The Woodlands-based Huntsman and its affiliated joint venture Rubicon LLC are mulling a potential multiphase polyurethane plant expansion in Ascension Parish worth at least $270 million.
The Geismar plant mostly produces methylene diphenyl diisocyanate, also known as MDI, which is used in polyurethane manufacturing for products such as insulation, furniture, plastic, shoes and pharmaceuticals. Roughly 80% of the chemicals produced at the plant are used in North and South America and the remaining 20% are exported elsewhere.
Huntsman and Rubicon are "evaluating an opportunity" to add more machinery to manufacture a purer chemical form of MDI that has less volatile organic compounds.
"It's removing the impurities and improving the product," said Mark Dearman, general manager of the Huntsman plant in Geismar.
That's because customers, mainly manufacturers, are looking to get away from that new car smell and instead want to buy polyurethane to produce foam that doesn't have a lingering chemical scent, Dearman suggested.
"Suppliers want higher quality products that are odor free," he said.
Project plans are "not yet fully designed," according to an advance notification for economic incentives filed with the state.
Construction for the plant expansion would begin in January 2020 and wrap up by 2023. The project would create about 700 construction jobs. Only a handful of permanent jobs are expected. Huntsman already has about 450 employees and 275 full-time contractors at the Geismar plant.
The companies are looking to submit the project through the Industrial Tax Exemption program, which could shave off 80% of the plant's property tax bill for up to 10 years. The expansion plan is contingent upon approval from local leaders, which includes the school board, the sheriff's office and council members.
"If this project receives the necessary approvals to move forward, then more project-specific information will be included on the future phased ITEP applications," according to company's state documentation.
Huntsman is weighing the plant expansion against other operations in Western Europe and China. The ITEP incentives "sweetens the pot," Dearman said.
"On the world scale, it's more expensive to build here on the Gulf Coast than anywhere in the world," he said. "The tax incentive makes it more competitive globally to do projects here."
To construct the same plant in Western Europe it would be about 20% cheaper and in China its 40% less expensive based on the cost of construction labor, such as specialized welders, he said.
Demand in the MDI market overall has been growing steadily about 5% each year for the past two decades, he said.
In 2013, Huntsman spent $78 million to expand its chemical plant to increase the capacity for producing methylene diphenyl diisocyanate to 500 kilotons.