Chemical Plant Owners Embrace a Larger Number of Smaller Projects

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Researched by Industrial Info Resources (Sugar Land, Texas)--The average value of capital and maintenance projects planned in the North American Chemical Processing Industry (CPI) remains small, although the number of opportunities continues to increase. Last year, in the midst of a global economic recession, the average total investment value (TIV) for the industry reached its lowest level in decades, at $8.5 million. Although this came as no real surprise to most, this was still a drastic reality shock when compared to previous years, where the average TIV varied between $13 million and $20 million. So far this year, the average TIV has improved only slightly, to just more than $8.8 million, based on project activity being tracked as part of Industrial Info's North American Project Database.

Although the average TIV increase for this year isn't remarkable, it is moving in the right direction; possibly more important to most industry observers is the number of new projects being planned. In 2009, project activity totaled just more than 600 capital and maintenance projects that began construction during the year. Already this year, more than 880 have been identified with plans to begin construction during 2010. A significant portion of this swell in project activity is an increase in the number of planned maintenance turnarounds, up by 20% so far to more than 566 individual plant or unit turnarounds. As operating rates continue to inch upward, so will the need for planned maintenance turnaround events. Another catalyst for the increase in turnaround activity is the desire to implement small incremental projects during periods of downtime, often even integrating them with maintenance expenditures when possible. Capital dollars have been increasingly difficult to come by for more than a year, and any chance to pair a project with a planned turnaround event has been capitalized on.

A closer look at just the planned capital project activity shows an impressive increase in both activity and total investments. Total investments this year are expected to exceed $6.3 billion in new construction starts from more than 320 projects, compared to just $4.3 billion and 178 capital projects last year. Several large projects planned in the Rocky Mountains are expected to bolster total spending in the region this year, taking it even beyond the traditional No. 1 market region, the Southwest. Earlier this year, Louisiana Energy Services (Eunice, New Mexico) began the first-phase expansion of its uranium enrichment plant in Eunice, with a second phase of construction planned to begin very soon. These two projects combined equal more than $2 billion in ongoing spending that will start construction this year. The Southwest market region is expecting to see nearly 100 capital projects begin this year with a total value of nearly $1.5 billion, easily making the region the No. 1 investment region this year based on the number of opportunities.

Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. IIR'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.