Eastman discontinuing $1 billion Beaumont project

Eastman Chemical Company announced Wednesday it's discontinuing plans to build a $1.6 billion plant in Beaumont that was predicted to create 250 jobs and perhaps thousands of indirect jobs, as well as contribute millions in tax payments to the Beaumont ISD, the city and county.

BISD, the City of Beaumont and Jefferson County offered tax abatements and other incentives to lure the plant to this area. On July 27, 2007, Eastman announced it had selected Beaumont over several other locations.  It intended to open the plant in 2011, although earlier this year the company said the project would be delayed because of market conditions.  

The gasification plant would have converted feestock into gas. The company planned to use petroleum coke instead of natural gas to produce industrial chemicals used in products including plastics, paints, photographic film and pharmaceuticals. 

The company planned to use the old Terra Industries site off Highway 347 for its plant.

Eastman cited a number of factors in its decision, including high capital costs, the current and foreseen reduced spread between natural gas and oil and petroleum coke prices, and continued uncertainty regarding U.S. energy and environmental public policy.

Late Wednesday afternoon, representatives of Eastman met with members of the Greater Beaumont Chamber of Commerce to discuss the decision.

"We just reached a point where, with some of these fundamental global changes that we've experienced over the last 12 to 18 months, that it didn't make sense from a shareholders' perspective," said Mark Bogle of Eastman during an interview with KFDM News following a Greater Beaumont Chamber of Commerce membership meeting late Wednesday afternoon.

"They're a company that's not here, so it's not like we're losing jobs," said Jim Rich, President of the Greater Beaumont Chamber of Commerce, during an interview with KFDM News. "It's just they represented such tremendous opportunity for us to grow and have a new industry here, so I think it needs to be put in that context. We didn't lose a GM plant. We didn't lose a refinery that's here. This was a company that's not here." 

KINGSPORT, Tenn., Dec. 9, 2009 – From Eastman Chemical Company - Eastman Chemical Company (NYSE:EMN) announced today that it has decided to discontinue its Beaumont, Texas, industrial gasification project.  This decision was made due to a number of factors, including high capital costs, the current and foreseen reduced spread between natural gas and oil and petroleum coke prices, and continued uncertainty regarding U.S. energy and environmental public policy.  As a result of this decision, the company will recognize a pre-tax non-cash asset impairment charge estimated to be between $150 million-$180 million in the fourth quarter 2009. 

“Even though it is no longer advantageous for Eastman to pursue this project, we will continue to explore global industrial gasification opportunities as a long-term growth option for the company,” said Jim Rogers, president and CEO.

Rogers added, “Eastman is committed to being an outperforming chemical company.  I am confident we will deliver profitable growth through the combination of our solid core businesses and strong financial profile.”

Eastman’s chemicals, fibers and plastics are used as key ingredients in products that people use every day.  Approximately 10,000 Eastman employees around the world blend technical expertise and innovation to deliver practical solutions.  The company is committed to finding sustainable business opportunities within the diverse markets it serves.  A global company headquartered in Kingsport, Tenn., USA, Eastman had 2008 sales of $6.7 billion.  For more information, visit www.eastman.com.