Kingsport, Tenn.-Eastman Chemical Co. said Dec. 17 that it plans a series of actions to respond to the current economic conditions, including the reduction of costs by over $100 million in 2009. Of this, $80 million will be labor related. “Given the sudden and dramatic deterioration of the global economy, we are slowing work on some of our projects as it makes sense to do so,” said Brian Ferguson, Eastman chairman and CEO. “We continue to believe, however, that the company is well positioned to weather this current economic crisis, and that we can successfully manage costs while pursuing our plans for growth.” While the company said that many aspects of its major gasification project at Beaumont, Texas, are going well, it says two aspects are challenging: capital cost and the financing environment. “On capital cost, we recently did an interim check step and the estimate was too high,” an Eastman spokesperson told Green Markets, “so we chose to slow down our work and focus on process simplification and optimization; as a result, our process design has improved and we firmly believe underlying engineering and capital costs are coming down; we expect to complete our front-end engineering and design (FEED) estimate by mid-year 2009. On project financing, the extra time for FEED to be completed should give the credit markets some time to settle down. Our next update on this project will be during our 2009 Investor Day in February.” Eastman agreed to buy the Beaumont facility from Terra Industries Inc. back in 2007, and had earlier hoped to have non-recourse project financing complete for the project by the end of 2008. Plans at that time called for a $1.6 billion gasification project to be online in 2011 using petroleum coke to produce hydrogen, ammonia, and methanol.
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