Houston petrochemical giant LyondellBasell Industries is taking its Houston Refinery off the selling block after weighing several sales options in the past few months.
LyondellBasell opted to keep the facility after considering selling the Houston area’s fourth-largest refinery because of weakening profit margins and its seemingly odd place as the only refinery in the company’s global portfolio of chemical and plastics plants.
LyondellBasell spokesman Michael Waldron said the company sees “tremendous value” in the refinery going forward, although an eventual sale in the more distant future could remain an option.
“Retaining the refinery was always a very real option for us,” Waldron said.
Rumored potential buyers of the refinery, which is valued at close to $1 billion or more, included San Antonio-based Valero Energy, Canada’s Suncor and state-owned Saudi Aramco, which has sought to diversify outside of Saudi Arabia and within the U.S. Aramco denied being a bidder at the time.
The Houston Refinery can process up to 268,000 barrels of crude oil a day into gasoline, jet fuel, diesel and other products. The refinery is located on 700 acres near the Houston and Pasadena city limits.
Dating back to 2015, LyondellBasell CEO Bob Patel has said the company would consider selling the refinery when the timing is right. However, profit margins are expected to improve in 2017 with rising fuel prices and the potential for the incoming Trump administration to loosen regulatory and environmental standards, according to analysts. Still, potential border tax proposals could hurt refiners, which continue to import much of their heavy crude oil.
LyondellBasell’s stock value is up nearly 15 percent since early November.
Lyondell first took ownership of the refinery through a joint venture with Citgo Petroleum in 1993. After considering selling the refinery, Lyondell bought out Citgo’s minority stake for more than $2 billion in 2006.
In 2015, there were strikes at the Houston Refinery and several other refineries as part of a larger United Steelworkers union strike. In April, a large fire broke out at the Houston Refinery in a coker unit, but no injuries were reported.
LyondellBasell currently is focusing on petrochemical growth in the Houston area. The company recently said it will build a $700 million plastics plant, creating nearly 1,000 construction jobs and providing another boost to the region’s booming petrochemical industry.
Construction of the plant, to be located at the company’s La Porte complex, will begin early this year as part of a $4 billion expansion in Texas. The plant, scheduled to be completed in 2019, will produce 1.1 billion pounds a year of polyethylene, a high-density resin used to make stronger and lighter plastics.
The company recently completed expansions of plants in La Porte and Channelview, which produce ethylene, a primarily building block of plastics derived from natural gas. That ethylene, in turn will be fed to Lyondell’s new plant to make polyethylene.
LyondellBasell also is moving ahead with plans to build its biggest project ever, a plant in Channelview to produce 900 million pounds of propylene oxide, as well as 2 billion pounds of tertiary butyl alcohol and its derivatives annually. Propylene oxide is a chemical used to make everything from antifreeze to cosmetics. The tertiary butyl alcohol is a byproduct used as a solvent to make chemicals and gasoline additives.
A final decision on whether to move ahead with that plant won’t come until later this year.