HOUSTON, GALVESTON STUDY REGIONAL PORT COMPLEX

HOUSTON, GALVESTON STUDY REGIONAL PORT COMPLEX

What began as an unprecedented attempt by one port to acquire another has evolved into discussions about creation of a larger, regional port complex on the Texas Gulf Coast.

And while some longtime proponents of that concept here express doubts that anything will happen soon, they nevertheless believe negotiations so far between the ports of Houston and Galveston have produced the most serious consideration of a regional plan in years.Calling the regional concept a necessity for Houston and Galveston in meeting the competitive challenges of the future, key labor and business leaders say they'll lobby to turn the acquisition talks into regional port development negotiations as much as possible.

"We feel there will ultimately be a regional port here," said Benny Holland Jr., president of the South Atlantic and Gulf Coast district of the International Longshoremen's Association. "If we're going to compete, it will have to happen."

Just 60 miles apart, Houston and Galveston boast a fierce rivalry dating back to the 19th century when Galveston's island port enjoyed top billing. But construction of the Houston Ship Channel and Houston's growth as an industrial marketplace boosted its maritime status well beyond Galveston's in recent decades.

Houston was the nation's eighth leading containerport in the first nine months of 1991, when it handled 273,332 20-foot containers or their equivalent, known as TEUs. Galveston ranked 20th with 55,788 TEUs, according to figures compiled by the Port Import/Export Reporting Service division of The Journal of Commerce. Both ports also handle significant amounts of breakbulk cargo, as well as grain and other bulk commodities.

Proud of their own maritime heritage, Galveston city leaders greeted last summer's acquisition overtures from Houston with suspicion. Although they recognized the capital improvement advantages Houston could offer with its strong cash position, sources say the Galveston forces resent and distrust the acquisition attitude initially extended by their larger neighbor to the north. As a result, acquisition talks since June have produced no decisions.

"Galveston continues to talk in terms of a merger and Houston talks about it as an acquisition," said Tom Kornegay, Houston's acting port director. ''That seems like the major issue to be overcome."

Since the city of Galveston owns its port, Houston officials have characterized the situation as a simple real estate transaction. Mr. Kornegay said Houston is still in the process of developing a "figure for acquisition cost - we still don't have a number" to offer.

However, William H. Clayton, chairman of a Galveston committee to study Houston's proposal, said: "We are interested in a regional port authority. We've been looking into that."

Mr. Kornegay said he and Ned S. Holmes, Houston port chairman, have met four times since June with the Galveston committee.

Meanwhile, maritime leaders in both cities have raised their own questions about the actual benefits from an acquisition. Critics, like John Ray Harrison, mayor of Pasadena, Texas, cite Galveston's $17 million debt load and complain that the Port of Houston would simply be buying a large liability.

In return, Houston initially saw Galveston's deep water location as ideal for grain and steel cargoes. Other observers have noted that Houston has few alternatives for expansion. And former port director Jim Pugh launched the proposal with expectations that Galveston's growing container business would relocate to Houston's Barbours Cut Container Terminal.