Shale Gas Development Fuels Chevron Phillips Expansion Plan

Dec. 14, 2011
Company to build new ethylene plant in Texas; study indicates more investments related to shale gas.

Chevron Phillips Chemical Co. LP plans to take advantage of increasing shale gas developments with the construction of a new ethylene plant in Baytown, Texas, the company said Dec. 14.

The company expects the plant, known as an ethane cracker, to be completed in 2017. It would produce 1.5 million metric tons of ethylene annually. Ethylene is a natural gas liquid used as a raw material in various chemical manufacturing processes.

Several chemical producers have announced plans over the past year to build or explore the possibility of constructing new plants as the industry reaps the benefits of falling natural gas prices. The cost of natural gas continues to drop as supplies increase from shale gas developments.

"We are pleased that the development of shale gas resources in the United States has set the stage for major petrochemical investment and job creation in our own backyard," said Peter Cella, president and CEO of Chevron Phillips Chemical.

As part of the project, Chevron Phillips Chemical plans to construct two new polyethylene facilities, each with an annual capacity of 500,000 metric tons annually. The new polyethylene units would be located either at the Cedar Bayou facility or a site nearby the Chevron Phillips Chemical Sweeny facility in Old Ocean, Texas, the company said.

The project will create approximately 400 direct jobs and 10,000 engineering and construction jobs, the company said.

The company expects to pick a final site in the first quarter of 2012.

More on Shale Gas

The development of shale gas resources could save manufacturers $11.6 billion in energy costs and create an estimated 1 million jobs for the sector by 2025, according to a PricewaterhouseCoopers report released Dec. 14.

Energy-intensive manufacturers, such as chemical and steel producers, will benefit from lower natural gas prices, PwC reported. Other manufacturers that supply the oil and gas industry will experience increasing demand for their products.

"The number of U.S. chemicals, metals and industrial manufacturing companies that disclosed shale gas potential and its impact so far in 2011 easily surpassed that of the last three years combined, indicating this is of growing importance in the outlook of U.S. manufacturers," said Jay Timmons, National Association of Manufacturers president and CEO.

But future growth could be hampered by regulatory and policy decisions, including taxes and energy legislation, said Timmons, who spoke Dec. 14 during a roundtable discussion on the PwC study.

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