(Adds comments from Chevron Phillips Chemical, paragraphs 12-13)
HOUSTON (ICIS)--US-based Phillips 66 remains open to developing another ethane cracker for its Chevron Phillips Chemical (CP Chem) joint venture, the refiner's CEO said.
"We remain constructive on the second cracker at CP Chem," said Greg Garland, CEO. He made his comments during an investor presentation held by Credit Suisse.
"We're doing initial work around that today," he said.
The company will unlikely make a final investment decision (FID) until 2019, he said. "That probably means heavy lifting becomes 2020, 2021 for us in terms of the capital."
Global demand could support more petrochemical production, Garland said. Demand is growing faster than GDP, and billions of people are joining the middle class in India and China.
This growing middle class will adopt buying habits that will result in more plastic consumption.
At the same time, the US should have enough natural gas liquids (NGLs) to feed new crackers, he said.
Crude production in the US continues to increase. Oil wells also produce associated gas, which is rich in NGLs. Midstream companies are aggressively building the infrastructure to process this associated gas and ship it via pipeline to petrochemical plants on the Gulf Coast.
Other companies are also considering new plants in what is shaping out to be another wave of new projects in the US.
Meanwhile, Chevron Phillips Chemical is in the midst of commissioning a 1.5m tonne/year ethane cracker at Cedar Bayou, Texas, Garland said.
It should start receiving feedstock for the front end of the cracker this quarter, he said. By the second quarter, it should be fully operational.
In a statement, Chevron Phillips said, "We are always assessing growth opportunities, as well as near-term and long-term industry conditions.
"This assessment includes potential investments along the US Gulf Coast, where the company is able to leverage its existing technologies, logistics capabilities and asset base to take advantage of a favourable investment environment," the company said.
The other joint venture partner in Chevron Phillips Chemical is the energy producer Chevron.