Eastman welcomes $130M in federal tax credits
Company says award will lengthen life of Longview plant
By JO LEE FERGUSON
Friday, December 01, 2006
news-journal.com
Tennessee-based Eastman Chemical Co. on Thursday welcomed the award of $130 million in federal tax credits to TX Energy for a proposed gasification project that would supply raw materials for the company's plant outside Longview.
The award is another step in a plan Eastman announced in November that company officials said will extend the life of the local facility.
"Awards such as these help minimize the risks of developing these types of projects while helping promote energy diversity and security for the United States," Mark Costa, Eastman's senior vice president for corporate strategy and marketing, said in a prepared statement.
Gasification involves converting coal and other materials into gas fuel and gases used in chemical production.
Eastman reported that an industrial gasification facility would be developed by TX Energy in cooperation with Eastman, with Eastman providing project development support. Eastman or an affiliated company also would start and operate the facility. Eastman already has a long history of using gasification, with about 20 percent to 25 percent of the company's products using that process.
TX Energy is a company organized to develop, build and own gasification facilities. Additional information about that organization was not immediately available Thursday.
The Internal Revenue Service and Department of Energy announced the award to TX Energy as part of a total $1 billion in awards for nine clean coal and advanced gasification projects.
The award follows Eastman's November announcement of plans to eventually produce half of its products from gasification-based raw materials. It's a strategy the company said would combat high and volatile prices of oil and natural gas.
One of the potential projects the company discussed in November was a gasification facility, probably located on the Gulf Coast, that would provide methanol and other products. The methanol in turn would be used to make olefins — ethylene and propylene — that the local plant uses in its production of chemicals and other products. The gasification facility also would produce other raw materials that would be sold into the market. Eastman officials previously said the gasification project would use petroleum coke, a powdery, black coal-like substance leftover from a barrel of oil.
"This is good news for this site, no doubt about it," Mike Childress, local Eastman spokesman, said after Thursday's tax credit announcement.
While the federal government's announcement indicated that the TX Energy's "Longview gasification and refueling project" would be located in Longview, Childress said the gasification facility's location has not been determined.
"This site has not been ruled out for gasification, but there's numerous other sites competing for gasification," he said.
In October, Eastman announced it was selling its local polyethylene operation to Houston-based Westlake Chemical. Polyethylene is a type of plastic. Other local operations, though, will remain under Eastman's ownership.
Eastman also said it would shut down three aging hydrocarbon cracking plants at the Longview site that convert propane and ethane into materials the company uses to make other products. A newer cracking plant will continue to operate.
The company said in November that gasification would help replace some of the materials generated in the cracking plants instead of purchasing them.
Childress said the local plant site could possibly see an estimated $150 million investment if Eastman decides to locate facilities here that convert methanol produced by the gasification facility into the other materials the plant uses in its production. Those facilities, when fully staffed, could mean 50 to 60 jobs. Childress said those jobs could be filled by redeploying people working in the cracking plants.
Teams throughout Eastman have been studying the process of converting methanol for years, he said, with the purpose of retrofitting the older cracking plants.
"We've executed a contract with a third-party for a more detailed study of this conversion," he said.
Engineering and purchase of equipment with long lead-times would start next year. Construction on the gasification and methanol conversion facilities would start in 2009 and begin operating in 2011, Childress said. |
