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Shell advances plans for $1.2 billion La plant, ExxonMobil to expand in Baytown, Venezuela oil hits 16-year lows
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Shell advances plans for potential $1.2 billion Louisiana plant
Shell is studying feasibility for expanded monoethylene glycol (MEG) production in Ascension Parish, Louisiana, according to a statement by Louisiana Economic Development.
Louisiana Governor John Bel Edwards and Shell Chemicals Vice President for Gulf Coast Manufacturing Rhoman Hardy announced the company will advance feasibility plans for a potential $1.2 billion manufacturing expansion at its Shell Geismar facility in Louisiana.
At the 841-acre complex in Ascension Parish, Shell Chemical LP would build a world-scale MEG plant, pending final engineering, design and investment decisions. A decision to proceed with the project could come from Royal Dutch Shell in 2020.
The Geismar project would create 23 new direct jobs with an average annual salary of $100,000, plus benefits. Louisiana Economic Development estimates the project also would result in 112 new indirect jobs, for a total of 135 new jobs in the state’s Capital Region.
Shell would retain 575 existing jobs at the Geismar site, with the project supporting 3,700 company jobs statewide. In addition to the retained jobs and new jobs, the project would generate more than 1,000 construction jobs.
“The successful completion of the company’s recent alpha olefins project, combined with this potential expansion, demonstrates to the world that Shell has confidence in Louisiana and recognizes our state’s tremendous physical attributes and our outstanding workforce,” Gov. Edwards said.
In December 2018, Shell completed a $717 million expansion that increased its linear alpha olefins (LAO) capacity by 425,000 tonnes to a total 1.3 million tonnes/year. That volume ranks the Geismar plant as the largest single-site manufacturer of alpha olefins in the world.
The MEG project won unanimous approval from the Ascension Parish Council in January, and in February from the Ascension Parish School Board for parish and local property tax abatement under Louisiana’s Industrial Tax Exemption Program. LED and Shell Chemical will complete negotiations on an incentive package for the project prior to the final investment decision (FID).
After a 1965 groundbreaking in Ascension Parish, Shell began operating the Geismar chemicals plant in 1967 and completed other major expansions in 1995 and 2002.
MEG is a key ingredient in manufacturing paints, paper, textiles, resins, coolants and adhesives.
ExxonMobil is pushing additional plastics expansions
ExxonMobil announced a $2-billion expansion project at its Baytown chemical plant in Texas, which is expected to require 2,000 jobs at construction.
The company expects construction to begin in mid-2021 and the project to be complete by 2023.
The Baytown expansion is in addition to the company’s Growing the Gulf initiative launched in 2017 that outlined plans to build and expand manufacturing facilities along the U.S. Gulf Coast, creating more than 45,000 high-paying jobs across the region.
The Baytown expansion includes a new Vistamaxx performance polymer unit. The new unit will produce about 400,000 tonnes of Vistamaxx polymers a year.
The project also will enable ExxonMobil to enter the linear alpha olefins (LAO) market, a polymer used in numerous applications including polyethylene (PE) plastic for packaging. The new unit will produce about 350,000 tonnes of LAOs per year.
The proposed expansion follows Exxon Mobil's recent start-up of a multi-billion dollar petrochemical complex at the Baytown campus, which includes a cracker that processes the natural gas liquid (NGL) ethane into into ethylene, the primary feedstock for most plastics. The expansion increased ethylene production by 1.5 million tonnes/year.
ExxonMobil also recently completed an expansion at its Mont Belvieu plant, adding 1.3 million tonnes of production capacity to make PE.
Exxon Mobil is also partnering with Saudi Arabia's government-owned Saudi Arabia Basic Industries Corp. or SABIC to build a $10 billion chemicals and plastics complex near Corpus Christi in Texas.
Venezuela oil hits 16-year lows, ethane imports requested
Venezuelan oil production reached 830,000 bbl/day in April, down from 1.2 million bbl/day at the start of the year and the lowest level since January 2003, the U.S. Energy Information Administration (EIA) said.
This decline in January 2003 was a result of a nationwide strike and civil unrest, which largely brought the operations of Venezuela's state oil company, Petróleos de Venezuela, S.A. (PdVSA), to a halt.
Widespread power outages, mismanagement of the country's oil industry, and U.S. sanctions directed at Venezuela's energy sector and PdVSA have all contributed to the recent declines.
The Venezuelan Petroleum Chamber has called for the country to import ethane as a short-term solution to feedstock shortages at the nation's Ana Maria Campos petrochemical complex in the state of Zulia.
The complex originally relied on associated gas, which is extracted from oil.
The EIA expects Venezuela oil production to continue falling through the end of 2020, and the decline could accelerate as U.S. sanctions kick in.
By the end of April, companies using the U.S. financial system had to end transactions with PdVSA. By the end of July, U.S. oil companies involved in Venezuela's crude sector must cease operations.
In January, the U.S. banned exports of petroleum products. Venezuela uses those products to process its heavy oil.
Even without these sanctions, Venezuelan oil production would probably continue to fall. A series of power outages that started in March cut electricity to Venezuela's oil-producing regions, the EIA said.
The outages shut down Venezuela's upgraders, the EIA said. These units upgrade the extra-heavy crude oil that the country produces. These power outages could also have damaged reservoirs and infrastructure.
It is unclear how much of Venezuela's domestic ethane supplies relied on oil production. Traders expect the ethane will come from the U.S. but it is unclear how it will be imported amid ongoing sanctions.