadium, offer naming rights and fill executive suites -- it also carries significant financial risk. To break even, the stadium will have to draw an average of 2,500 spectators per game, or about five times the typical Blaze home game at Sam Lynn Ball Park.

Tejon complex attracts big tenants

Kern County residents are getting more and more reasons to take a drive over to the Grapevine.

For some, it's a job at one of two new distribution centers -- Caterpillar Inc.'s 400,000-square-foot facility and Dollar General's 439,000-square-foot center -- at the Tejon Ranch Commerce Center. Together the tenants were expecting to create 350 to 400 new jobs.

For others, shopping may soon be the draw. Tejon Ranch Co., the Lebec-based agribusiness and real estate development company, announced in September that it will partner on a 500,000-square-foot outlet center near the intersection of Interstate 5 and Highway 99. Spring 2014 is the projected opening date.

Local retailers close

Lingering economic pain and changing shopping patterns claimed some local independent stores.

First there was an attempt to reopen the Green Frog Market on Columbus Street that closed in late 2011. The bid failed in February.

And now, it was announced just last week, the Bernard Street location is slated for closure Jan. 13. While hopes are high that a suitable site for a new store will be found, a spokesman for family-owned Green Frog Market said there’s no guarantee.

In May, another independent, Young’s Marketplace, closed as well, to be replaced by a Dollar General.

At The Marketplace shopping center, high-end local retailer Olcotts called it quits. About a month later, in October, clothing boutique Tangerine, also a tenant at The Marketplace, closed as well.

Farmers await Farm Bill's passage

It was a somewhat frustrating year for Kern's farming industry as Washington politics held up approval of the federal Farm Bill, a five-year spending measure that expired Sept. 30.

The bill -- a complex piece of legislation that covers food stamps as well as direct assistance to wheat, corn and other "program crop" farmers -- offers important help in Kern.

Local growers of "specialty crops" such as nuts and grapes worried that without Congressional action, they would miss the bill's financial support of pest control, crop research and overseas marketing help.

But no group was more anxious for the bill's passage than dairies struggling with high feed prices and dry pastures. Without the bill, they stood to lose a special insurance coverage in early 2013.

Midcontinent crude flows to Kern

No, Kern County is nowhere near to running out of oil. But in some cases, it makes more sense to bring in crude from out of state.

Following a national trend, a 26,000 barrel-a-day refinery on East Panama Lane, Kern Oil & Refining Co., began buying large amounts of North Dakota crude and having it hauled to Bakersfield by train.

It makes perfect sense. Prices in the midcontinent have been depressed by a bottleneck related to infrastructure problems and the area's fracking-driven oil boom.

The owner of another local refinery -- the Alon plant on Rosedale Highway -- has announced plans to begin importing crude from the midcontinent as well.

Tri-Valley ends in a mess

Amid a federal investigation and accusations of fundraising and cost-allocation improprieties, the publicly traded oil exploration and production company that was Tri-Valley Corp. filed for Chapter 11 bankruptcy protection in August.

The Bakersfield-based company had reported losing more than $31 million from 2009 to 2011. Its former chairman and CEO, F. Lynn Blystone, agreed in May to pay $75,027 to settle federal charges of insider trading.

All Tri-Valley's assets, including oil operations in Bakersfield and Oxnard, were expected to be liquidated. An investigation by the U.S. Securities and Exchange Commission is ongoing.

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