Chemical maker LyondellBasell said it will build a $700 million plastics plant in the Houston area, creating nearly 1,000 construction jobs and providing another boost to the region's booming petrochemical industry.

LyondellBasell, based in Houston, said construction of the plant, to be located at the company's La Porte complex, will begin early next year as part of a $4 billion expansion in Texas.

The plant, scheduled to be completed in 2019, will produce 1.1 billion pounds a year of polyethylene, a high-density resin used to make stronger and lighter plastics.

"It's a flagship site," said LyondellBasell Chief Executive Bob Patel."We're starting with the idea that these (plastics) will serve global markets."

LyondellBasell is among several petrochemical companies growing quickly in the Houston area to take advantage of cheap and abundant feedstock for their products — natural gas from Texas shale. In less than a decade, more than 100 petrochemical projects worth $50 billion are expected to be completed in Texas, according to the American Chemistry Council, a trade group.

This dramatic growth has helped offset the effects of the energy bust, which has led to widespread layoffs and spending cuts in oil and gas operations. At the same time, companies like Exxon Mobil, Dow Chemical and Chevron Phillips have all launched ambitious and costly petrochemical expansions in Greater Houston.

LyondellBasell operates chemicals and plastics plants throughout the region in Alvin, Pasadena, Bay City, Mont Belvieu, Channelview and La Porte, as well as its Houston Refinery. The company recently completed expansions of plants in La Porte and Channelview, which produce ethylene, a primarily building block of plastics derived from natural gas. That ethylene, in turn will be fed to Lyondell's new plant to make polyethylene.

Some analysts have raised concerns that the petrochemical industry is making the same mistakes as the oil and gas industry, ramping up production so fast that it produces a glut. But Patel said that global demand, particularly among growing middle classes in India and China, will absorb the burgeoning supplies.

The Houston area is a good fit for continued plastics growth because of abundant supplies of ethylene and the easy access to a major port for exporting products, said Hassan Ahmed, a chemical industry analyst of New York-based Alembic Global Advisors. Even though profit margins have come down in 2015 and 2016, he said, petrochemical companies like LyondellBasell are still raking in money.

"These guys are generating oodles of cash," Ahmed said of LyondellBasell ."They have a lot going on, but they could do even more,"

Despite recent successes, Patel is moving ahead cautiously, Ahmed said. He wants to keep saving money though by expanding in areas where the company already has footprints and pipeline networks in place, like La Porte. He added that LyondellBasell could build more Texas polyethylene plants down the road using its new "Hyperzone" polyethylene technology.

The technology isn't as environmentally harmful as older processes, Patel said. The thinner and lighter — but stronger — plastics use less material so there's less pollution during manufacturing and shipping. The plastic pipes are more resistant to stress fractures, and the lightweight packaging can hold toxic products like bleach or pesticides safely for years while sitting in people's garages.

LyondellBasell also is moving ahead with plans to build its biggest project ever, a plant in Channelview to produce 900 million pounds of propylene oxide,as well as 2 billion pounds of tertiary butyl alcohol and its derivatives annually. Propylene oxide is a chemical used to make everything from antifreeze to cosmetics. The tertiary butyl alcohol is a byproduct used as a solvent to make chemicals and gasoline additives.

A final decision on whether to move ahead with that plant won't come until next year, Patel said.

 

Source : houstonchronicle.com

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