|
| Bay Ltd./Berry Contracting of Corpus Christi, a general construction contractor for the oil and gas industry, employs about 3,000 people. It just completed a $148-million project for PEMEX operations in Corpus Christi and Tampico that included two jacket decks, a process module and living quarters. |
| A |
bout 200 miles (322 km.) south of Houston, resting quietly on the shores of the Gulf of Mexico, Corpus Christi, a city of 407,000 people, serves as the proving grounds for solutions to America's new energy crisis.
Site selectors growing increasingly worried about America's long-term ability to provide adequate, affordable energy supplies to support global manufacturers should take notice of recent events in this energy-rich community.
A new, US$700-million, liquefied natural gas (LNG) terminal, modernized petroleum refineries and huge grain silos give testament to the changing Southwest landscape of energy resources. Everywhere you turn in Corpus Christi, it seems, there's a super-sized pipeline of capital investment being pumped in to increase the flow of energy that will fuel the expanding manufacturing capacity of America's factories.
In Southern Texas, they're not waiting on Congress to pass the energy bill of their favorite son, President George W. Bush. They're charging full-steam ahead to make sure the factories of Texas, as well as much of the U.S., receive the power they need.
The first President Bush saluted the "thousand points of light" that he said would transform the country; in Corpus Christi, those thousand points of light can be seen every night in a skyline that boasts some of the largest, energy-related construction sites on the planet.
The largest of them is the $700 million construction site for a LNG terminal for Cheniere Energy, a Houston-based company, along La Quinta Channel near the Sherwin Alumina plant and the town of Gregory.
Cheniere received authorization April 13, 2005, from the Federal Energy Regulatory Commission to construct and operate the terminal in the deepwater port of Corpus Christi. Construction will begin this year, could employ 1,000 construction workers and should be completed by late 2008.
The terminal will be able to process 2.6 billion cubic feet per day of natural gas cooled to minus 260 degrees Fahrenheit — roughly the equivalent of enough energy to heat and cool about 2,600 houses for an entire year.
Keith Meyer, president of Cheniere LNG Inc., says the emergence of new LNG terminals in the U.S. is critical to the future competitiveness of America's leading manufacturing companies. Only four LNG terminals are operating in the U.S., but there are various plans to add another 50 such terminals around the nation.
"These LNG receiving terminals are needed to reduce the cost of natural gas in the country," Meyer says. "Texas uses more natural gas than the entire nation of Japan. Large consumers are feeling a lot of economic pain. Large employers who are big users of natural gas — petrochemical companies, refining industries, aluminum plants, chemical and allied products manufacturers — rely heavily on natural gas to power their plants."
Experts who study long-term manufacturing trends say that, without increasing the supply and reducing the cost of natural gas, America's large chemical and plastics manufacturers will have no choice but to leave the country.
Dr. Loren C. Scott, a Louisana-based economic consultant who advises ExxonMobil and other multinational energy firms, says the rising cost of natural gas is devastating several manufacturing clusters in his home state.
"The impact on Lake Charles, Baton Rouge and New Orleans has been huge," Scott says. "The impact of declining production due to dwindling supplies and rising costs of natural gas is leaving manufacturers in a pickle. In Louisiana, there is virtually no expansion of either the chemical or plastics manufacturing industries. We are seeing more of these jobs go to Asia." (One recent super-project belies this trend: Japanese corporation Shin-etsu Chemical Co. announced early in 2005 a completely self-funded $1-billion investment in a PVC plant in Addis, Iberville Parish, to be operated by its Shintech subsidiary.)
Since 1998, Louisiana has lost 5,500 chemicals jobs. "We have lost another 1,100 in just the last 12 months," says Scott. "Ammonia fertilizer plants have been hit the hardest by this, because natural gas is the main raw material they use to make their product."
With gas prices now at $6.50 per million cubic feet in the U.S. and just 40 cents per million cubic feet in Africa (home of the one of the world's most plentiful natural gas supplies), Scott says you don't have to be a mathematician to figure out what will happen.
"The companies that rely on gas to power their plants can either try to hunker down and get more efficient, or they can relocate to Asia, Africa or Russia, where the supplies are plentiful," he says. "BASF just laid off 500 people. ExxonMobil laid off 250. They either need more relief or a lifting of the moratorium on drilling for natural gas."
Meyer contends that they need quick and easy access to LNG. "The demand for natural gas is about 21 trillion cubic feet. The gas prices we have today are not sustainable for manufacturers for the long term," Meyer says. "Billions of dollars could be saved by the consuming segment if we start to bring on more supply."
Beyond saving money, Meyer notes, the survival of American companies is at stake. "The opening of more LNG terminals in the U.S. would enable more companies to survive here instead of being forced to move offshore. The choice is simple — we are either going to import natural gas, or we are going to import plastics, petrochemicals and other value-added products," he says.
According to a recent report in The Wall Street Journal, employment in the chemical and plastics industries has dropped by 12 percent since natural gas prices started rising five years ago. At least 20 fertilizer plants have either closed or been idled.
"This is all about the long-term sustainability of manufacturers in this country," says Meyer.
Site selectors growing increasingly worried about America's long-term ability to provide adequate, affordable energy supplies to support global manufacturers should take notice of recent events in this energy-rich community.
A new, US$700-million, liquefied natural gas (LNG) terminal, modernized petroleum refineries and huge grain silos give testament to the changing Southwest landscape of energy resources. Everywhere you turn in Corpus Christi, it seems, there's a super-sized pipeline of capital investment being pumped in to increase the flow of energy that will fuel the expanding manufacturing capacity of America's factories.
In Southern Texas, they're not waiting on Congress to pass the energy bill of their favorite son, President George W. Bush. They're charging full-steam ahead to make sure the factories of Texas, as well as much of the U.S., receive the power they need.
The first President Bush saluted the "thousand points of light" that he said would transform the country; in Corpus Christi, those thousand points of light can be seen every night in a skyline that boasts some of the largest, energy-related construction sites on the planet.
The largest of them is the $700 million construction site for a LNG terminal for Cheniere Energy, a Houston-based company, along La Quinta Channel near the Sherwin Alumina plant and the town of Gregory.
Cheniere received authorization April 13, 2005, from the Federal Energy Regulatory Commission to construct and operate the terminal in the deepwater port of Corpus Christi. Construction will begin this year, could employ 1,000 construction workers and should be completed by late 2008.
The terminal will be able to process 2.6 billion cubic feet per day of natural gas cooled to minus 260 degrees Fahrenheit — roughly the equivalent of enough energy to heat and cool about 2,600 houses for an entire year.
Keith Meyer, president of Cheniere LNG Inc., says the emergence of new LNG terminals in the U.S. is critical to the future competitiveness of America's leading manufacturing companies. Only four LNG terminals are operating in the U.S., but there are various plans to add another 50 such terminals around the nation.
"These LNG receiving terminals are needed to reduce the cost of natural gas in the country," Meyer says. "Texas uses more natural gas than the entire nation of Japan. Large consumers are feeling a lot of economic pain. Large employers who are big users of natural gas — petrochemical companies, refining industries, aluminum plants, chemical and allied products manufacturers — rely heavily on natural gas to power their plants."
|
| CITGO refinery expansions in Lake Charles, La., (pictured here in 2002, prior to construction) and Corpus Christi are just the tip of the iceberg when it comes to North American and global demand for expanded refinery capacity. |
Experts who study long-term manufacturing trends say that, without increasing the supply and reducing the cost of natural gas, America's large chemical and plastics manufacturers will have no choice but to leave the country.
Dr. Loren C. Scott, a Louisana-based economic consultant who advises ExxonMobil and other multinational energy firms, says the rising cost of natural gas is devastating several manufacturing clusters in his home state.
"The impact on Lake Charles, Baton Rouge and New Orleans has been huge," Scott says. "The impact of declining production due to dwindling supplies and rising costs of natural gas is leaving manufacturers in a pickle. In Louisiana, there is virtually no expansion of either the chemical or plastics manufacturing industries. We are seeing more of these jobs go to Asia." (One recent super-project belies this trend: Japanese corporation Shin-etsu Chemical Co. announced early in 2005 a completely self-funded $1-billion investment in a PVC plant in Addis, Iberville Parish, to be operated by its Shintech subsidiary.)
Since 1998, Louisiana has lost 5,500 chemicals jobs. "We have lost another 1,100 in just the last 12 months," says Scott. "Ammonia fertilizer plants have been hit the hardest by this, because natural gas is the main raw material they use to make their product."
With gas prices now at $6.50 per million cubic feet in the U.S. and just 40 cents per million cubic feet in Africa (home of the one of the world's most plentiful natural gas supplies), Scott says you don't have to be a mathematician to figure out what will happen.
"The companies that rely on gas to power their plants can either try to hunker down and get more efficient, or they can relocate to Asia, Africa or Russia, where the supplies are plentiful," he says. "BASF just laid off 500 people. ExxonMobil laid off 250. They either need more relief or a lifting of the moratorium on drilling for natural gas."
Meyer contends that they need quick and easy access to LNG. "The demand for natural gas is about 21 trillion cubic feet. The gas prices we have today are not sustainable for manufacturers for the long term," Meyer says. "Billions of dollars could be saved by the consuming segment if we start to bring on more supply."
Beyond saving money, Meyer notes, the survival of American companies is at stake. "The opening of more LNG terminals in the U.S. would enable more companies to survive here instead of being forced to move offshore. The choice is simple — we are either going to import natural gas, or we are going to import plastics, petrochemicals and other value-added products," he says.
According to a recent report in The Wall Street Journal, employment in the chemical and plastics industries has dropped by 12 percent since natural gas prices started rising five years ago. At least 20 fertilizer plants have either closed or been idled.
"This is all about the long-term sustainability of manufacturers in this country," says Meyer.
