About 13.5 billion cubic feet per day of that capacity is currently under construction, and each new LNG terminal – Plaquemines LNG in Louisiana and Golden Pass, Port Arthur, Corpus Christi Stage III, and Rio Grande in Texas – has one or more pipelines being developed.

In Louisiana, Venture Global Gator Express is constructing two pipelines, each with approximately 2 billion cubic feet per day of capacity, to deliver natural gas from pipeline interconnections to the Plaquemines LNG export terminal 20 miles south of New Orleans. Phase 1 of the project includes a 15-mile pipeline, and Phase 2 includes a 12-mile pipeline.

Additionally, Tennessee Gas Pipeline Company plans to construct a 13-mile pipeline with capacity of 1.1 billion cubic feet per day to deliver natural gas to the same terminal from a Southern Natural Gas Company interconnection in Mississippi,

And Texas Eastern Transmission is constructing a three-mile pipeline with 1.3 billion cubic feet per day capacity that will replace an existing segment of its pipeline system to accommodate natural gas deliveries to Plaquemines LNG. Read more.

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APF River Partners, the local entity for the Texas-based American Plant Food Co., proposed the Cornerstone Chemical facility in Waggaman to manufacture ammonia fertilizers for industrial-scale farms.

APF Chief Operating Officer Jerry Bilicek attributed the decision to pause the project to “several global economic and political factors” and said the project could be revived at a future date.

Early on Tuesday, APF notified state and local officials it was withdrawing its application for a $3.6 million annual property tax break under the state’s Industrial Tax Exemption Program (ITEP). Last year, APF initially said it would create more than 100 full-time jobs at the new plant with an average salary of $120,000. It would have totaled a hefty $12 million annual payroll.

Earlier this year, APF began changing the number of promised jobs and did so at least three times. In each case, the number was significantly lower than the initial 100 positions, and projected salaries fell by nearly half, according to records filed with state regulators. Read more.

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The company plans to expand its utilization of 3D technology and meet increasing demand from customers in the paper, energy, mining and petrochemical industries, LED says.

The company expects to create 26 direct new jobs with an average annual salary of more than $59,000, while retaining 22 current positions.

“Howell Foundry combines modern day 3D innovations with proven craftsmanship in one of the oldest known trades to produce rapid and reliable solutions to its valued customers who are primarily located on the Gulf Coast,” Howell Foundry President JB Shoaf says in a prepared statement.

To secure the project in St. Francisville, the state of Louisiana offered Howell Foundry an incentives package that includes a $400,000 performance-based forgivable loan for infrastructure repairs contingent upon meeting investment and payroll targets. The company is also expected to participate in the state’s Quality Jobs and Industrial Tax Exemption programs.

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It’s also the third consecutive year that project wins totaled $20 billion or more.

The capex totals are among the highlights of the 2023 Louisiana Economic Development Annual Report that was released Thursday.

Energy and emissions reduction projects are driving much of the recent investment. Louisiana has experienced a surge of economic activity in the energy sector—more than $14 billion in capex and 11,500 potential new jobs resulting from 2023 projects alone, according to the report.

“Legacy sectors that have traditionally fueled Louisiana’s economy—energy, agribusiness and manufacturing—are expanding and transforming in response to the global shift toward sustainability,” LED Secretary Don Pierson said. “They are now complemented by increasingly robust technology, aerospace and aviation, life sciences and water management sectors.”

See the full announcement.

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The project would create the largest facility of its kind in the United States and support the growth of domestic lithium-ion battery and electric vehicle supply chains, officials say.

Capchem Technology USA, a subsidiary of Shenzhen Capchem Technology Co., says the project would create 95 direct new jobs with an estimated average annual salary of $71,000.

“If the project comes to fruition, Capchem would bring cutting-edge technology to Ascension Parish, create high-paying jobs for our skilled manufacturing workforce and reinforce our state’s standing as a global hub of energy innovation and investment,” says Gov. John Bel Edwards in a prepared statement.

The facility would have the capacity to produce 200,000 tons of solvent and 100,000 tons of electrolyte annually, using ethylene oxide and carbon dioxide as feedstock.

Capchem board chair Johnson Qin says the project would help the company serve its customers in the U.S. battery manufacturing industry and promote localization of the lithium-ion battery supply chain in North America.

“Capchem USA is a U.S. company and will become a proactive corporate citizen of Louisiana,” he says.

The state has offered Capchem an incentives package that includes the workforce solutions of LED FastStart and a $2 million performance-based grant for infrastructure expenses contingent on meeting investment and employment targets. The company is also expected to participate in the state’s Industrial Tax Exemption and Quality Jobs programs.

The parent company, founded in China in 1996, established its U.S. base in 2018. The company estimates construction on its integrated Louisiana facilities would begin in 2025 and conclude in 2028, pending the completion of commercial agreements and regulatory approvals.

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The company says the upgraded technology is designed to increase overall safety, productivity and product reliability.

According to Louisiana Economic Development, the project won’t create new jobs but the investment will allow the company to retain 157 direct jobs and maintain an associated annual payroll of more than $13 million.

The project includes the installation of three Continuous Dry Kilns, a new low-carbon process drying system. The kilns will reduce greenhouse gas emissions, waste and maintenance costs while increasing the lumber mill’s capacity, according to Weyerhaeuser. The facility will also add a new trimmer, sorter and stacker to improve mill efficiencies and help reach production targets.

Weyerhaeuser has eight locations in Louisiana, including timberland operational bases in Hammond, Ruston and Winnfield; lumber mills in Dodson and Holden; and a plywood and veneer mill in Zwolle that, along with its oriented strand board mill in Arcadia, supplies its Natchitoches Microllam manufacturing facility.

The company plans to install the first two dry kilns by the end of 2024. The additional new equipment is expected to be installed by the end of the second quarter in 2025.

To secure the project, the state of Louisiana offered Weyerhaeuser an incentives package that includes a $500,000 performance-based forgivable loan from the Economic Development Award Program for infrastructure improvements and equipment. The company is also expected to participate in the state’s Industrial Tax Exemption Program. See the announcement.

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The company, FusionOne, filed documents with Louisiana Economic Development earlier this month outlining its plans for the two facilities and requesting two state incentives: a property tax abatement under the state’s Industrial Tax Exemption Program and a Quality Jobs tax rebate.

If the company moves forward with the plans, the processing plants could be up and running by early 2025, according to the filing.

The company hopes to make a final investment decision on the project by the end of the first quarter of 2024 and potentially sooner, FusionOne Executive Vice President Mathew Emory said.

Green hydrogen is a cleaner burning form of hydrogen that has a lower carbon footprint than traditional fossil fuels and can be used to power plants and refineries. The hydrogen processing plants in Louisiana would be FusionOne’s first full-scale facility using the technology. Read more.

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The project, announced in a release from Louisiana Economic Development, is designed to enhance job safety, create efficiencies and lower costs to clients.

Pipe and Steel, founded in 2000, expects the new project to create 32 new jobs with an average salary of $88,000 as well as retain 57 existing positions.

The expansion will add 8,000 square feet to the existing structural steel shop, 14,000 square feet to the current pipe fabrication facility and a new permanent covered blasting and painting area, the release adds.

The project is being partially funded by a competitive incentive package offered by the state, which includes services from LED FastStart, Louisiana’s workforce development program.

The company is eligible for a $200,000 performance-based award from the Economic Development Award Program for reimbursement of infrastructure costs, contingent on meeting investment, employment and payroll benchmarks, according to the release.

Pipe and Steel is also expected to utilize the state’s Industrial Tax Exemption and Quality Jobs programs, pending approval by local government entities in Livingston Parish. Read more.

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As part of the contract, Emerson will provide DG Fuels with a suite of advanced sensing, control, systems, equipment monitoring and production optimization technologies and software to enable safe, reliable and sustainable production at the complex, the service provider said.

DG Fuels’ proposed $4.2-billion Louisiana investment project would involve construction of a very low carbon dioxide lifecycle emissions complex equipped to produce up to 180 million gal/year of SAF from a feedstock of agricultural and timber waste using the operator’s proprietary high-carbon conversion technology. Read more.

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Material prices continued to rise in the latest monthly data available at press time, increasing by 1.5% in August, according to the Bureau of Labor Statistics’ Producer Price Index. That continues a trend that shows no sign of stopping.

“Anyone who thought that excess inflation would simply go away later this year has been rudely awakened,” ABC chief economist Anirban Basu noted in a press release. “Price growth continues to be problematic. While energy prices will grab headlines, items like concrete and switchgear have also exhibited inflationary tendencies.”

Escalating interest rates are bringing their own challenges, particularly for contractors that depend heavily on loans to fund their projects. For many, the Federal Reserve’s aggressive rate hikes have led to organizational changes and an increased focus on cash management.

The rising interest rates pose a specific threat to a contractor’s profitability, since their performance is profoundly affected by the management of cash flow.

No matter the business environment, though, laying the groundwork for a profitable project begins during contract negotiations, says Jay Montalbano, managing partner of accounting and consulting firm Hannis T. Bourgeois in Baton Rouge. One thing is for certain: Given the wildly fluctuating material prices of the last couple of years, contractors should ensure that their contracts don’t lock in prices for more than 90 days.

Fortunately, “contractors have a bit of an edge right now,” Montalbano says, because of the current construction boom and ongoing labor shortages. “They’re in a better position to negotiate. In one instance, a plant owner went to the contractor and asked what it would take to keep their people on site. They’re recognizing that they need to pay more.”

Owners are also negotiating over increased benefits, such as insurance and time off, particularly with those “nested” industrial contractors who have had a presence in the plant for years.

INTEREST RATES AND CASH FLOW

Managing cash flow is another critical piece of the profitability puzzle, but it can be a tricky proposition in today’s high interest rate environment. That’s because many contractors need credit to finance working capital.

It was a different scenario just two years ago. “You almost didn’t need cash flow management because interest rates were so low,” Montalbano says. “Now, rates are creeping up and cash flow management is huge because that interest expense will kill you.” That, in turn, can negatively impact a contractor’s ability to price projects competitively.

The situation is prompting many contractors to reexamine their contracts.

“Those contractors that are heavy into ‘cost-plus’ contracts [whereby they are reimbursed for expenses plus a pre-determined profit], experience more of a cash flow drain,” he adds. “They are billing the customer monthly and the plant might pay 60 days later, so they’re floating two to three months’ worth of payroll at any given time. That’s difficult from a cash flow perspective.”

On the other hand, contractors who predominately enter into lump sum (fixed price) contracts have the ability to “front-load” billings.

“Lump sum contracts have risks, but you have more flexibility,” Montalbano says. “You can bill by milestones, by percentage of completion or put clauses in the contracts to allow for upfront mobilization or material purchases. It allows the contractors to be cash heavy at the front end of the contracts.”

For Performance Contractors in Baton Rouge, the importance of cash flow depends upon the situation. “In markets where we’re growing our operation, we’re consuming more cash and therefore cash flow becomes more important,” says Performance Chief Financial Officer Dane Bailey. “And if it’s going to be an aggressively scheduled project, we push a little harder on the payment terms … even if we must make concessions in other parts of the contract.”

That has led to some rather innovative approaches to generating cash flow. One area of recent success for Performance? Getting a cash advance from the owner before a project begins.

The idea originated when the contractor needed a “cash positive” situation to execute a project. “We partner with a surety to bond the advance, thereby giving the owner a level of comfort that their advance payment is not at risk,” Bailey says. “In the process, it gives us the working capital to go out and staff those aggressively scheduled projects.”

THE COST OF CHANGE ORDERS

For industrial contractors, money can be made or lost based upon how well they manage change orders. Mismanaged change orders—a failure to recognize or communicate when a change in scope has occurred—can lead to disputes with project owners and increased project costs.

Contractors should therefore ensure that they are not overexposed to unapproved scopes of work. That’s a difficult proposition at the job site, as supervisors executing a fast-paced project might be tempted to delay documenting changes to avoid slowing the project.

“It can be a challenge, but we preach to our folks that they should have a disciplined and established procedure at the front end of the project,” Bailey says. “As part of the project kickoff with the owner, we lay out the expectations around change management, including the process for getting changes approved prior to the execution of the work.

“There’s a temptation sometimes to get the job done and let the dust settle at the end,” he adds. “It’s about fighting against that urge, to make sure we’re taking care of our business along the way.”

To facilitate the process, Performance uses tools that provide more transparency and visibility into the status of change orders and change order requests. “That way, there’s visibility at a higher level into the pending change orders on a particular project,” he says.

The company has also made a significant push to remove “information silos” in the organization to facilitate the cross sharing of data. “We’re making sure that we’re getting the data that’s being collected out in the field in a format where we can report on it, meet about it and monitor it on a weekly basis,” he adds.

OTHER TIPS

It seems simple, perhaps, but efficiently managing the billing and collections process throughout the entire cash cycle can have a huge impact on cash flow and profitability.

“When you get busy you do have those issues,” Bailey says. “You have to stay on top of the billing and stay on top of purchase orders from clients so that there are no nasty surprises. Then make sure that collections is a regular part of the site discussions and weekly updates, and keep that in front of the owner to make sure that they’re aware of where every invoice is in the payment cycle.”

Hannis T. Bourgeois’ Montalbano says value engineering input can also provide a significant boost to project profitability. In that case, the contractor finds ways to introduce cost effective alternatives before a project begins.

“The owner can benefit from that when it’s a time and materials contract [which sets prices for materials and an hourly rate],” he adds. “And if we’re talking about a significant amount of savings, that’s going to change the output. The owner can then share the savings.”

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