LyondellBasell Eyes One More Ethylene Debottleneck at Channelview Site

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Researched by Industrial Info Resources (Sugar Land, Texas)--Having completed two billion pounds in ethylene capacity expansions since 2013, LyondellBasell Industries NV (NYSE:LYB) (Houston, Texas) is considering one more debottleneck at its facility at Channelview, Texas, according to the company's top executive.

Speaking to investment analysts during LyondellBasell's second-quarter earnings conference call on July 28, Chief Executive Officer Bob Patel reviewed the company's recent ethylene expansions. During 2013 and 2015, smaller expansion projects in Channelview and Clinton, Iowa, increased ethylene capacity with little disruption to existing production, he said. However, he added, the 2014 expansion in La Porte, Texas, and the 2016 Corpus Christi, Texas, project both required significant maintenance outages of existing capacity.

"As a result, the full effect of our 2 billion-pound growth program has not been fully realized until 2017," Patel said. The company now has 11.72 billion pounds in ethylene capacity, compared with 9.75 billion pounds in 2013.

Industrywide, more than 25% of the first wave of new U.S. ethylene capacity is now in the market, Patel said in LyondellBasell's earnings release. For related information, see April 20, 2017, article - Gulf Coast Ethylene Project Wave Yet to Crest; Site Announced for Exxon, SABIC Project.

There is still one more debottleneck that LyondellBasell could do at its Channelview ethane cracker, Patel said, adding the debottleneck was delayed in 2015 in preference for the Hyperzone polyethylene plant project in La Porte. The company broke ground on the polyethylene project in May, with a planned startup in 2019. See Industrial Info's project report for more information on the polyethylene project. For related information, see June 6, 2017, article - LyondellBasell Concentrates on Growing PE Exports.

The current plan is to execute the 550 million-pound debottleneck at Channelview in the next decade, Patel said. For more information, see Industrial Info's project report.

Beyond that, it would be "very logical" to build another polyethylene unit to consume the additional ethylene, Patel added.

LyondellBasell has also committed to build a new propylene oxide/tertiary butyl alcohol (PO/TBA) plant project in Texas, with groundbreaking expected in mid-2018 and startup in 2021. For more information, see Industrial Info's project report and July 24, 2017, article - PO/TBA Project Rises on New Wave of U.S. Petchem Development.

After completing four major ethylene cracker maintenance turnarounds during 2016, LyondellBasell has none scheduled for this year, Patel said, allowing the company to run its downstream derivative units at higher rates. During the second quarter, the company's ethylene units in the U.S. and Europe operated at 99% nameplate capacity. Ethylene production volumes increase by 34% in the Americas and 13% in Europe compared with second-quarter 2016.

For the just-ended second quarter, planned maintenance at the company's PO/TBA facility plant in Botlek, Netherlands, and its methanol unit in Channelview impacted results by $70 million.

Meanwhile, the company's Houston refinery operated at 265,000 barrels per day, which is 72,000 barrels per day than the prior quarter following completion of planned maintenance at the beginning of the second quarter. However, refining earnings results were negatively impacted by low industry margins, reflecting weak discounts for heavy crude oil May and June, the company reported.

LyondellBasell reported $1.13 billion in net income for the just-ended quarter, up from $1.09 billion reported for second-quarter 2016.

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