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Eastman to invest in plants on Gulf Coast

Sharon Caskey Hayes • Jul 27, 2007 at 12:00 AM

KINGSPORT - Eastman Chemical Co. will invest millions of dollars into the Gulf Coast region to enhance its coal gasification efforts through two major building projects in Texas and Louisiana.

The Kingsport-based company announced the investment on Friday, one week after unveiling a plan to pump $1.3 billion into its Kingsport facilities.

Eastman Chairman and Chief Executive Officer Brian Ferguson said the company plans to construct one of the gasification projects in Beaumont, Texas, where local officials approved an incentive package valued at about $100 million to close the deal. Eastman will take a 50 percent equity position in the $1.6 billion plant. Another financial equity investor will soon be announced.

Eastman has acquired options on industrial property in Beaumont and expects regulatory permitting to begin later this year. Construction is expected to begin by early 2009 and be completed in 2011. The plant, which will employ about 250 people, will produce low-cost intermediate chemicals, such as methanol, hydrogen and ammonia.

The other gasification project will be located in St. James Parish, La. Faustina Hydrogen Products LLC will build the plant, which will use petroleum coke and high-sulfur coal as feedstocks to make anhydrous ammonia for agriculture, methanol, sulfur and industrial-grade carbon dioxide.

Eastman will take a 25 percent equity position in the $1.6 billion project. The company provided development funding for the plant and will also provide operations and maintenance services and purchase methanol under a long-term contract.

The facility is expected to be completed and operating in 2010.

Eastman is a pioneer in coal gasification. The company has operated such processes at its Kingsport facility for 24 years.

Ferguson said gasification processes help Eastman achieve a low-cost position and add to the company's earnings growth. And, he said, it's good for the environment because the technology can minimize the carbon footprint vs. 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," Ferguson said.

"Gasification is an environmentally responsible choice," he said.

He said the 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.

Friday's announcement comes a week after the company said it would pump $1.3 billion into its Kingsport headquarters and facilities. That investment will be used to upgrade infrastructure, enhance research and development efforts, and help ensure a pipeline of future employees through a partnership with Northeast State Technical Community College.

Eastman manufactures and markets chemicals, fibers and plastics, and employs 11,000 worldwide, including 7,500 in Kingsport.

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