North American Chemical Industry Prepares to Start New Year with $2.4 Billion in Total Spending

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Researched by Industrial Info Resources (Sugar Land, Texas)--There are very few chemical industry professionals that won't admit their worry about the current economic climate and the potential lingering effects it could have on the North American Chemical Processing Industry (CPI). During the last two months of 2008, numerous project cancellations and permanent plant closures were announced, altering both the short- and long-term outlooks for the industry. As bad as most reports may appear, the picture might be brighter than some expect. Based on active projects being tracked as part of Industrial Info's North American Project Database, there are more then 180 active CPI projects planned to begin construction during the first quarter of 2009. These capital and maintenance projects have a combined total investment value of nearly $2.4 billion.

This level of activity is similar to the original forecast for the first quarter of 2008 that ended up with actual spending nearing $1.87 billion. Getting the year off to a strong start could equal a lasting momentum for the entire year, considering the very low point of the current financial markets. Three of the largest projects planned to begin construction over the next few months are each for new hydrogen capacity. Air Products & Chemicals Incorporated (NYSE:APD) (Allentown, Pennsylvania) is planning to begin construction of two grassroot hydrogen plants in Louisiana, and Javelina Company (Corpus Christi, Texas) is adding a new unit at its Texas plant. These hydrogen projects reinforce the Petroleum Refining Industry's plans for continuing to add capacity for long-term demand.

Terra Nitrogen Limited Partnership (Sioux City, Iowa) is hopeful of receiving permit approval this month for a planned $180 million addition of a urea ammonium nitrate unit at its Woodward, Oklahoma, plant site. Engineering and construction resources have been secured for this project, and construction could begin in March if final approvals are received soon.

Nearly half of the estimated $2.4 billion forecast to begin construction during the first quarter of the year has been approved. An additional $482 million, including plans by Terra Nitrogen, are in some advanced phase pending approval in the coming weeks. Maintenance turnaround spending will account for only $200 million of the first quarter CPI spending, although this represents the greatest level of project activity with more than 80 individual unit or plant turnarounds.

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