Eastman coal-gas start up likely delayed until 2014 - exec

17 September 2009 17:53  [Source: ICIS news]

TORONTO (ICIS news)--Eastman Chemical’s planned coal-gas project in Beaumont, Texas, is not likely to come online until at least 2014, significantly behind its original schedule, a company executive said in conference remarks made available on Thursday.

Also, given its size, Eastman would likely implement the project – if it goes forward – with partners, and not alone, chief financial officer Curt Espeland told an investor conference this week.

Eastman announced the project in July 2007, saying at the time it expected the petroleum coke-fed gasification facility to start producing methanol, hydrogen and ammonia in 2011.

But Espeland said that following completion of front-end engineering and design (FEED) work this summer, Eastman believed it was unlikely that the project would come online by year-end 2013.

And even with FEED completed, Eastman said it was not in a position to provide a new range for the project's costs, compared with a $1.6bn (€1.1bn) estimate from 2007, he said.

The company was working to reduce capital investment costs, and it was pursuing federal loan guarantees and other incentives for the project, he said.

Also, as the Beaumont facility would sequester nearly all the carbon dioxide (CO2) it produces, it was in a position to potentially benefit from carbon legislation planned by the Obama administration, he added.

As for Eastman’s near-term outlook, Espeland said the company saw continued modest improvement in volumes as industry destocking had come to an end amid signs of a slight pick-up in end-market demand.

In addition, Eastman was benefiting from product-mix improvements and cost reductions, he said.

However, “visibility remained poor” as customers were ordering in a 2-4 week fashion, rather then the 6-8 weeks Eastman used to see in the past, he said.

Also, while raw material costs had generally held steady, some products such as polymer-grade propylene were still seeing significant price increases.

“Polymer-grade propylene has increased 30% since July,” he said.

($1 = €0.68)

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By: Stefan Baumgarten
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