IHS Chemical’s Mark Eramo recently wrote, “From 2010 to 2020, IHS forecasts that… North America will re-emerge as a location of choice for new building capacity.” He attributes the resurgence of North American chemical production above production in Asia and the Middle East to the abundant supply of low-cost feedstocks (i.e. natural gas). In chemical manufacturing, energy and feedstock prices can dictate up to 75% of total end product costs, so areas that are in close proximity to feedstock sources or are abundant in energy resources are particularly attractive to chemical manufacturers.[i]
Subsequently, Eramo states that the geographic areas most suited for development will be those that “hold promise for significant development… provided an indigenous supply of competitively priced hydrocarbon feedstocks can be sourced and leveraged.” Mississippi is uniquely positioned to attract attention as a place for U.S. chemical manufacturing capacity additions. These projects are attractive development prospects due to their enormous capital requirements, high construction intensity, and way above average wages for plant workers.[ii]
Traditionally, much of this sector has been based in Louisiana or the Texas coast, and because of the cluster of expertise and existing assets, LA and TX will continue to be the major players in this industry. However, with $100 billion or more in projects to be constructed in the next several years, Mississippi could be a relief valve for these areas as they become congested with construction activity. Some of MS’s strengths include:
Crude Oil and Liquids
Capitalizing on these local resources would establish Mississippi as the ideal location for the expansion of petrochemical production, bringing businesses in high-growth industries to the state for years to come.
[i] “Investment risk for chemical producers”
[ii] Acadian Consulting Group, Research Report: “Leveraging Energy for Industrial Development – A Summary of MEI’s Analysis”