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Chevron’s $6B Expansion Near the Finish Line

(Photo by Justin Sullivan/Getty Images)

(Photo by Justin Sullivan/Getty Images)

The army of cranes that can be viewed easily from I-10 in Baytown will be gone after a few short months as Chevron Phillips Chemical’s $6 billion expansion inches nearer to a close.

The pricy “U.S. Gulf Coast Petrochemicals Project” is over 80 percent finished. The project is estimated to be operating within a year’s time. The project consists of constructing a huge ethane cracker on a plot of land the size of 44 football fields at Chevron’s Cedar Bayou plant located in Baytown. The cracker will convert natural gas into ethylene at the rate of 1.5 million metric tons each year. Ethylene is the most commonly used building block in the production of plastics.

In addition to the petrochemicals project, Chevron will also build two brand new polyethylene plastics facilities just southwest of Houston in Old Ocean. The facilities, located near Phillips 66’s Sweeny complex, will take converted ethylene to create plastic resin that will be domestically and internationally shipped.

Ron Corn, Chevron’s senior VP of projects and supply chain, said that the idea for project started in 2010 following the company’s shift in focus to their growing presence in the Middle East. Chevron had massive projects in both Qatar and Saudi Arabia.

“It was quite radical at the time,” said Corn of constructing major petrochemical projects on Texas soil, “These are big, big projects — very complex.”

The endeavor is an attempt to continue the petrochemical boom along the Gulf Coast and to cash in on the abundant, inexpensive ethane created from natural gas through the current shale revolution.

The American Chemistry Council, an industry trade group, predicts that over 250 petrochemical projects are either currently under construction or planned all over the nation through 2023 and that the projects will produce around 70,000 new jobs. The total cost is nearly $160 billion with $50 billion of that cost in Texas alone.

The mounting demand for plastics is coming primarily from Asia, particularly China. However, India and Indonesia account for some of the demand as well. “They’re basically entering the consumer class,” said Corn of these countries which are pushing for products such as single-serve packets of shampoo for the very first time.

Other crackers that are being built in Texas and Louisiana have become competitors for Chevron and their new project. The Chevron Phillips cracker has eight huge furnaces that heat the ethane until it becomes ethylene. So far, the project has produced 10,000 temporary construction jobs in Baytown and Old Ocean and will produce 400 permanent position when it is finished.

Exxon Mobil is another company building a cracker in Baytown that will also hold a capacity of 1.5 million metric tons. The company’s new plastics plants are being constructed in Mont Belvieu. Exxon is also in the middle of selecting a site in either Texas or Louisiana to make the world’s largest cracker in a joint deal with the Saudi Arabia Basic Industries Corp or SABIC.

Corn stated that he is sure that the demand for global plastics is growing rapidly enough to consume the imminent explosion in supply. “The spotlight is on the U.S., and the world needs the U.S. production,” he said.

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