Exxon
plans multibillion-dollar expansion to tap into gas boom
HOUSTON — Exxon
Mobil Corp. is expanding its Baytown complex to boost its capacity for turning
natural gas into petrochemical building blocks, a multibillion-dollar upgrade
the company believes makes sense even if gas prices rise from lows that have
driven a manufacturing surge.
The company
announced the project Tuesday. Permit applications are pending.
Irving-based Exxon
Mobil is the largest U.S. producer of natural gas and plans to leverage its
bounty into a huge expansion of its petrochemical facilities along the Gulf
Coast, including the expansion at the Baytown plant. It did not put a precise
price tag on the work.
When the permits
are approved, construction of the plant will take three years, and Exxon Mobil
says it could be running by the end of 2016. “The project is going to be an
expansion of our Baytown project, which is already the largest integrated
refining complex in the country,” said Steve Pryor, president of ExxonMobil Chemical Co. “It builds on our strengths as
an integrated petrochemical company and will take advantage of all the shale
gas that is coming on.”
Technological
advances in recent years have helped producers unlock natural gas and oil from
tight shale formations.
The expansion will
increase the Baytown plant's capacity to convert ethane, a natural gas liquid,
into the chemical building block ethylene and from that to produce the plastic
polyethylene. Pryor said the expanded
plant will have features that will keep it economically competitive, even if the
price of natural gas rises.
One expected
advantage is that the plant will produce a premium-grade polyethylene, which
Pryor said can be used to make lighter and lower-cost packaging products with
smaller environmental footprints.
The expanded plant
also will enjoy economies of scale, Pryor said, and will use new environmental
technology that will allow it to operate within already permitted emission
limits.
And the company
has plenty of its own natural gas, which petrochemical plants use both as fuel
and raw material.
Exxon Mobil bought
XTO Energy in 2009 for $41 billion, a big bet on the shale gas boom. It's
looking for ways to protect that investment as gas hovers around a relatively
low price of $3.50 per million British thermal units.
Exxon Mobil, the
nation's largest chemical manufacturer, had a 2012 profit of $3.9 billion in
its chemical division on revenue of $61 billion, Pryor said.
The company
estimates that the plant expansion will create 10,000 area jobs during its
construction and about $870 million of economic activity annually once it's
running. The Baytown complex now employs about 6,000 workers, and the expansion
will add 350, the company said.
Exxon hopes that
the expected boost to the economy will help speed along the process of
receiving permits from Texas regulators and the U.S. Environmental Protection Agency.
“We have received
a positive response to our application from the Texas Commission on Environmental Quality, and we are working with the EPA on the federal permit,” Pryor said. “We
think we have a very positive story, in terms of the jobs added and the
economic creation. We are proud of what we have put forward.”
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