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Sabic, ExxonMobil eyeing USGC sites for potential PE, MEG projects

Houston (Platts)--25 Jul 2016 250 pm EDT/1850 GMT


Sabic and ExxonMobil Chemical are considering a pair of locations near Corpus Christi in South Texas and another pair near Baton Rouge, Louisiana, for a potential 1.8 million mt/year ethylene plant that would feed two polyethylene units and a monoethylene glycol facility, the companies said Monday.

If the decision is made to move forward, it would mark Saudi Arabia-based Sabic's entrance into the North American market as a major producer for both derivatives.

The companies are working with state and local governments regarding potential sites in St. James Parish and the Parish of Ascension in Louisiana, and in Victoria, Texas, and in San Patricio County, Texas, ExxonMobil spokeswoman Margaret Ross and Sabic spokeswoman Susan LeBourdais both said.

"ExxonMobil and Sabic must complete their respective studies and obtain project permits before a final investment decision can be made," Ross said. "We are very early in the process and cannot speculate on timelines."

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Any new facility would take several years to complete, but potential timeframes would call for the new ethylene and derivatives to come online during the next decade following the first wave of ethane-fed petrochemical expansions in North America.

"If they can time this project to come online in 2023, they would be in a position to capitalize on a more than million metric ton global polyethylene deficit we're anticipating in 2024," said Jim Foster, director of analysis, petrochemicals, for S&P Global. If there is an economic turnaround globally before 2023, this unit might be needed sooner."

Based on Platts Analytics forecasts, ethylene run rates in the US would be between 85% and 90% in the period between 2021-2023. If the project dedicates 60% of the ethylene produced to polyethylene production, Platts Analytics anticipates it would provide an additional 890,000-940,000 mt of material to the global market.

NEEDED FOR LONGER TERM

With the polyethylene surplus in the Americas -- including all of North and South America -- expected to already be at 6.7 million mt in 2021, the project's output would either displace that of other North American producers in the region, or would be exported to meet global demand. Either way, there would be nearly 1 million mt more polyethylene coming out of North America once the unit is built, Foster said.

"Based on current announcements, we expect the global polyethylene deficit will reach 5.75 million mt in 2025," Foster said. "New projects such as these are definitely needed toward the tail-end of our 10-year forecast.

"I do have concerns in the short-term though. As these new units come online, we are expecting global PE surpluses globally to grow to more than 7 million mt by 2018 -- which is nearly 8% of total worldwide demand."

Earlier Monday, Sabic and ExxonMobil said they were considering a joint petrochemical complex on the US Gulf Coast that would attempt to capitalize on cheaper ethane feedstock in North America.

"We are focused on geographic diversification to supply new markets," Yousef Abdullah Al-Benyan, Sabic vice chairman and chief executive officer, said in a statement. "The proposed venture would capture competitive feedstock and reinforce Sabic's strong position in the value chain."

ExxonMobil and Sabic have worked together for 35 years in major chemical joint ventures in Saudi Arabia.

"We have the capability to design a project with a unique set of attributes that would make it competitive globally," Neil Chapman, president of ExxonMobil Chemical Company, said in the statement. "That is vitally important as most of the chemical demand growth in the next several decades is anticipated to come from developing economies."

--Nida Qureshi, nida.qureshi@spglobal.com

--Pavel Pavlov, pavel.pavlov@spglobal.com

--Chris Ferrell, christopher.ferrell@spglobal.com

--Edited by Lisa Miller, lisa.miller@spglobal.com

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