CP Chem inaugurates new US PE plant in Old Ocean, Texas

HOUSTON (ICIS)–Chevron Phillips Chemical (CP Chem) inaugurated two new polyethylene (PE) units at its facility in Old Ocean, Texas on Friday. ICIS representatives were present at the inauguration ceremony.

The two plants – PE units 40 and 41 – each have a capacity of 500,000 tonnes/year. They are part of CP Chem’s US Gulf Coast Petrochemical Project, a $6bn investment encompassing the two new PE plants in Old Ocean as well as a new ethane cracker at the company’s Cedar Bayou facility in Texas.

Chevron Phillips Chemical’s (CP Chem) new polyethylene (PE) units at Old Ocean, Texas. (Photo by Zachary Moore)

“We announced plans to build these world-scale units in 2011, broke ground in 2014, and today, we are celebrating the successful start-up of commercial operations,” said Mark Lashier, president and CEO. “With these new assets in place, we can penetrate new markets to reach new customers, expand our global presence, and deliver on our growth commitments to our owner companies.”

“Congratulations to CPChem on a milestone that is helping Phillips 66 achieve its vision of providing energy and improving lives,” said Tim Taylor, president of Phillips 66. “The two new polyethylene units on the Texas Gulf Coast will have a global impact, providing the world with plastics for everything from automobile parts to smartphones.”

The company stated that while it had always planned to start up the PE units ahead of the new cracker, the impact of Hurricane Harvey resulted in some additional delays at the start up of the Cedar Bayou cracker. The company currently anticipates initial start-up at the cracker in the first quarter of 2018 and commercial operations by the second quarter.

CP Chem’s new PE plants at Old Ocean will source much of their ethylene from the existing crackers at the Old Ocean site, while the company expects to remain a merchant seller of ethylene even with the new PE capacity.

A company executive stated in an interview with ICIS that the company is trying to spread its assets throughout the greater Houston area partly to mitigate against hurricane risks. The company hopes to keep overall operations healthy, even if one facility is shuttered due to adverse weather events.

In addition to the PE plants, CP Chem also inaugurated a storage in transit (SIT) facility adjoining the plant. The SIT facility includes 2,750 new hopper cars, which will allow CP Chem to easily ship product to customers throughout the US as well as major port cities to take advantage of export opportunities.

Company executives stated that much of the product from the new plant will be destined for export, although the percentages likely to be exported are not as high as many market participants had been anticipating for new US PE facilities. Exports will be shipped to whichever region of the world provides the best netback, with the company adding that the Old Ocean facility is among the most efficient and competitive PE plants currently operating in the global marketplace.

Touching on future investment possibilities, the company stated that it anticipates shale gas and the resulting ethane advantage for US producers to remain in place over the longer term and this could justify additional investments in the Gulf Coast.

“CPChem is a critical part of Chevron’s investment strategy, and this Gulf Coast expansion project is an important piece of the US energy value chain that has been revolutionized by shale resources,” said Pierre Breber, Chevron’s executive vice president for downstream and chemicals. “The two new polyethylene units enable CPChem to meet the demand for a wide variety of valuable products. Today’s milestone is a testament to the hard work of the entire CP Chem organisation.”