Planned Investments for New Industrial Gases Capacity Continue to Increase Sharply

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Researched by Industrial Info Resources (Sugar Land, Texas)--The Chemical Processing Industry (CPI) of North America continues to buck the trend of showing any hesitation or admitting to a slowing domestic economy. The industrial gases segment of the CPI has consistently shown its strength during recent years and it has certainly been one of the most profitable segments of the industry. The strength of this industry segment is reinforced by the continued expansion of U.S. petroleum refineries demanding greater quantities of hydrogen and oxygen to increase capacity and produce transportation fuels with lower sulfur content.

Industrial Info is tracking nearly $900 million in capital and maintenance projects planned to kick off in this segment of the CPI during 2008 based on active projects in its North American Project Database. This is more than double the investment amount identified in October 2007. This rapid increase in spending over such a short period is in response to several major announcements of synfuel plants announced in the Gulf Coast region that will require enormous amounts of industrial gases to support gasification and similar technologies. One example of this is plans by Lake Charles Cogeneration LLC (Houston, Texas) for an estimated 8,000 tons per day of air-separation capacity at the site of a proposed petroleum coke gasification in Louisiana estimated to cost $1.3 billion.

Proof of the Petroleum Refining Industry driving investments for additional hydrogen capacity is obvious from several major unit additions planned across the United States. This new capacity is not limited to the traditional producers of hydrogen. Javelina Company (Corpus Christi, Texas), a small ethylene producer, has awarded Linde BOC Process Plants LLC (Tulsa, Oklahoma) the engineering, procurement and construction/management contract for a planned hydrogen unit to be located on its Corpus Christi plant site. The unit will produce an estimated 40 million standard cubic feet per day, serving the regional refining and pipeline markets.

Texas and Louisiana will be home to more than half of the spending identified in this industry segment during 2008, which is consistent with these states being home to the largest number of industrial and refining plants in North America. California, Indiana and Kentucky will each see major investments in new capacity this year potentially equaling a combined $256 million in project activity. At the time of this analysis, an estimated $220 million of the reported spending for this segment during 2008 had been previously approved or funded, leaving a large balance yet to be approved and the potential for portions of it slipping into next year in some cases.

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Industrial Info Resources (IIR) is a marketing information service specializing in industrial process and energy related industries with products and services ranging from industry news, forecasting, plant and project databases, as well as multimedia advertising campaign assistance.