OxyChem, Mexichem grant final approval on new Texas ethylene cracker
Occidental Chemical (OxyChem) and Mexichem have officially created a 50/50 joint venture, Ingleside Ethylene LLC, to build a 1.2 billion lb/year capacity ethylene cracker at the existing OxyChem plant in Ingleside, Texas, the companies announced on Thursday.
The venture also includes associated pipelines and storage at Markham, Texas.
As part of a long-term strategic supply relationship between the companies, essentially all of the ethylene produced from the cracker will be consumed in the manufacture of vinyl chloride monomer (VCM), utilizing existing VCM capacity.
VCM will then be delivered to Mexichem to produce polyvinyl chloride (PVC) and PVC piping systems.
The ethylene cracker will strengthen the position of Mexichem by taking advantage of competitive energy and feedstock costs in the United States resulting from shale gas development, said Juan Pablo del Valle Perochena, chairman of the board for Mexichem.
The companies began looking into the potential cracker in 2012 with the launch of a feasibility study.
OxyChem, which will build and operate the cracker, has taken a number of relevant steps needed to begin construction, including: completed the front-end engineering and design; received draft permits from the Texas Commission on Environmental Quality; and applied for US Environmental Protection Agency permits in December 2012.
The high degree of integration between the two companies from the wellhead through the use of VCM as a raw material in the manufacturing PVC pipe will also create highly competitive assets on a global basis, said Chuck Anderson, president of OxyChem.
OxyChem expects to award the engineering and construction contract in the fourth quarter of 2013, with construction beginning in mid-2014. The facilities are expected to become commercially operational in the first quarter of 2017.
OxyChem is a wholly-owned subsidiary US-based oil and gas major Occidental Petroleum.
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