North American Chemical Processing Industry Meets Fourth-Quarter 2007 Construction-Start Expectations

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Researched by Industrial Info Resources (Sugar Land, Texas)--In the summer of last year capital and maintenance projects planned to begin construction in the Chemical Processing Industry (CPI) during the last quarter of 2007 were forecast to reach $1.5 billion or more in North America. This was based on active projects reported as part of Industrial Info's North American Project Database. Looking now at the fourth quarter of 2007, it appears that spending might have exceeded the original forecast by a small margin with total construction starts reaching an estimated $1.7 billion.

"As we continue to research ongoing, active and previously reported projects you can expect to identify delays and cancellations, although the momentum of the CPI has remained so strong over the past year that we expect cancellations to be minimal," said Trey Hamblet, Vice President for the Chemicals Research Group of Industrial Info. Less than 10% of the 174 projects originally reported as having plans to begin some phase of construction during the fourth quarter of 2007 have been identified as canceled or indefinitely placed on hold.

Some of the largest single projects contributing to the quarter's performance include plans by Chevron Phillips Chemical Company LLC (CPChem) (The Woodlands, Texas), AlphaPet Incorporated (Decatur, Alabama), and INEOS Incorporated. CPChem began construction of its polyphenylene sulfide (PPS) unit addition at its Borger, Texas, plant site. AlphaPet expected to complete civil construction for its planned grassroot polyethylene terephthalate plant to be located in Decatur, Alabama. INEOS began civil construction and demolition late last year for the addition of a fourth acrylonitrile reactor at its Port Lavaca, Texas, plant site. E&C services have been awarded and identified for each of these projects with project values ranging from $50 million to $200 million each.

The value of capital projects made up the majority of spending during the fourth quarter although the number of maintenance turnaround projects made up almost one half of the project activity and represented more than $160 million in total spending. CPI plant owners continue to focus as much as possible on their reliability improvement projects with planned maintenance repairs or replacements as an effort to decrease cost and increase efficiency. Over the past several years, the number of planned maintenance turnaround projects identified has continually gone up. This reinforces the plant owner trends toward preventative and predictive maintenance routines and planning.

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