Eastman Chairman and CEO Brian Ferguson said the company will be the developer, operator, co-investor and customer of a new $1.6 billion project slated for Texas. As a participant in the recently announced Faustina Hydrogen Products LLC project in St. James Parish, LA, Eastman will be the operator, a co-investor and customer. Both projects would use petroleum coke primarily instead of natural gas to produce industrial chemicals used in a variety of consumer end products.

"Our gasification technology is good for Eastman because it's an important part of our efforts to achieve a low cost position and add to the company's earnings growth," Ferguson said. "It's good for the environment because the technology can minimize our carbon footprint when compared to traditional manufacturing processes. And, it's good for the U.S. because we can use readily available domestic feed materials such as coal and petroleum coke, which are less expensive and more stable when compared to oil or natural gas."

"Gasification is an environmentally responsible choice," Ferguson said. "We expect to sell nearly all of the carbon dioxide produced into the enhanced oil recovery market in the Gulf Coast. Additionally, this advanced process is essentially free of sulfur, mercury and arsenic emissions."

"As the first company to use gasification to produce commercial quantity chemical products from coal, we've developed a strong track record in our 24 years of experience," Ferguson said.

Texas Project

Based on incentives on the order of about $100 million that have been preliminarily approved by local officials in Beaumont, Texas, Eastman intends to locate its gasification project there, Ferguson said. That plant, which is expected to be online in 2011, will produce low-cost intermediate chemicals, such as methanol, hydrogen and ammonia.

Ferguson said Eastman anticipates a 50 percent equity position in the project and expects to announce a financial equity investor soon.

The company has acquired options on several pieces of industrial property in Beaumont, including assets currently owned by Terra Industries that include methanol and ammonia production facilities.

"We expect the Terra assets will fit in well with this project, and the result will be reduced capital costs, compared to building new methanol and ammonia facilities," Ferguson said.

Eastman has identified several key participants for the Beaumont project, including

• Air Products and Chemicals, Inc., which has signed a letter of intent to purchase hydrogen produced by the project on a long-term basis. Air Products will also construct and operate new world class air separation units to produce over 7,000 tons per day (TPD) of oxygen, essential to the gasifier operation;
• Fluor Corp., which will support the front end engineering design effort; and
• GE Energy, which has licensed its gasification technology for the project.

Eastman expects the regulatory permit application process to begin later this year, and construction is expected to be under way by early 2009. Construction employment is expected to peak at 1300-1500 workers, with permanent employment expected to be approximately 250.

Louisiana Project

Eastman also plans to participate in a project recently announced by Faustina Hydrogen Products LLC as an investor, service provider and customer. Faustina plans to build a plant that will use petroleum coke and high-sulfur coal as feedstocks to make anhydrous ammonia for agriculture, methanol, sulfur and industrial-grade carbon dioxide.

Eastman has provided development funding for the project, with the intent to take a 25 percent equity position. Eastman will also provide operations and maintenance services and purchase methanol under a long-term contract, subject to customary reviews and approvals. The facility will be built in St. James Parish, La., and is expected to be on line in 2010.

Eastman manufactures and markets chemicals, fibers and plastics worldwide. It provides key differentiated coatings, adhesives and specialty plastics products; is the world's largest producer of PET polymers for packaging; and is a major supplier of cellulose acetate fibers.