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Released January 03, 2018 | SUGAR LAND
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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--A full slate of electric power projects under development along the Gulf Coast, coupled with tight local labor markets, could spell trouble for developers hoping to kick off construction on their projects in 2018 or 2019, according to labor analysis from Industrial Info. Several Gulf Coast markets in Texas, Louisiana and Mississippi are projected to have a high reliance on traveling labor to meet local demand for several skilled crafts. Skilled craft laborers who travel from another market generally receive higher wages, larger per diems and sometimes travel allowances.
In recent years, the Gulf Coast liquefied natural gas (LNG) terminal buildout has absorbed a lot of skilled craft laborers like millwrights, iron workers, welders, electricians, pipe fitters, boilermakers and scaffold-builders, according to Industrial Info's Labor Forecast Analyzer. Those projects are scheduled to be completed gradually over the next five years, freeing some laborers to work on other projects.
The LNG and Power industries are not the only ones booming along the Gulf Coast. The Oil & Gas Production and Pipelines industries, along with the Chemical Processing Industry, also have been growing sharply in recent years. Although all three industries have put a lot of steel into the ground in recent years, many more projects remain in the planning stage.
Whether it's exports of LNG or manufacturing of petrochemical products, low-cost natural gas is an important driver in the surge of industrial project activity in and around the Gulf Coast. Favorably priced feedstock and the availability of local infrastructure enable increased exports of material around the world, Furthermore, the opening of the Panama Canal's $5 billion expansion allows super tankers to access Asian markets more economically than before. Industrial Info expects a continuation of the Gulf Coast industrial buildout for the Petrochemical and Oil & Gas markets.
Power developers and asset owners are scheduled to begin construction on more than 70 capital and maintenance projects in 2018 and 2019, with an aggregate value of nearly $4 billion.
"Supply chain managers, contracting managers and procurement officials may have to revise their schedules or recalculate the costs of labor for some of their electric power projects, some of which have been delayed for years," said Tony Salemme, vice president of Industrial Info's Skilled Craft Labor Group. "The skilled craft market was tight before Hurricane Harvey hit the Gulf Coast. We estimate that hurricane affected about 139 power projects. We expect there will be a cascading effect on construction, as work to get idled power plants back online may delay the start of construction for new projects."
In the wake of Hurricane Harvey, local wage surveys indicate wages have increased by up to $5 per hour for certain key trades such as Millwrights, Electricians and Instrumentation Techs. "Over the next two years," Salemme said, "the rebuild work related to commercial, infrastructure and housing markets could put pressure on skilled craft labor wage rates, but will certainly impact the already-tight supply of construction workers in the Gulf region."
The largest Gulf Coast-area power projects scheduled to begin construction between January 2018 and December 2019 are:
"In the Corpus Christi area, we are seeing sharp increases in demand for power-related trade labor, including welders, pipefitters, millwrights and iron workers," Salemme noted. "The increased demand for power-related labor we saw in 2017 is expected to continue through 2018 and 2019."
In the New Orleans area, he continued, demand for laborers who work on power plants rose sharply last year, and demand is expected to continue rising in 2018 before declining in 2019, and rising again in 2020. In the Baton Rouge market, labor demand is forecast to rise in 2018 and 2019. In 2020, demand for power-related skilled laborers like pipefitters, millwrights, iron workers, electricians and boilermakers is expected to revert to 2018 levels, Salemme added.
Industrial Info's proprietary Labor Forecast Analyzer tracks aggregate demand for labor in a given labor market. Using another proprietary platform, the Labor Forecast Geolocator, we can drill deeper into which industries in a given market are expected to experience a surge, or a sag, in demand for skilled craft labor hours from one year to the next.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
In recent years, the Gulf Coast liquefied natural gas (LNG) terminal buildout has absorbed a lot of skilled craft laborers like millwrights, iron workers, welders, electricians, pipe fitters, boilermakers and scaffold-builders, according to Industrial Info's Labor Forecast Analyzer. Those projects are scheduled to be completed gradually over the next five years, freeing some laborers to work on other projects.
The LNG and Power industries are not the only ones booming along the Gulf Coast. The Oil & Gas Production and Pipelines industries, along with the Chemical Processing Industry, also have been growing sharply in recent years. Although all three industries have put a lot of steel into the ground in recent years, many more projects remain in the planning stage.
Whether it's exports of LNG or manufacturing of petrochemical products, low-cost natural gas is an important driver in the surge of industrial project activity in and around the Gulf Coast. Favorably priced feedstock and the availability of local infrastructure enable increased exports of material around the world, Furthermore, the opening of the Panama Canal's $5 billion expansion allows super tankers to access Asian markets more economically than before. Industrial Info expects a continuation of the Gulf Coast industrial buildout for the Petrochemical and Oil & Gas markets.
Power developers and asset owners are scheduled to begin construction on more than 70 capital and maintenance projects in 2018 and 2019, with an aggregate value of nearly $4 billion.
"Supply chain managers, contracting managers and procurement officials may have to revise their schedules or recalculate the costs of labor for some of their electric power projects, some of which have been delayed for years," said Tony Salemme, vice president of Industrial Info's Skilled Craft Labor Group. "The skilled craft market was tight before Hurricane Harvey hit the Gulf Coast. We estimate that hurricane affected about 139 power projects. We expect there will be a cascading effect on construction, as work to get idled power plants back online may delay the start of construction for new projects."
In the wake of Hurricane Harvey, local wage surveys indicate wages have increased by up to $5 per hour for certain key trades such as Millwrights, Electricians and Instrumentation Techs. "Over the next two years," Salemme said, "the rebuild work related to commercial, infrastructure and housing markets could put pressure on skilled craft labor wage rates, but will certainly impact the already-tight supply of construction workers in the Gulf region."
The largest Gulf Coast-area power projects scheduled to begin construction between January 2018 and December 2019 are:
- Lewis Creek Power Station, a gas-fired, combined-cycle project on the Texas Gulf Coast being developed by a unit of Entergy Corporation (NYSE:ETR) (New Orleans, Louisiana). This $937 million, 997-megawatt (MW) project is scheduled to begin turning dirt in early 2019 and to be operating by late 2021. Chicago Bridge & Iron Company NV (NYSE:CBI) (CBI) (The Hague, Netherlands) is providing engineering, procurement and construction (EPC) services to the project, which has been delayed several times.
- Jackson County Generating Station, a 920-MW, simple-cycle generator that will burn natural gas. This $900 million project, slated to be built in Jackson County, is expected to be operating by mid-2021. The project, which has been delayed several times, is being developed by a unit of Southern Company (NYSE:SO) (Atlanta, Georgia).
- Tenaska Brownsville Generating Station, an 800-MW, combined-cycle generator scheduled to be built in Cameron County, Texas. A unit of Tenaska Incorporated (Omaha, Nebraska) is developing this $800 million project, which is scheduled to begin construction in early 2019 and to be complete in mid-2021. This project has been delayed several times, with aggregate delays exceeding four years.
- La Paloma Energy Center, a 730-MW, $650 million combined-cycle power plant scheduled to be built in Cameron County, Texas. Coronado Power Ventures (Plano, Texas) is developing this project, which is scheduled to begin construction in August 2019 and to be operating by October 2022. However, construction of this project has been delayed numerous times over the last five years.
- Washington Parish Energy Center, a combined-cycle project being developed by Calpine Corporation (NYSE:CPN) (Houston, Texas). This 360-MW plant, valued at about $300 million, is scheduled to break ground in August 2018 and to be operating by early 2021.
- Corpus Christi, Texas
- Houston, Texas
- Brownsville, Texas
- Lake Charles, Louisiana
"In the Corpus Christi area, we are seeing sharp increases in demand for power-related trade labor, including welders, pipefitters, millwrights and iron workers," Salemme noted. "The increased demand for power-related labor we saw in 2017 is expected to continue through 2018 and 2019."
In the New Orleans area, he continued, demand for laborers who work on power plants rose sharply last year, and demand is expected to continue rising in 2018 before declining in 2019, and rising again in 2020. In the Baton Rouge market, labor demand is forecast to rise in 2018 and 2019. In 2020, demand for power-related skilled laborers like pipefitters, millwrights, iron workers, electricians and boilermakers is expected to revert to 2018 levels, Salemme added.
Industrial Info's proprietary Labor Forecast Analyzer tracks aggregate demand for labor in a given labor market. Using another proprietary platform, the Labor Forecast Geolocator, we can drill deeper into which industries in a given market are expected to experience a surge, or a sag, in demand for skilled craft labor hours from one year to the next.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
