OxyChem plans $1.1B expansion of La Porte facility

The chemical arm of Occidental Petroleum plans to modernize and expand an existing La Porte facility that produces chlorine and caustic soda.

Oxy plans to begin construction of the $1.1 billion “Project Orca” next year, the company said Wednesday in an earnings call. Improvements to the complex near the San Jacinto Battleground site will have “significant” effects on production capacity, make the facility more efficient and reduce its carbon intensity, the company said.

The La Porte project — Oxy’s first major investment in OxyChem since 2017 — is likely the first in a series the company will take to modernize its chemical chlor-alkali facilities as demand for chemicals grows. The company said it is evaluating similar upgrades to others within OxyChem’s footprint.

“The project is being undertaken in part to respond to customer demand for chlorine, chlorine derivatives, and certain grades of caustic soda that we can produce with newer technology, but will also result in increased capacities for both products,” Occidental CEO Vicki Hollub said. “The project is expected to increase cash flow through improved margins and higher product volumes while lowering the energy intensity of the products produced.”

OxyChem employs about 200 people at the Battleground site, Oxy’s largest chlorine and caustic soda facility. The project is expected to add new equipment, a new electrical system and upgrade the facility’s chlorine and salt purification systems.

The site near the Houston Ship Channel has “ready access” to markets both domestic and international, Hollub said.

“This high return project is just one of several opportunities we have to grow OxyChem’s cashflow over the next few years,” Hollub said.

The project helps ensure “the long term viability of the Battleground plant operations,” the company said in an application for a tax break with Deer Park ISD. Operations will continue “as normal” during construction, which is expected to be completed in 2026, the company said.

The last major investments Oxy made into its chemical business were in four chlorinated polyethylene plants and an ethylene cracker completed in 2017.