Project Cancellations and Fallout Remains Low for the North American CPI During the First Half of 2007

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Researched by Industrial Info Resources, Incorporated (Sugar Land, Texas). The first six months of 2007 have proven to be just as productive as many had forecast and even more than most had hoped it would be. Based on projects verified by the Chemical Processing Industry (CPI) research staff of Industrial Info, an estimated $650 million in capital and maintenance project activity originally planned to begin construction in the first half of the year was placed on-hold or cancelled. This is a substantial difference in the outcome to the first six months of 2006 when nearly $1.4 billion in total project activity was cancelled. “It is still early enough in the year that we will find additional projects that were delayed or cancelled although the expectations are that the results will still remain significantly below those of last year,” commented Trey Hamblet, VP of Chemical Processing for Industrial Info.

Click on the image at right to view a chart showing project fallout for the CPI during the first half of 2007

Some of the most significant project cancellations so far this year include plans shelved by Praxair Incorporated, BP, and United Carbon Corporation (Woodland Hills, California). Praxair cancelled plans for a new hydrogen unit in Port Arthur, Texas. The capacity needed in the region will likely be met by plans for a pipeline proposed by Air Liquide (Houston, Texas) that will originate from an existing plant located in Pasadena, Texas, where a new hydrogen unit was completed last year. BP had planned a debottleneck of the No. 3 purified terephthalic acid (PTA) located in Decatur, Alabama, and has placed those plans on indefinite hold. United Carbon has long planned a grassroot carbon black plant to be located in Southern California and plans for that project appear stalled. SNC-Lavalin Incorporated (Montreal, Quebec) had contributed design and estimating for this nearly $125 million project.

A few projects that started construction ahead of schedule contributed to the total active project spending during the first half of the year. One such project was a plant restart by VVF LLC (Kansas City, Kansas). VVF has successfully restarted portions of a plant it acquired from Colgate Palmolive Company, which had previously idled the plant. More upgrades and additions to the site are being studied and expected in the near future. Agrium Incorporated (Calgary, Alberta) began construction during the second quarter for the second phase expansion of a gypsum stack storage area. This plant faced an uncertain future only two years ago as the space to store waste and byproduct generated in the plant ran short. The advancement of this project combined with plans for projects related to feedstock improvement ensure another decade or more of life for the plant.

The CPI continues to operate with an outlook of good fortune as noted in recent analyses and studies, read related June 15, 2007 news article - The North American Chemical Processing Industry Continues to Show Strength. As the summer progresses and barring major tropical system influence in the U.S. Southwest Region, the CPI is positioned to complete the year on a positive note.

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