Formosa Plastics Plans More Than $600 Million in Capital Projects in the United States

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). Formosa Plastics Corporation U.S.A. (Livingston, New Jersey), a subsidiary of Formosa Plastics Group (Taiwan), is currently planning several major plant expansions and additions at four different plant sites located in three states totaling an estimated $622 million in capital spending. Since beginning operations in the United States in the mid 1970’s, Formosa has grown to become a significant player in the domestic chemical market and current plans for growth will certainly help Formosa maintain a leading position in the domestic market.

The largest and most significant expenditure planned is a grassroot 300-megawatt (MW) petroleum coke fired cogeneration plant that will be located in Port of Lavaca, Texas. When complete, this plant is expected to provide power to the Point Comfort, Texas chemical complex located approximately three miles away. Pending both funding and permit approvals, construction for this plant could begin in early 2007.

Formosa’s Point Comfort site has grown almost annually since it was built in the late 1980’s. Two large projects are planned for this site starting next year with a combined Total Investment Value (TIV) of $240 million. The larger of the two is a polyvinyl chloride resin (PVC) unit addition that is expected to add another 375 million pounds per year of PVC capacity to the site’s existing 1.6 billion pounds per year. Formosa currently operates two ethylene units at the Point Comfort site. Plans to debottleneck the No. 1 ethylene unit have been considered and studied for several years and appear to be making ground towards a potential construction start early next year. Modifications and upgrades to the furnace section of the unit are planned that will ultimately provide an additional 400 million pounds per year of capacity when complete in the summer of 2006.

Also along the Gulf Coast in Louisiana, Formosa is in the early phases of planning a major expansion of vinyl chloride monomer (VCM) capacity. This project, estimated at nearly $60 million, will include the expansion of the reactor section of the VCM unit located in Baton Rouge, Louisiana.

In April of last year, Formosa suffered a devastating explosion to one of two PVC production lines at its plant located in Illiopolis, Illinois that has left the plant in a shuttered status every since. Formosa has completed major cleanup efforts since the explosion and fire, but no dismantling or equipment rebuilding as of yet. It appears that Formosa still expects to restart the nearly 190 million pound per year plant within the next year or more. One line, which did not sustain significant damage, had been idle for nearly two years prior to the explosion and remains offline as it is used to produce a different grade of PVC product. The boiler house and wastewater treatment units were also mostly undamaged in the explosion.

The selection of an engineering firm to assist with planning and scheduling of the estimated $20 million restart and rebuild project could be made by early next year pending funding approval and market demands.

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