Fluor takes $154 million hit on delayed petrochemical project near Houston

The chief executive of Fluor engineering and construction company said he’s “extremely disappointed” by the financial loss it’s taking on building the $6 billion Chevron Phillips petrochemical expansion in Baytown.

Irving-based Fluor, which is building Chevron Phillips’ “U.S. Gulf Coast Petrochemicals Project” in a joint venture with Japan-based JGC, said it recorded a $154 million impairment charge for the project in the third quarter. That is largely responsible for Fluor reporting a net profit of just $5 million for the quarter.

“We are very disappointed in the construction progress on a fixed-price Gulf Coast project that led to a significant charge this quarter,” said David Seaton, Fluor chairman and CEO.

Seaton confirmed Fluor will take a net loss on the entirety of the project. He cited weather delays, which were caused by Houston-area flooding in the spring, as well as problems with “piping performance” during the construction process. There was also one fatality in May when a Fluor contractor died after an on-site accident.

Last month, Chevron Phillips acknowledged some minor delays caused by weather and additional retraining needed for some craft workers.

Chevron Phillips’ petrochemical expansion is more than 80 percent complete and it’s now expected to be up and running in fall 2017. The effort involves building a massive ethane cracker – on a plot the size of 44 football fields – at its Cedar Bayou plant in Baytown to take a component of natural gas to churn out 1.5 million metric tons a year of ethylene, the most common building block of plastics.

Chevron Phillips Chemical, which is jointly owned by Chevron and Phillips 66, also is building two new polyethylene plastics units southwest of Houston in Old Ocean by Phillips 66’s Sweeny complex to take that ethylene and turn it into plastic resin that’s shipped both domestically and internationally.