Chevron Phillips Chemical Sees Three Major Ethylene-Related Startups on Horizon

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Researched by Industrial Info Resources (Sugar Land, Texas)--Chevron Phillips Chemical (The Woodlands, Texas), a 50:50 joint venture between Chevron Corporation (NYSE:CVX) (San Ramon, California) and Phillips 66 (NYSE:PSX), is in a good position to take advantage of the remarkably low prices for ethane, as three of its largest projects under construction will use the chemical feedstock to create ethylene, a key ingredient for plastics. With plastics demand booming globally, the joint venture could be looking at further growth after these projects come online next year. Industrial Info is tracking $3.37 billion in growth projects at facilities operated fully or in part by Chevron Phillips.

Chevron Phillips is at work on one of the most widely anticipated projects in its industry: the $2.5 billion addition of an ethylene cracker at its Cedar Bayou facility in Baytown, Texas. The 3.3 billion-pound-per-year cracker will convert ethane into ethylene. For more information, including schedules, equipment and environmental requirements as well as and contractor contact information, see Industrial Info's project report.

About 85 miles northeast, Chevron Phillips is constructing two polyethylene units, each valued at $300 million, at the Sweeney ethylene complex in Old Ocean, Texas. Each 1.1 billion-pound-per-year unit is designed to be configured to produce large amounts of any one of multiple high-density polyethylene (HDPE) and linear low-density polyethylene (LLDPE) products. For more information, see Industrial Info's project reports on Unit 1 and Unit 2.

All three of these projects are set to start up in the third quarter of 2017.

Ethane is so cheap right now that many natural gas processers are choosing to leave it in the natural gas stream, rather than spend the money to extract it; the ethane later is sold as natural gas at fuel value, a practice known as "ethane rejection."

"Development of the first phase of the Sweeny hub is nearing completion," said Greg Garland, the chairman and chief executive officer of Phillips 66, in the company's most recent quarterly earnings call. "However, volume mix across all of our fractionators remains impacted by heavier NGL (natural gas liquids) feedstock, as a result of continued ethane rejection." Timothy Taylor, the president of Phillips 66, later added: "We're starting to pull more ethane out of the gas stream, which should strengthen the ethane price."

Less Maintenance Means Lower Ethylene Prices
Industrial Info also is tracking $243 million in maintenance projects at Chevron Phillips facilities, including the $80 million ethylene unit turnaround at the Cedar Bayou complex. The inspection and repairs are among the factors that are expected to keep the ethylene market tight until it wraps up in October, according to S&P Global Platts. For more information, see Industrial Info's project report.

A string of planned and unplanned outages at several other ethylene facilities have added up to higher summer prices for the product, but analysts expect the prices to drop in the fourth quarter as Cedar Bayou and other facilities come back online, according to S&P Global Platts. However, some of this effect may be offset by higher export and domestic heating demand.

Over the same period, Chevron Phillips is performing a $2 million turnaround in the alpha-olefins area at Cedar Bayou. The 710,000-metric-tonne-per-year unit is currently expected to conclude all maintenance at the end of the year. For more information, see Industrial Info's project report.

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