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Shell's Convent facility is seen in Convent, La. Thursday, Nov. 5, 2020. (Photo by Max Becherer, NOLA.com, The Times-Picayune | The New Orleans Advocate)

Jim Mitchell, a top St. James Parish public school official, says Shell Oil Co.'s decision this week to close its Convent refinery is akin to an uppercut to the head from onetime heavyweight boxing champ Mike Tyson.

"We're still in the process of getting our vision back," said Mitchell, the school system's chief financial officer.

The refinery is St. James' largest taxpayer, its largest employer and a bedrock of the Mississippi River parish's industrial base that has employed generations of its residents.

Sheriff Willy Martin said the complex generates a total of $24 million per year in property, inventory and sales taxes for local governments: about $5 million in sales tax and $19 million in property and inventory taxes.

"So that's quite a bit of impact on our local economy," said Martin.

Local officials said the 53-year-old refinery could close by the end of the year. All product inventories will be removed or sold off, with no hazardous raw materials left on-site once the shutdown is finished, local officials said Shell told them.

Martin said Shell's employees will remain on the Convent site payroll until February. Meanwhile, the company would attempt to find jobs for them at its Norco and Geismar sites after a voluntary severance program starts up at those operations. 

Martin's office collects about $4 million in property and inventory tax from Shell, which represents about a quarter of his revenue in 2019.

The impact on each agency that receives tax revenue from Shell will vary, based on revenue each receives from other sources. Parish government and the School Board benefit through property, inventory and sales tax collections from Shell while the Sheriff's Office doesn't get the sales taxes.

The local governments, however, can also expect further economic reverberations once the parish loses its share of the salaries of 700 direct employees and 400 additional contractors. The complex also supports an array of smaller businesses that feed its workers, fuel their trucks and supply equipment and services.

Though St. James has many other industrial facilities and is line for new expansions, the next-closest employer to the Shell refinery's 700 direct employees in 2019 was the School Board's 600 workers, school audits say.

Ernie Matherne Jr., owner of the Matherne's Market grocery store chain founded in St. James Parish, said he had heard the talk that Shell was trying to sell the refinery.

But he said it is "inconceivable" to him that the plant he had seen being built as a youth could actually be shut down. Matherne said he is concerned about the impact its closure will have not only on his business but also the broader economy, the local governments and the families he has for customers. 

Matherne's original Grand Point location is only a few miles down La. 3125 from the refinery and near one of St. James' areas of residential growth — homeowners who are employed in the region's petrochemical industrial.

Matherne said he is nearly finished an almost $1 million renovation of the store to serve those customers, some of whom may be looking for a job.

"You get something like that that hits you and just kind of worry," he said Friday. 

Similar worries were at play just down the road at Guzman's Machine Works Inc., a multi-million-dollar business that builds or refurbishes the pumps, pipes, fittings and other pieces of equipment that keep oil and various kinds of product flowing through the maze of pipes and machinery at St. James plants like the refinery. 

Bill Guzman, general manager, said the Convent refinery constitutes about 5% of his business and the loss likely won't mean he'll have to shrink his workforce of 37 people. But he believes other businesses more heavily focused on the refinery could be in for rough times.  

Like Matherne, he said he worries about the Shell workers who may be looking for work soon and the effect on local governments.

Guzman added that Shell's closure may also speak to broader troubles that the oil and gas industry has suffered in recent years and what could be ahead.

"It does open your eyes," he said. 

Parish President Pete Dufresne joined Martin and Assessor Glenn Waguespack for a news conference Thursday on the closure. The first-term president said that, while he was hopeful the refinery could be repurposed, the parish would have to start looking at its budget.

"We're gonna have to start reallocating our budget, and we're gonna have to start preparing for the significant decrease in our revenue," he said. "I mean just like any other business, we can't spend money we don't have."

Dufresne said the parish would have consider the services it provides, prioritize them and consider which ones to discontinue first. He didn't specifically discuss job cuts at parish government.

Shell kicks in $6.7 million in property and inventory tax to the parish's annual budget and probably close to another $1.5 million in sales tax. Combined, those tax dollars represent about 20% of the parish's annual revenue in 2019. 

The School Board alone pulls in $8.7 million in property and inventory tax revenue from Shell, which was nearly 12% of the system's total revenue in 2019 even before the sales taxes.

In an interview, St. James School Superintendent Ed Cancienne Jr. said top administrators, Assessor Waguespack and others plan to meet with the School Board's Finance Committee at 4 p.m. Tuesday in Lutcher to address the impact of Shell's closure.

The school district has 3,600 students and 600 full-time employees.

When asked whether the revenue loss could require a reduction in force or other severe measures in the school system, he declined to comment.

Cancienne said the School Board has already adopted its budget for this year but officials would be "realistic and start some serious planning" in close consultation with the board.

"Everything will be put on the table," he said. "We'll have to be creative."

Property tax bills typically go out at the end of the year. Both Martin and Cancienne said Shell officials left indications they would try to soften the blow of their departure, including by honoring their 2020 taxes this year.

Cancienne said he didn't receive a direct statement from Shell officials that they would pay the 2020 bill but that they would be "true and honor all of our commitments to the St. James Parish School Board."

He added that still leaves big questions for 2021.


Email David J. Mitchell at dmitchell@theadvocate.com

Follow David J. Mitchell on Twitter, @NewsieDave.