ExxonMobil to grow petchems by leveraging innovation, integration and scale – president

HOUSTON (ICIS)–ExxonMobil is committed to growing its global petrochemicals and plastics business as it leverages innovation, integration and scale for lasting competitive advantage, said the head of its chemicals and refining division.

“We really believe that in petrochemicals… there’s growth greater than GDP which makes it inherently an attractive market. And our resolve to stay committed to the business has allowed us to really grow a very differentiated business,” said Karen McKee, president of ExxonMobil Product Solutions, in an interview with ICIS.

McKee is the winner of the 2023 ICIS CEO of the Year Award, having been selected in a vote by the ICIS Top 40 Power Players – the global leaders driving the greatest positive impact on their companies and the chemical industry.

Among the major global oil and gas companies, ExxonMobil has arguably been the most committed to petrochemicals and plastics where others have either pivoted away, or re-entered certain businesses after divesting.

McKee sees ExxonMobil’s lasting advantage rooted in three key factors.

“Firstly, investment and innovation which has allowed us to offer differentiated products for our customers. Ultimately that allows us to deliver an advantaged return on our investment. Secondly, we have the scale because we’ve stayed committed, which allows us to be a very significant participant in the industry,” said McKee.

“And finally, versus the pure play chemical companies, which really are our head-to-head competitors in this space, we have a real advantage in being part of ExxonMobil Corp. We really are able to leverage the integration we have in refining [and] also in global projects,” she added.

LARGE-SCALE PROJECT EXPERTISE
ExxonMobil not only has the financial capability to make “superscale” investments in chemicals but also can leverage its large-scale project expertise to build new facilities more efficiently, she said.

With joint venture partner SABIC, ExxonMobil was able to build the Gulf Coast Growth Ventures cracker and downstream polyethylene (PE) and monoethylene glycol (MEG) project in San Patricio, Texas, at about 25% less cost than a conventional cracker on the US Gulf Coast, said McKee at her keynote speech at the Gulf Petrochemicals and Chemicals Association (GPCA) annual forum in Riyadh, Saudi Arabia in December.

This fully modularised steam cracker – the world’s first, according to ExxonMobil – started up in January 2022 ahead of schedule as well.

Coming off this US cracker project, along with the doubling of its polypropylene (PP) capacity at Baton Rouge, Louisiana, in December 2022, ExxonMobil in September 2023 announced the start-up of two new projects in Baytown, Texas.

NEW DIFFERENTIATED PROJECTS
These latest more differentiated projects, representing $2bn in investment, include 350,000 tonnes/year of linear alpha olefins (LAO) – a new market for ExxonMobil – and 400,000 tonnes/year of performance polymers capacity.

“For every investment that we make, we’re really looking at how we can win. What is it that is differentiated for ExxonMobil in terms of those investments? And specifically for the investment we made in Baytown, we have a unique-to-the-world polymer,” said McKee.

“Vistamaxx is one of the products we make there, and this is a product we needed more capacity for. We only made that product in Singapore, therefore being able to make that product at the second site was highly advantaged,” she added.

Vistamaxx – a range of semi-crystalline copolymers – can increase the durability of consumer products like reusable containers to extend their useful life while also allowing for higher recycled content, according to the company.

PIONEER ACQUISITION TO PROVIDE MORE FEEDSTOCK
ExxonMobil’s planned $64.5bn (including the assumption of debt) acquisition of US-based oil and gas producer Pioneer Natural Resources will further strengthen its petrochemical operations on the US Gulf Coast by increasing the availability of feedstocks from the nearby Permian Basin.

This deal boosts the integration between Permian hydrocarbons and ExxonMobil’s refinery and chemical footprint on the US Gulf Coast, ExxonMobil CEO Darren Woods said on the announcement of the deal in October.

The company has the pipeline capacity to handle additional volumes of oil and natural gas feedstock coming out of the Permian, he added.

CHINA CRACKER PROJECT PROGRESSING
While this could support the case for another cracker project on the US Gulf Coast down the line, next up For ExxonMobil is its China cracker and downstream project in Huizhou in Guangdong province already under construction and targeted for start-up in 2025. This includes a 1.6m tonne/year flexible feed cracker with three “performance PE” units and two “differentiated PP” lines.

“For our China cracker, we’re really pleased with the progress on that project… where we’re building capacity in China for China, because that is a very large and growing market for many of the products we make,” said McKee.

“We serve that market today predominantly with imports, and so it’s really an exciting step for us to be able to supply some of the demand with capacity right there on the ground in China. The project is going extremely well,” she added.

The differentiated performance aspect of the downstream polymers should drive an attractive return on investment, she pointed out.

“Whatever we invest in, we’re always looking for an advantaged project with an advantaged return. For our chemical business, we have the advantage of our performance products… that have attributes that customers are somewhat willing to pay more for, typically because they can use less plastic to deliver the same utility,” said McKee.

“And so inherently, we have some advantages that we’ve built into this project. The other thing we’ve brought to bear is this great skill we have at ExxonMobil on project building. We are able to be very cost effective,” she added.

BUILDING RESILIENCE
In a highly cyclical business as petrochemicals, building resilience through leveraging competitive advantage is critical to long-term success, the executive said.

“What I really focus on is the resilience of my business. I have to focus on investing in, and ensuring that my business is resilient to wherever we are in the cycle,” said McKee.

“This is a cyclical business. We have periods of overcapacity and periods where capacity is very tight, and margins vary because of that. That’s where my head really is – I’m very focused on ensuring that my business is resilient to the difficult conditions we have in the market right now,” she added.

See the entire Q&A with Karen McKee, the 2023 ICIS CEO of the Year, here.

Interview article by Joseph Chang