Formosa mulls US olefins expansion, cites natgas advantage

16 November 2010 22:26  [Source: ICIS news]

Formosa Point Comfort complex in TexasHOUSTON (ICIS)--Formosa Plastics is considering expanding its US olefins capacity as a result of cost advantages for feedstock natural gas, but the company on Tuesday said a final decision had yet to be made.

Formosa declined to confirm a report in Taiwan’s Taipei Times, which on Monday said the company planned to invest between $800m (€592m) and $1bn to increase capacity at its Texas complex.

“Formosa Plastics… is considering all of our options given the anticipated long-term natural gas advantage in the US, though no final decisions or approvals have yet been made,” said company spokesman Steve Rice.

The company has two crackers in Point Comfort, Texas, with a combined ethylene capacity of 1.5m tonnes/year.

Despite the cost advantage derived from natural gas, Formosa expressed concerns about increased regulation in the US, citing the Environmental Protection Agency's (EPA) greenhouse gas (GHG) emission rules scheduled to take effect in January 2011.

"The decision to move forward [with the expansion] may depend, in part, on the granting of a 2-year postponement of the US EPA’s uncertain greenhouse gas permitting,” Rice said in an e-mail.

Formosa is one of several business groups in the US calling for a delay by the EPA.

The American Chemistry Council (ACC) in September said planned regulation by the EPA was one of the top challenges facing US businesses in a letter to the Senate Appropriations Committee.

Formosa is the second company to hint at possible US olefins expansion in recent weeks.

LyondellBasell’s chief executive Jim Gallogly in late October predicted the availability of ethane could lead to increased cracker capacity in the US.

Gallogly, however, stressed that he was speaking from an industry perspective, as opposed to strictly for LyondellBasell.

He also said it was still too soon to tell whether demand would justify such a decision.

($1 = €0.74)

For more on ethylene visit ICIS chemical intelligence
For more on Formosa’s plants, visit ICIS plants and projects
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By: William Lemos
+1 713 525 2653

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