Low priced, abundant shale gas supply has created downstream manufacturing renaissance: Woods
ExxonMobil and Saudi Arabian chemical company SABIC today announced the selection of a site in San Patricio County, Texas for their proposed petrochemical plant joint venture.
First announced in July 2016, this complex is a joint venture between ExxonMobil Chemical and Saudi Arabia Basic Industries Corporation, SABIC, Saudi Arabia’s foremost chemical company. The original proposal for this complex considered three other sites, two in Louisiana and one in Victoria, Texas.
The Corpus Christi plant could cost as much as $10 billion, according to the Houston Chronicle.
A large ethane steam cracker capable of producing 1.8 million tonnes of ethylene per year would feed a monoethylene glycol unit and two polyethylene units. Ethylene and its derivatives are the primary building block of many plastics.
Now that the site has been selected, ExxonMobil and SABIC will apply for environmental state permits. Final investment decision will only be made after these permits are granted. The Houston Chronicle reports that the plant could come online as early as 2021, but the regulatory process means this date has significant uncertainty. While ExxonMobil and SABIC have worked together in Saudi Arabia for 35 years, this would be the companies’ first JV in the U.S.
U.S. shale boom fueling chemical plant expansions: Exxon is growing the Gulf; Shell is growing the NE
The resurgence of oil and gas production in the U.S. has created an opportunity for chemical companies. As ExxonMobil CEO Darren Woods commented, “We are using new, abundant domestic energy supplies to provide products to the world at a competitive advantage resulting from lower costs and abundant raw materials. In this way, an upstream technology breakthrough has led to a downstream manufacturing renaissance.”
The ethylene project is part of ExxonMobil’s larger “Growing the Gulf” expansion program. Growing the Gulf is a $20 billion series of investments made by ExxonMobil over a 10-year period. Investments will be made at a total of 11 sites. Some involve improving existing facilities while others, like the proposed Corpus Christi project, involve building new plants.
Helping make Woods’ point, Royal Dutch Shell announced last summer that the final investment decision had been given for construction of a petrochemical plant in western Pennsylvania. The plant will be located near the Marcellus and Utica shale plays and will collect ethane from the area to make ethylene for use in the manufacturing of plastics.
Local city governments, chambers of commerce and media in Pennsylvania have lauded the Shell ethylene plant FID as a major step toward a jobs renaissance for the state and region.
Shell said the location was chosen because of its proximity to gas supplies, creating “shorter and more reliable supply chains than those for comparable facilities on the U.S. Gulf Coast,” and because it will be within 700 miles of North American polyethylene customers, the company said.
Construction will commence on the plant in roughly early 2018, and is expected to spark the local economy with the creation of approximately 6,000 construction jobs. Once completed, the plant is expected to employ 600 full-time workers at the facility. The expected cost of the plant is between $2 billion and $3 billion.
The price tag for the Exxon/SABIC ethylene plant slated for Corpus Christi, Texas, is estimated to be in the $10 billion range.
