The Number of Projects Identified with Selections for Major Contractors and E&C Firms in the Chemical Processing Industry Continues to Rise

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Researched by Industrial Info Resources (Sugar Land, Texas) -- Most every major capital project requires some type of engineering or architectural support by an E&C or professional services contractor. The number of chemical projects planned in the United States and Canada for 2007 with this type of award or selection currently exceeds $2.9 billion from just 140 individual projects making the average project total investment value (TIV) greater than $20 million. This number has almost doubled since the first of the year when Industrial Info was tracking approximately 72 CPI projects planned for 2007 with this type of service already identified.

The very impressive number in this analysis is the number of these projects that have already been funded or have even begun construction already, over $2.1 billion dollars. Of the remaining $800 million, over $400 million is in some advanced phase of planning or pending capital approval in the near future. Over $87 million of the total is project activity related to major plant maintenance turnarounds, which in many cases is awarded to onsite or evergreen contractors with a long-term relationship at the plant.

Design-Build and E&C services combined represent more than $1 billion of the project activity reviewed in this analysis. The supply of engineers and construction labor remains limited in almost every region. Owners’ ability to direct hire craftsmen and engineering talent to execute projects internally has been hampered by this short supply providing an increasingly attractive market for E&C or Design-Build companies.

True to the traditional geography of the CPI, the most significant portion of this spending is the United States’ Southwest Market Region at over $1.1 billion with the second largest contributor surprisingly being the Great Lakes region with over $500 million in total projects. In the Southwest some of the most recent selection of E&C services identified by Industrial Info includes plans by Tetra Technologies Incorporated (The Woodlands, Texas) to build a new calcium chloride plant in El Dorado, Arkansas. Hunt Guillot and Associates (Ruston, Louisiana) has been selected as the E+P+C/M for the dry end of the new plant that will be located on a former feed mill site approximately one mile from the plant’s supplier of brine, Chemtura Corporation. HPD LLC (Plainfield, Illinois) has been selected to provide the E+P+C/M services for the wet end of the plant. Tetra Technologies has been planning this estimated $100 million plant for over a year and the selection of this El Dorado site eliminates the need to develop and operate its own brine supply mines.

Looking ahead to 2008 Industrial Info is already tracking $2.8 billion in project spending planned to kick-off where engineering, design or construction services have already been identified. The Southwest again plays the leading role with $1.5 billion of the total although the Mid Atlantic region moves up to second place in total spending with over $500 million reported so far.

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