Loren C. Scott, Louisiana State University

   "If you make something out of natural gas, you are in a pickle and you don't have an option," says Scott. "The long-term solutions, of course, are to allow the permitting of new liquefied natural gas terminals and allow tankers to bring natural gas to this country by LNG carrier.
   "If we do not allow that, then more and more companies will be forced to go overseas," he adds. "I don't think that is good for anyone that relies heavily on natural gas. If we don't do something soon, these companies are going to be facing high natural gas prices in the U.S. for some time."
   Scott contends that Louisiana is not doing enough to encourage alternative supplies of gas. "The governor of Louisiana is effectively going to stop the development of LNG terminals that don't yet have their permits," he noted. "What we're doing is pursuing policies that are exactly the opposite of what the chemicals industry needs right now."
   The Conway Data New Plant Database supports Scott's analysis of plant location trends. According to the database, the largest capital investments into new plastics and chemicals manufacturing facilities are taking place in Asia, South America, Europe and the Middle East.
   Of the 20 largest chemicals plants announced last year, 16 are being built outside the U.S., including every one of the top 10. Popular locations for chemicals plants right now are Brazil, China, Singapore, Western Europe and Venezuela.
   Of the 20 largest plastics plants announced last year, eight are occurring outside the U.S. Hot international locations for plastics plants right now are the United Kingdom, China, Mexico and Belgium.
   According to the IBM-PLI Global Investment Locations Database, the top five locations for foreign direct investment into new chemical factories are China, the U.S., India, Singapore and the U.K.
   Bill Pearson, director of real estate and facilities for BASF Corp., tells Site Selection that "the petrochemical industry, or at least a large segment of it, is chasing cheap natural gas. Unfortunately for us, you won't find that in the United States."
   Pearson, based in Florham Park, N.J., points out that "most of our new investment is going to China, because that is where the growing market is for the consumer products that require our chemical value chains to 'make them better.'"
   Despite the lingering effects of Katrina and Rita, Pearson notes that "the Gulf Coast is still an attractive location for a chemical plant. We have large complexes in Geismar, La., just north of New Orleans; Freeport, Texas, just north of Corpus Christi; and Altamira, Mexico, near Tampico."
   Pearson says that BASF, the world's largest chemical company, prefers Gulf Coast port locations because they offer large shipping lanes, plenty of water available for both cooling and process and, "perhaps most important, opportunities for symbiotic relationships with other chemical plants."
   Pearson also notes that Texas, Louisiana, Mississippi and Alabama are "relatively friendly" from a regulatory standpoint.
   In the Northeast, BASF is looking to sell the real estate that once housed active chemicals plants. The main reason? The land sales provide more profits to BASF than did the manufacturing operations, notes Pearson.
   The Conway New Plant Database shows considerable investment by petrochemical companies in the Gulf Coast, with major new plants in the past year coming in Texas, Louisiana, Alabama, Mississippi and Mexico.
   As for future new plants, Pearson says that BASF likely will continue to look to China. "BASF has invested heavily in China over the past five years and will continue to do so, I think," he says. "We may build a new grassroots plant or two in North America, but probably none outside the Gulf Coast. Any new plants will be integrated into our large sites because of the economy and synergy inherent in large, integrated chemical complexes."
   Bolstering BASF's expansion into Asia is the company's recent opening of a $26-million nanotechnology research center in the Singapore Science Park. BASF announced that it will spend about one-tenth of its global nanotech capital on the new facility over the next three years.
   The firm said it chose Singapore for its easy access to knowledge capital, presence of research institutes and the country's protection of intellectual property.