Chevron Phillips petrochemical plant to be expanded in Orange, Texas

Chevron Phillips-Qatar, Ineos projects supersize growing industry

From an Article by Marissa Luck, Houston TX Chronicle, July 15, 2019

Two new petrochemical projects are underway along the Gulf Coast as the sector’s second wave of expansion rolls on, despite analyst projections of abundant supplies, lower prices and a potential industry downturn in the coming years.

Chevron Phillips Chemical said Tuesday that has signed a deal with Qatar Petroleum to develop an $8 billion plant on the Gulf Coast in a project that would generate thousands of construction jobs and represent the Middle Eastern country’s first major petrochemical project in the U.S. The mega project rivals the scale of the Exxon Mobil-SABIC petrochemical plant near Corpus Christi, which would become one of the biggest petrochemical plants in Texas when completed in 2022.

The London petrochemical company Ineos, owned by Britain’s richest man, also recently made a final decision to expand its Chocolate Bayou plant in Alvin, south of Houston. Ineos Oxide, a subsidiary of Ineos, will build new ethylene oxide and associated ethylene oxide derivatives units with the capacity to produce 1.2 billion pounds (about 520,000 metric tons) of the chemicals. Ethylene oxide is used to make ethylene glycol, which is used to make polyester fiber for clothes, upholstery, carpet and pillows and the blending of automotive engine antifreeze.

Ineos also is considering an $803 million expansion at its La Porte chemical plant.

The expansions come as the outlook for the petrochemical industry has grown gloomy. Chemical prices and profits have plunged or the past year as new plants and new supplies of chemicals, particularly those related to plastics, have come online and a supply glut has begun to emerge. Industry analysts at Wood Mackenzie have projected a glut of ethylene capacity to peak in about 2023 to 2024.

Ethylene is a key component of polyethylene, the world’s most common plastic.

But Mark Lashier, CEO of Chevron Phillips, downplayed the potential glut. Analysts said the long-term fundamentals of growing petrochemical and plastic demand still remains strong, and the Gulf Coast region’s proximity to low-cost natural gas supplies could insulate the region from the worst effects of a downturn.

The Chevron Phillips-Qatar project would include one of the world’s biggest ethane crackers, which processes the natural gas liquid ethane, a byproduct of oil and gas drilling, into ethylene. The cracker would be capable of producing 2 million metric tons a year of ethylene, according to Chevron Phillips, a joint venture of the oil major Chevron and the Houston Refiner Phillips 66 headquartered in The Woodlands. .

The plant would would also include two high-density polyethylene units, each with the capacity to produce 1 million tons of polyethylene. The project could create about 9,000 construction jobs and about 600 full-time permanent jobs, including permanent contractors and direct hires.

“These are the kinds of positions where someone can come out of high school, can get a two-year degree and earn $100,000 a year,” Lashier said in interview. “When you think about monetizing these great resources in Texas, much more of this material will be exported, adding to global trade. We’re helping the trade imbalance in the U.S. and creating jobs.”

Chevron Phillips hasn’t named the location for the new plant. The company previously has confirmed it is considering Orange and Sweenyas sites for a potential expansion, among other locations in Texas and Louisiana.

The Orange site has room to grow and is relatively close to an access point for the Mont Belvieu chemicals and natural gas liquids hub. And in nearby Sweeny, Phillips 66, is growing its ability to process, store and ship natural gas liquids, including ethane, in a project expected to come online in 2020.

Chevron Phillips has applied for tax incentives tied to the Orange location, but appears to be keeping its options open. It could follow the same playbook used by Exxon and SABIC in developing their petrochemical project near Corpus Christi.

Exxon and SABIC explored multiple locations and local governments vied for the deal. Ultimately San Patricio County and Gregory-Portland ISD officials awarded more than $500 million in tax incentives over the next decade.

Chevron Phillips has for months explored the possibility of expanding its footprint in the region. Lashier said the company had first pursued the project on its own before recently agreeing to partner with Qatar Petroleum. Qatar will have a say on the location and final investment decision,expected by 2021.

Chevron Phillips would own a 51 percent share in the project and Qatar Petroleum 49 percent. Chevron Phillips would provide project management and oversight and operate the plant.

The announcement follows another deal signed by Qatar and Chevron Phillips in late June on a new petrochemical complex in Qatar.

Middle East Interests

“We’ve got a great relationship with Qatar Petroleum,” Lashier said. “We’re able to progress on these two projects in parallel that allows both of us to optimize our risks out both over time and over geography.”

The Gulf Coast project, expected to come on line in 2024, is the latest example of Middle Eastern oil companies moving into petrochemicals to diversify into other products and regions. Saudi Arabia’s state-owned oil company Saudi Aramco has a goal of investing $100 billion into petrochemicals; its subsidiary Motive Enterprises is considering a petrochemical expansion on the Gulf Coast. United Arab Emirate’s state-owned oil company ADNOC also is working on a $45 billion plan to expand its petrochemical and refining assets.

This is Qatar Petroleum’s first big petrochemical plant in the United States but not its first Gulf Coast project. Qatar is partnering with Exxon Mobil to build a liquefied natural gas export terminal in Texas.

Ethylene production from ethane has jumped 70 percent since 2010 as ethane production skyrockets from the continuing US shale gas revolution, according to the research firm Wood Mackenzie.

“The CP Chem/QP and Ineos announcements indicate that producers are interested in capitalizing on this strong growth by increasing production in feedstock-advantaged regions,” said John Maselli, senior research analyst at Wood Mackenzie.


On Two years after getting $500M in tax breaks, Exxon-SABIC construction job numbers shrink

On Petrochemical downturn expected to hit in coming years


The money being spent on lobbying and so-called public relations belongs in the state budgets for public disgression, to say nothing about excessive salaries

Virginia Legislators ask Federal Agency to Stop Work on Atlantic Coast Pipeline

From Doug Jackson, Sierra Club, July 16, 2019

>>> Legislators Deeds, Hurst, Rasoul, Roem, and Others Call on FERC to Halt Fracked Gas Project

RICHMOND, VA — Today, 18 Virginia legislators announced they sent a letter to the Federal Energy Regulatory Commission (FERC) asking the Commissioners to issue a stop work order for the fracked gas Atlantic Coast Pipeline (ACP). The letter cited the project’s cost, environmental impact, and lack of need as reasons to halt construction and reassess its justification. 22 legislators from North Carolina sent a similar letter to FERC in May asking for a stop work order while it reassesses the need for the ACP.

Specifically, the letter mentions:

>>> “the pipeline’s now $7.8 billion price tag would be passed on to captive ratepayers under the developers’ plans”

>>> “the pipeline developers have never demonstrated public need for the ACP”

>>> “a growing body of evidence that the developers have overstated the demand for gas”

>>> “the ACP is facing numerous legal challenges”

In response, Sierra Club Virginia Chapter Director Kate Addleson released the following statement:

“The fracked gas Atlantic Coast Pipeline threatens Virginia’s air, water, climate, and communities and its construction should be stopped immediately. The Sierra Club Virginia Chapter applauds these legislators for standing up to polluting corporations like Dominion Energy that are putting their profits over people. Dominion’s tight grip on Virginia politics has been well-documented and these legislators deserve tremendous credit for standing up for their constituents against Dominion’s influence.”


A Resolution Condemning Pipeline Challengers Passed Easily. A Pipeline Lobbyist Wrote It,” by Kate Mishkin, The Charleston Gazette-Mail, July 11, 2019

A Dominion Energy lobbyist drafted the resolution and bought meals for its supporters in West Virginia’s legislature. He says there’s nothing unusual about it. The public wasn’t told.


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$84 Billion China Deal for West Virginia is a Continuing Mystery

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Large Diameter Pipe for Marcellus Gas Rolled onto Truck Driver Six Years Ago

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Settlement of $10.6 Million for Truck Driver’s Loss of Legs in Pipeline Accident From an Article by TOM DAVIDSON, Pittsburgh Tribune – Review, July 10, 2019 A Mercer man who had portions of both legs amputated six years ago after they were crushed in a Christmas Eve accident at a Duquesne pipe yard will receive [...]

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Mountain Valley Pipeline Creating Muddy Mess and Water Pollution

July 10, 2019

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