Sabic, ExxonMobil advance US Gulf Coast project; Phillips 66 expects cracker decision; US crude oil efficiency rises

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Visibility into another wave of construction is becoming clearer with majors announcing plans in recent Q1 earnings calls. Photo: NOVA

Sabic, ExxonMobil advance US Gulf Coast project

SABIC and ExxonMobil said they have created a new joint venture to advance development of the Gulf Coast Growth Ventures project, a 1.8 million tonne ethane cracker currently planned for construction in San Patricio County, Texas.

The facility will also include a monoethylene glycol unit and two polyethylene units.

SABIC is the operating partner for two long-standing joint ventures with ExxonMobil in the Kingdom of Saudi Arabia, Kemya in Jubail and Yanpet in Yanbu.

Creation of the new joint venture represents a key milestone that allows the two companies to continue advancing the project, which is expected to create 600 new, permanent jobs, about 3,500 indirect and induced jobs during operations, as well as 6,000 construction jobs during the peak of construction.

Construction of the project, announced in 2016, is pending completion of the environmental permitting process. The plant is expected to be operational in the 2021-2022 timeframe.

The cost of the project is estimated at about $7.3 billion. Engineering, procurement and construction (EPC) contracts have been signed with Chiyoda Kiewit Joint Venture and CTCI McDermott, SABIC said in a filing to the Saudi Stock Exchange.

ExxonMobil to start Baytown cracker

ExxonMobil expects a mid-year start-up for its new 1.5m tonne/year ethane cracker at its complex in Baytown, Texas, the company said during its Q1 earnings call. ExxonMobil announced the mechanical completion of the cracker and the start of commissioning activities in February.

The cracker was previously scheduled to start up in late 2017 to feed its new polyethylene (PE) units. However, the project was delayed following Hurricane Harvey in August 2017.

ExxonMobil recently started up its two PE lines at its plastics plant in Mont Belvieu, Texas. Each line has a PE capacity of 650,000 tonnes/year.

Phillips 66 expects ethane cracker decision by 2019

Phillips 66 expects a final investment decision on building an ethane cracker on the U.S. Gulf Coast by joint-venture Chevron Phillips Chemical by late 2019, Phillips 66 Chief Executive Greg Garland during the company’s Q1 earnings call.

Chevron Phillips recently started up a 1.5 million tonne/year ethane cracker at its Baytown, Texas, plant and is considering adding a second similar sized unit along the U.S. Gulf Coast.

US crude oil efficiency improves

U.S. tight oil production increased in 2017, accounting for 54% of total U.S. crude oil production, in part because of the increasing productivity of new wells, according to the U.S. Energy Information Administration (EIA).

Since 2007, the average first full month of oil production from new wells in regions tracked by EIA’s Drilling Productivity Report (DPR) has generally increased. 

These growing initial production rates have helped tight oil production to increase despite slowdowns in drilling activity when oil prices fell.


The average new well in each DPR region in 2017 produced more oil than wells drilled in previous years in those same regions, a trend that has persisted for nearly ten consecutive years.

More effective drilling techniques, including the increasing prevalence of hydraulic fracturing and horizontal drilling, have helped to increase these initial production rates.

The injection of more proppant during the hydraulic fracturing process and the ability to drill longer horizontal components (also known as laterals) have improved well productivity.

This increasing well productivity has supported tight oil production even in years such as 2015, when crude oil prices fell, and rig counts dropped.