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Texas company plans to invest $100 million in Arkansas brine plant Wednesday, Feb 22, 2006 By Wesley Brown Arkansas News Bureau LITTLE ROCK - A Texas company said Tuesday that it plans to invest $100 million to develop a new brine production facility in Magnolia and expand an existing facility in West Memphis to support its growing oilwell fluids business. Tetra Technologies Inc., based in Woodlands, Texas, said it is currently in talks with Arkansas officials regarding the availability of incentives for the project. "We have worked with local politicians that wanted the jobs and plants," Tetra President and CEO Geoffrey Hertel said in a phone interview. "We are also working on a package of incentives that will give us the economic reason to move ahead." However, Hertel would not provide details of his talks with state and local economic development officials. He said the $100 million investment would not only bring more than 100 new jobs to Arkansas, but also would support his company's worldwide oilwell completion fluids business. Gov. Mike Huckabee, through his spokeswoman Alice Stewart, credited Magnolia Mayor Lane Jean, economic development and chamber officials in south Arkansas for negotiations to bring the Tetra to south Arkansas. "This significant investment in the highly competitive bromine industry is a vote of confident for the people of south Arkansas and their hard work," Huckabee said. Mitch Chandler, spokesman for the state Department of Economic Development, said Tetra qualified for Advantage Arkansas and Tax Back, two special investment and job creation incentives that are part of the state's updated tiered-system Consolidated Incentive Act of 2005. Advantage Arkansas offers income tax credits to start-up businesses that create a certain number of new jobs, while Tax Back is a sales and use tax refund for companies that created jobs in targeted industries. "We will also help them with training," Chandler said. Plans for the Magnolia facility include new brine production wells, along with a future bromine plant and a calcium chloride manufacturing facility. Tetra said it also plans to expand its West Memphis bromide production plant, which was built in 1998. Hertel said construction on the Magnolia project would proceed in two phases, with the first plant expected to be operational by late 2007 and the second phase completed two years later. "This project would not have been possible had Tetra not begun acquiring brine leases near Magnolia over a decade ago," Hertel said, adding that Tetra has amassed nearly 33,000 gross acres of brine leases. "This should be enough reserves to sustain a world scale bromine/calcium chloride manufacturing facility for 25 to 30 years." Today, the oil and gas industry uses completion fluids, or brines, in oil reservoirs because they contain no particles that might plug or damage a producing well. Brine is use to protect wells from certain types of damage, such as swelling clays and contamination. Hertel said his company is making the multimillion-dollar investment in the Arkansas plants because both calcium chloride and other brominated products have experienced large wholesale and retail price increases in the last eighteen months. "As an example, wholesale prices for calcium bromide increased over 100 percent in 2005," he said. "Today, with extreme tightness in the markets and dramatic cost increases, the only way to offer assured products to our customers at stable prices is through a project like this." In the past, Tetra has primarily bought the raw materials required to manufacture brine from Dow Chemical and other larger producers, Hertel said. "This plant will utilize brine, thus reducing Tetra's reliance on by-product streams that have volatile prices." Hertel added that the new Magnolia facility won't compete with other bromine producers in southern Arkansas, which is currently seeing renewed interest in leasing and ownership of acreage near brine well production Albemarle Corp. of Richmond, Va., and Connecticut-based Chemtura Corp. both operate bromine manufacturing facilities in the Magnolia area. Those facilities mainly produce brominated flame retardants such as aluminum hydroxide and magnesium hydroxide. Chemtura, which was created in July 2005 by the $2 billion merger of specialty chemical giants Great Lakes Chemical Corp. and Crompton Corp., also has bromine production plants in nearby El Dorado. Currently, Great Lakes employs 600 workers at three chlorine production plants in Union County. Just over a year ago, Great Lakes and Ohio-based Ashta Chemicals Inc. successfully lobbied the Legislature for nearly $25 million in tax breaks to build a chlor-alkali manufacturing plant in El Dorado, which will produce bromine-based flame retardants. Rep. Jodie Mahony, D-El Dorado, who introduced House Bill 1589, told lawmakers during the session the bill would help his hometown land a multimillion dollar facility that would bring 25 jobs paying between $50,000 and $60,000 a year. Mahony's bill easily passed by a vote of 68-22 in the House. Act 877 provides specifically that electricity purchased for use in the manufacturing of chlor alkali manufacturing process is exempt from state sales and use tax. Ashta recently began construction on the state's first chlor-alkali plant. The facility, which will supply Great Lakes' three plants in El Dorado, is scheduled to be operation by mid-2007. At the close of business Tuesday, Tetra's shares $1.34 or 3.63 percent at $38.22. In its recent forecast, Tetra said it expects to report revenues in fiscal 2006 in the range of $647 million to $716 million. |
