Vancouver-based methanol maker Methanex reportedly is $300 million over budget on its massive project to dismantle a pair of Chilean petrochemical plants and relocated them to Geismar.
As Bloomberg reports, part of the reason the project is so far over budget is that Methanex CEO John Floren didn’t plan on paying welders and pipefitters more than $100 an hour—almost 20% more than expected—to get the job done.
Methanex’s cost overruns on the relocation project are just one example of how labor and construction costs for chemical companies are soaring as the construction workforce is overwhelmed by historically high demand.
A growing surplus of cheap natural gas from shale drilling is driving a boom in the U.S. chemical industry, which uses gas as a raw material for plastics, fertilizer and paints. Chemical companies have plans to build or expand 215 plants in the U.S. at an estimated cost of $133 billion. The surge is boosting construction costs and causing delays in the mostly rural areas where the projects are located.
“We’re all competing for the same limited workforce,” Floren tells Bloomberg. “The only way to address that is train people, which takes time, or bring in foreign workers, which is not allowed.”
Methanex said earlier this year that it hoped to produce methanol from the first relocated plant by the end of this year, and from the second plant in early 2016. Read the full story.
