Exxon Mobil Corp. is expanding the capacity of 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 afternoon at the IHS CERAWeek conference, a five-day gathering of industry heavyweights at the Hilton Americas downtown. 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 in the Gulf Coast, including the new steam cracking capacity at its Baytown plant. It did not put a precise price tag on the work.
When the permits are approved, construction of the plant will take about three years, and Exxon Mobil says the plant could be up and 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 that 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.
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 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 will create about $870 million of economic activity annually. 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 permitting process.