Petrochemical boom keeps on growing
Total, Westlake, ONEOK announce plans that show sector in expansion mode
New investments underscore that the region’s energy industry remains in expansion mode.
The region’s booming petrochemical industry just keeps on growing.
Three developments last week underscored that the sector remains very much in expansion mode. The French energy major Total and its partners said they will soon start construction on a plastics plant at Total’s Bayport campus near Pasadena, a $1 billion project estimated to create more than 1,700 constructionrelated jobs. The Houston petrochemical maker Westlake Chemical said it would pay $265 million to buy the compounds maker Nakan.
And the Oklahoma energy company ONEOK said it will invest about $1 billion on a pipeline from West Texas and plant in Mont Belvieu to transport and process natural gas liquids, the feedstocks for plastics and other petrochemicals.
The availability of cheap and plentiful natural gas liquids, a byproduct of oil and natural gas drilling, has driven the rapid growth of the petrochemical industry along the Texas Gulf Coast. Exxon Mobil, for example, recently completed a $6 billion expansion of petrochemical and plastic plants in Mont Belvieu and Baytown and is eyeing further expansion of its plasticmaking capacity at its complex in Beaumont.
Total, in partnership with Nova Chemicals of Calgary, Alberta, and Borealis of Vienna, is among the latest to tee up an expanion. Total will own 50 percent of the project, which involves building a new plant that would annually produce 625,000 metric tons — more than 1.3 billion pounds — of polyethylene, the world’s most common plastic.
The expansion, expected to be completed in 2021, would more than double the Bayport campus’ polyethylene production from about 400,000 metric tons a year.
In Port Arthur, Total and its partners already are building a $2 billion ethane cracker, a plant that processes natural gas liquid ethane into ethylene, which is the primary building block of most plastics. The ethylene would then be piped to Bayport to be manufactured into plastics. The Bayport campus is near the Port of Houston’s Bayport Container Terminal, which is exporting much of the plastic produced in the Houston area to developing markets in Asia and elsewhere.
Westlake Chemical has its own growth plans. It plans to expand its compounding business by acquiring the French plastic compounds maker Nakan from its owner, the Los Angeles private equity firm OpenGate Capital. Compounding blends commodity plastics with additives to achieve certain properties, such as strength, durability and flexibility, resulting in a higher-margin product made to customer specifications. The deal is expected to close early next year.
Nakan produces compounds made from polyvinyl chloride and other materials for use in automotive manufacturing, construction materials, packaging and medical applications. Nakan has eight production facilities around the world, as well as a research facility in France and a lab in the United States.
The expansion of petrochemical manufacturing, meanwhile, is increasing demand for raw materials, namely natural gas liquids or NGLs. ONEOK said it will spend $750 million to build a Mont Belvieu fractionator that separates out the components of NGLs into ethane, butane, propane and other materials. The company also will invest about $250 million more on an expansion of its Arbuckle II NGL pipeline to Mont Belvieu, which is hub for storing and processing petroleum products.
The pipeline, which is expected to be completed in 2020, will see its capacity increase to 500,000 barrels a day from the initially proposed 400,000 barrels daily. The fractionator would process 125,000 barrels a day.
The availability of cheap and plentiful natural gas liquids has driven rapid growth.