Executive confidence still strong: Peter Cella

22 March 2013 15:26  [Source: ICB]

Many petrochemical companies are examining investment opportunities in the US, since abundant shale resources provide access to low-cost natural-gas-based feedstock. Peter Cella, CEO of Chevron Phillips Chemical (CP Chem), says shale hydrocarbons also significantly reduce energy costs and transportation costs, giving the US several advantages over other countries that rely on more expensive conventional resources.

"It has certainly affected the investment opportunities for companies like mine," Cella says. "It's a significant incentive for petrochemical companies to take a hard look at taking their next unit and capacity to the US."

CP Chem is capitalising on shale-driven investment opportunities. It is building a 1.5m tonne/year ethane cracker at its Cedar Bayou plant in Baytown, Texas, as well as two polyethylene (PE) units with a combined capacity of 1m tonnes/year near its Sweeny plant in Old Ocean, Texas.

The projects are currently in the front-end engineering and design (FEED) stage for the next month or so, says Cella. The company will spend most of the second quarter negotiating engineering, procurement and construction (EPC) contracts and other estimates before making a final investment decision. "I have no reason to believe they will be anything but approved," he says. "Once approved, we do see three to three and a half years for the construction phase, with completion in early 2017 and start-up in mid to late 2017."

While the industry has been inundated with announcements of new plants and expansion plans, Cella says he is not concerned about overinvestment. "I think what you will see is more exports," he says.

"The US is becoming a competitive region to produce olefins and olefin derivatives globally." Global demand is growing at 1.5 times gross domestic product (GDP), says Cella, and the world needs to build four or five crackers a year to satisfy global demand growth.

CP Chem is also expanding its natural gas liquids fractionator (NGL) complex at its Sweeny plant in order to process more NGL from the Eagle Ford and Permian shale basins. Cella says start-up should occur in a few months, increasing capacity by about 20% at the 116,000 bbl/day unit.

ADDED 1-HEXENE AND NAO
In addition, CP Chem is building a 250,000 tonne/year on-purpose 1-hexene plant at its Cedar Bayou complex to ensure it has sufficient supply to meet global demand. The project is expected to start up during the first half of 2014.

Coinciding with that project CP Chem is studying the possibility of expanding its normal alphaolefins (NAO) capacity at the site. "We expect the study to be completed at the end of the year," Cella says. "It'll probably be a couple of years for any expansion and debottlenecking to be complete. We're targeting at least a 20% increase in a phased approach."

Cella adds that while the company is excited about what's happening in the US, the shale resource boom is not the full story for CP Chem as it strives to be a world-class customer service organisation with a number of global investments.

The biggest challenge the petrochemical industry is facing in the shale resource boom is ensuring it has adequate workers and resources to pursue these projects successfully. "We're opportunity long and people-resource short," Cella says.

CP Chem is re-examining its recruiting processes, including expanding opportunities available to college graduates in its rotation and development programmes, as well as reaching out to those in community colleges and technical schools.

"We're also looking for more diverse and experienced hires," Cella says. "These are jobs that require some level of technical competency. Most are going to be experienced people already working someplace else." While ensuring that there is a steady supply of talented workers is an industry-wide challenge, Cella says he does not see any "show stoppers" with the advent of shale.

"Certainly, the catalyst for all this is the shale resource, and anything that would impair that would be detrimental to the entire value chain," he says. "We are not aware of any big issues expressed by any groups that can't be overcome with technology that has already been proven."


By: John Baker
+44 20 8652 3214



AddThis Social Bookmark Button

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly