Focus article by Al Greenwood
SAN ANTONIO, Texas (ICIS)--The roads and rail lines leading to the port of Houston are among the biggest potential choke points for exporting polyethylene (PE) capacity out of the new plants being built on the Gulf Coast, the CEO of Chevron Phillips Chemical said on Tuesday.
Such constraints could limit shipping even if the port itself has enough infrastructure to handle the new capacity coming online in the US.
"Our concern is not the port of Houston," said Peter Cella, CEO. He made his comments on the sidelines of the International Petrochemical Conference (IPC).
Because of the potential for bottlenecks, Chevron Phillips has invested in trans-loading and packaging facilities in the Dallas area in Texas and in Charleston, South Carolina, giving the company flexibility to export from the east or west coasts of the US, Cella said earlier during a presentation at the conference.
From Charleston, Chevron Phillips Chemical could export product to Europe or South America, Cella said. From the Dallas area, Chevron Phillips could ship material to Long Beach, California, from where it could go to Asian markets.
Cella and others have raised concerns about ability of US rail lines and roads to handle the influx of material coming from the new plants starting up this decade.
A significant amount of this material will be exported since the US alone cannot absorb all of the PE.
Already, chemical companies are experiencing delays shipping product by truck and rail, according to a report by the consulting firm PwC.
Texas presents its own challenges to shippers, in that it limits the weight of trucks to 80,000-84,000 lb (36,000-38,000 kg), Accenture said in a separate report. To meet these weight limits, resin containers are shipped partly filled.
These containers could have 10-15% empty space because of these weight limits, said Neil Chapman, CEO of ExxonMobil Chemical. He made his comments at the IPC presentation.
Legislation is underway to increase that weight limit to 97,000 lb, which would make resin shipments more economical and efficient.
For its part, Chevron Phillips is taking other steps to prepare for potential shipping challenges. In addition to building the trans-loading and packaging facilities, the company is also buying 3,000 rail cars, provided by American Railcar Industries from the state of Arkansas, Cella said.
All but a few of these rail cars have been delivered, Cella said.
Meanwhile, Chevron Phillips is encouraged by the emphasis being placed on infrastructure by the administration of President Donald Trump. Nonetheless, the company is not fully confident that the US will make the needed infrastructure investments in time, Cella said.
Like Cella, Chapman said the big challenge is getting material from the plants to the port. However, he is confident that shipping companies will flex where the demand is.
Hosted by the American Fuel & Petrochemical Manufacturers (AFPM), the IPC continues through Tuesday.