Chemical Processing Industry Project Spending in Southeast Market Region Increases Sharply in 2006 Setting Expectations for 2007

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Researched by Industrial Info Resources (Sugar Land, Texas). The Southeast Market Region, consisting of Mississippi, Tennessee, Alabama, Georgia, and Florida, is home to an estimated 655 operational chemical plants. The Chemical Processing Industry (CPI) has historically contributed between $800 million and $1 billion in total project spending to the region each year over the past decade, although spending dropped off significantly to just more than $300 million in 2005. Quick improvement was seen in 2006 as total spending was expected to exceed $870 million from over 100 projects.

Looking ahead to the spending expectations of 2007, Industrial Info is currently tracking nearly $700 million in capital and maintenance project activity with plans for several major projects getting underway early this year and even bigger projects by the fourth quarter. Kicking off the first quarter, with likely the largest single CPI project in the region, is Toray Carbon Fibers America, Incorporated (Decatur, Alabama) with an estimated $150 million phase III expansion of its Decatur carbon fibers plant. Major architect and engineering contracts have been awarded and construction of the new multi-level building and related production line are expected to begin almost immediately.

Click on the image at right to view a breakdown of CPI project spending in the Southeast region for 2007

The spring and summer months will be filled with several major projects with average total investment value (TIV) in the $25 million to $70 million range, taking place mostly in Georgia, Alabama and Tennessee. The owners of these project investments are names familiar to the mainstream CPI such as BP and DuPont and others with expansions and major debottlenecks either approved or nearing approval.

The last quarter of the year isn’t expected to get any quieter with plans for BASF Corporation (Florham Park, New Jersey) to begin construction of a major $100 million dispersions unit addition at its site in Chattanooga, Tennessee. INEOS Phenol, Incorporated (Theodore, Alabama) is also expected to contribute largely to the region at the end of the year with the potential expansion of its Theodore phenol plant by an estimated 350,000 metric tons per year.

Planned CPI maintenance turnaround activity is forecast at over $50 million for the year with most plant turnaround events averaging over $2 million each. Considering the limited number of petrochemical plants located in this region, less than 30 plants, this is a considerable level of turnaround spending, although much less than its western neighbor, the Southwest market region, where planned maintenance turnaround activity is currently forecast to easily exceed $350 million in 2007.

Approximately $170 million of the total spending identified for 2007 has already been approved, leaving the balance in some phase of planning and estimating. Considering that over $500 million is still in the planning phase as we approach the end of the first quarter, it is difficult to say exactly what the outcome of spending will be, although the large number of major projects sets a relatively positive tone to aid the region along to another year of strong investments.

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