Third quarter industrial report

Big-dollar projects boost announcements by 150 percent

By Sam Barnes

Yes, it's really that bad.

Third quarter project announcements were catapulted by more than 150 percent after the unveiling of two petrochemical projects that total nearly $1 billion.

Total project announcements for the third quarter reached $1.72 billion, significantly higher than the $678.5 million posted a year ago.

The information was provided by The Louisiana Economic Development's (LED) Division of Policy, which derives its data from applications for tax exemptions filed by the project owners.

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Topping the list of third quarter project announcements were a $552 million LNG receiving and processing facility for Cameron LNG LLC in Hackberry; a $400 million refinery for Valero Refining in New Orleans; an $88 million biomass facility for Vanguard Synfuels LLC in Pollock; an $84.7 million project at Shell Chemical LP in Norco; and a $61.5 million reinstrumentation project at Motiva Enterprises LLC in Norco.

In parish-by-parish mid-year statistics, parishes leading in third quarter announced projects were St. Charles Parish, with $618.5 million in announced projects; Cameron Parish, with $552 million; Calcasieu Parish, with $93.2 million; Orleans Parish, with $91.4 million; and Grant Parish, with $88 million.

The number of construction jobs created by third quarter investment increased minimally from 4,592 in 2002 to 4,839 in 2003, or 5.38 percent.

In an annual report released in October, state economists Loren Scott, James A. Richardson and A. M. M. Jamal said refineries would continue to lead construction activity in the industrial market.

"Refineries in Louisiana have invested an estimated $1.1 billion to meet EPA guidelines for reducing the sulfur content of gasoline from 300 parts per million (PPM) to 30 ppm for 2004 model cars," the report reads. "This additional expense went directly against the refineries' bottom lines, so each began to scramble to find ways to offset this additional cost. One approach was to reduce labor costs as much as possible, hence the job losses of recent years."

And the pattern is about to be repeated.

"The refineries must next address the sulfur content of diesel fuel," the report says. "For highway use the sulfur content of diesel must drop to 15 ppm by 2006, and for nonroad diesel (railroad engines, tractors, graders etc.) the sulfur content must drop to 500 ppm by 2007 and to 15 ppm by 2010."

In the chemical sector, employment and construction have suffered during 2002 and 2003, a trend the economists expect to continue into 2005.

"The problem that will simply not go away is the high price of natural gas," the report reads. "Ammonia, ethanol and ethane-based ethylene are chemicals that are the most sensitive to high natural gas prices. Engineers and plant managers tell us that at just $3 per mcf, U. S. polyethylene products can remain competitive domestically but start to become uncompetitive in the export market."

Editor's Note: The preceding data was derived from a LED listing of projects approved for state tax exemptions.