Total forms joint venture to build Texas chemicals and plastics plants

Paris-based Total energy giant said it will form a joint venture to build major chemical and plastic plant expansions in Port Arthur and Bayport, just outside of Houston.

The multibillion-dollar partnership will be 50 percent owned by Total and the other half split between Calgary-based Nova Chemicals Corp. and Vienna’s Borealis petrochemical company. Total had long planned on the Port Arthur expansion, but was seeking investment partners.

The goal is to build a $1.7 billion ethane cracker at Total’s existing Port Arthur complex to churn out up to 1 million metric tons of ethylene a year, or 2.2 billion pounds, after it opens in 2020. Ethylene is the primary building block of most plastics. The joint venture also includes construction of a polyethylene plastics plant to produce 1.35 billion pounds of year at Total’s Bayport plant east of Houston. Total isn’t yet revealing cost estimates on the plastics facility.

“This almost $2 billion investment signals our determination to strengthen our presence in the United States, where we have operated for 60 years and have more than 6,000 employees,” added Total Chairman and CEO Patrick Pouyanné.

Total’s existing polyethylene plant in Bayport will be included in the joint venture as well.

These projects are designed to capitalize off of the cheap and ample natural gas supplies being produced in the U.S., including Texas, from shale rock formations. They’re producing chemicals and plastics to export to much of the developing world with growing middle classes, especially Asia.

Occidental Petroleum, Exxon Mobil, Chevron Phillips Chemical and Dow Chemical all are completing major ethane cracker projects this year along the Texas Gulf Coast, including the Houston area, for the same purposes.