By Ben DuBose
HOUSTON -- Petrochemical major LyondellBasell
will wait for longer-term trends in US natural
gas pricing before deciding on whether to build a new US
facility, CEO Jim Gallogly said on Wednesday.
Instead, the company is seeking to capitalize on current low
gas prices through the more immediate method of expanding
current facilities, Mr. Gallogly said at the
IHS World Petrochemical Conference.
Our expansion in La Porte is equivalent
to half of a world-scale cracker, he said. We also
have the possibility of expanding at Channelview.
Our first priority is to get assets on the ground today
that will capture margins early. We know there will be excess
ethane in the near-term.
That strategy is somewhat different from industry rivals
such as Dow Chemical and Shell. Those companies have plans in
the works to build new US olefins facilities in coming years.
LyondellBasell, however, said in late 2011 that
it will boost ethylene capacity by 386,000
tpy via an expansion at
its established plant in La Porte, Texas.
In addition, the company is expected to increase its
processing capacity for ethane feedstocks by 228,000
tpy in Channelview, Texas.
LyondellBasell is also considering another project in Channelview, whereby it
would build a new metathesis unit to raise propylene production
by 500 million lb/year of equivalent ethylene.
If you look at the supply-demand economics, it looks
very good for the next five-plus years, Mr. Gallogly
said. We want to capture that margin early.
He noted that brownfield development projects in petrochemicals will have better
economics than greenfield developments.
We have very large facilities in the US, Mr.
Gallogly said. It doesnt mean we wont add
later if extra ethane continues to grow.
Were going to watch how gas prices, ethane
prices and fractionation plans develop, and then make decisions
in a reasonable way.
gas is trading in the US at just above $2/MMBtu, with
prices depressed largely due to perceived abundant shale
Some have speculated that US prices will rebound to
traditionally higher levels in coming years, though, especially
if government regulations against fracking act as a deterrent
to production. That, in turn, would push feedstock prices higher for
petrochemical firms such as LyondellBasell, thereby squeezing
The 2012 World Petrochemical Conference lasts
through Thursday at the Hilton Americas in downtown Houston.
Stay tuned to
Hydrocarbon Processing for further coverage.