Gulf Coast Chemical Plant Owners Post Big Gains in Project Activity, Although Investment Totals Fall

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Researched by Industrial Info Resources (Sugar Land, Texas)--Capital and maintenance project activity for the Chemical Processing Industry (CPI) along the United States' Gulf Coast has improved sharply this year to more than 285 total projects, compared to only 188 in 2009.

This improvement in activity hasn't been equally met by an increase in investment values: Total spending in the region in 2009 reached $2.6 billion, but this year spending is expected to reach only $2.2 billion. Overall, the CPI performance across much of the U.S. is similar. There has been a push for more project activity as markets have improved throughout the world, while the size and scope of the average project is much smaller than in previous years. Last year, the average total investment value (TIV) for a chemical project in the Gulf Coast region topped $13 million, but is not even reaching $8 million this year.

The increase in project activity is consistent with the optimistic outlook on the market and times ahead, although very few chemical plant owners have stepped up the size and level of the investments planned for the current year. At the moment, the largest CPI project to begin construction in the region this year is valued at $220 million. The project is a hydrogen-unit addition planned by Air Liquide Industrial US LP (Houston, Texas) at the company's plant site in Pasadena, Texas. There are only six CPI projects planned in the region this year with a TIV reaching or exceeding $100 million, a much different landscape from the days less than a decade ago when twice that many projects of this size began construction each year.

One of the biggest changes in project-spending trends across the CPI, particularly in the Gulf Coast region, is an increase in reliability and energy-efficiency projects. The region is home to North America's densest and oldest population of large petrochemical industry plants, making energy consumption quite high. CPI plant owners are increasingly tackling the chore of reducing operating costs and achieving incremental emission reductions through equipment replacements, modifications and retrofits. In past years, many of these objectives were met as part of capital budgets. This trend has changed. Plant owners are repackaging a large number of projects to be executed as part of maintenance agendas and accomplished during planned turnarounds.

CPI maintenance turnaround spending the Gulf Coast region has increased sharply this year to more than $700 million, up from $474 million in 2009. The number of planned turnarounds has also increased and is expected to reach 195 individual plant or unit turnarounds this year, compared to 138 last year.

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