01 April 2003 00:25 [Source: ICIS news]
SAN ANTONIO, Texas (CNI)--An environmental compliance expert warned here Monday that the controversial Texas air quality reform plan will cost the industry “several billion dollars” and could stand as the “last straw” in forcing movement of production overseas.
Rather than upgrade facilities to meet the new standards, many companies will consider shutting down and investing that money in new plants overseas closer to sources of more competitively-priced natural gas, predicted George Pilko, president of Houston’s Pilko & Associates.
Pilko was interviewed by CNI here on the sidelines of the 28th annual International Petrochemical Conference (IPC) sponsored by the National Petrochemical and Refiners Association (NPRA).
Despite the existence of key infrastructure components such as pipelines in the Houston and Texas Gulf Coast area, the region is growing less competitive due to the rising costs of natural gas, said Pilko. He fears the implementation of the new air quality program in the next two years will be the final push in many cases for companies already poised to seek new opportunities in locations such as Trinidad or the Middle East.
The Houston area hosts one of the largest concentrations of petrochemical plants in the world and an analyst at Chemical Market Associates Incorporated (CMAI) described the new Texas air control plan controversy as one destined to have impact on the global industry. Although executives in the Houston area have been relatively quiet in public about the plan, Pilko said he’s heard plenty of howling from clients trying to get a handle on the prospective costs.
“I can’t provide an exact figure for the Houston area but I know it will cost the chemical industry several billion dollars to come into compliance,” Pilko told CNI.
Besides ranking as a large production area, the Houston region also will serve as a model for similar programs in other parts of the US, according to CMAI analyst Vikki Medley, who has urged producers to watch the situation closely.
Drafted by the Texas Commission on Environmental Quality (TCEQ) and overseen by the US Environmental Protection Agency (EPA), the Texas plan would require a 90% reduction of nitrogen oxide (NOx) emissions from industrial and utility sources by 2007 with a staged schedule for compliance.
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