LyondellBasell plans $2 billion plastics, chemical project

Thursday, Oct 26, 2017

LyondellBasell said it is planning to build a more than $2 billion petrochemical and plastics plant along the Gulf Coast, perhaps in the Houston area, but a final decision on whether to go forward with the project is likely a year away.

Bob Patel, the Houston chemical company's chief executive, said the plant would use propane, a component of natural gas, to make chemicals and the plastic polypropylene. The plant would serve North and South American markets.

Patel said that market conditions ultimately will decide whether the project will proceed, but he hopes to move forward with the plans by the end of 2018.

LyondellBasell already is in the midst of a massive expansion along the Houston Ship Channel, building a plastics plant in La Porte and beginning construction soon on a $2.4 billion chemicals complex spanning two locations in Channelview and Pasadena.

The region's petrochemical boom has been driven largely by the cheap and ample natural gas that is produced in Texas shale fields and used as a feedstock for chemical plants. Most of the projects rely on ethane, another component of natural gas. Ethane, however, is much cheaper than propane because it is almost exclusively used in the petrochemical sector, while propane is in demand for heating and other purposes.

While propane costs more, Patel said, he expects growing domestic demand for polypropylene as a plastic and fabric in the years ahead. Unlike the world's most common plastic, polyethylene, polypropylene also can be used as a fabric. In the United States, a key market for polypropylene is the automobile industry, which uses the plastic in bumpers, interior trim and even under the hood. Globally, packaging and plastic products for surging middle classes in Asia represent the biggest markets for polypropylene, Patel said.

LyondellBasell's expansion along the Ship Channel will add a plant to make propylene oxide, which is used to make bedding, carpeting, coatings, building materials and adhesives, and the by-product tertiary butyl alcohol, which is refined into an fuel additive. The plant will have the biggest production capacity in the world for these chemicals, capable of manufacturing 1 billion pounds of propylene oxide and 2.2 billion pounds of tertiary butyl alcohol a year.

The company will refine tertiary butyl alcohol into fuel additives at its nearby Bayport facility in Pasadena. Construction on the project is slated to begin next year, with completion scheduled for 2021.

In the last few years, LyondellBasell also has completed ethylene expansions at its Channelview, La Porte and Corpus Christi sites, as well as a plastics expansion in Matagorda.

Other companies are expanding petrochemical operations along the Gulf Coast, too. DowDuPont recently started up a massive ethylene and plastics plants in Freeport. Chevron Phillips Chemical Co. and Exxon Mobil Corp. are both completing massive ethane processing plants in the Baytown area. Houston's Occidental Petroleum Corp. and the Mexican chemical maker Mexichem opened a smaller ethane processing plant earlier this year outside Corpus Christi.

The American Chemistry Council, a trade group, estimates that the Texas Gulf Coast accounts for about $70 billion of the $185 billion in petrochemical plants completed since 2010 or planned through 2023.

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