Total Cites Progress on Plans for Texas Ethane Cracker

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Researched by Industrial Info Resources (Sugar Land, Texas)--Total S.A. (NYSE:TOT) (Paris, France) is pressing forward with its plans for an ethane cracker in Port Arthur, Texas, despite cutting its capital guidance by some $2 billion for the next four years, according to company executives.

Speaking at the global oil & gas giant's strategy and outlook presentation to the financial community, Chief Executive Officer Patrick Pouyanné said, "We intend to sanction this project in coming months."

Front-end engineering and design (FEED) studies for the project were completed this summer, Pouyanné added. CB&I Incorporated (NYSE:CBI) (The Hague, Netherlands) was the FEED contractor.

Total puts emphasis on petrochemical projects when it has access to low-cost feedstock such as ethane in the U.S. and the Middle East, Pouyanné said.

To be located at the Port Arthur refining and petrochemical complex, the steam cracker would produce 1 million metric tonnes per year of ethylene. The complex comprises a refinery owned by Total and a petrochemical plant operated by a joint venture between BASF SE (Ludwigshafen, Germany) (60%) and Total (40%). Pouyanné said the new cracker would benefit from its placement within the complex.

Construction of the cracker project, valued at $1.6 billion, and a related $130 million utilities project could kick off in second-quarter 2017, with completion in 2019.

Citing short-term challenges as a result of low oil and gas prices, Total said it plans to keep annual capital expenditures in the $17 billion to $19 billion range from 2017 through 2020, down from its earlier guidance of $18 billion to $19 billion. The company said it will accomplish the reduction through fiscal discipline and cost deflation. It also plans to increase operational expense savings from $3 billion to $4 billion by 2018.

Industrial Info is tracking 188 active Total S.A. projects worth $22 billion.

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