From Shale gas to Polyolefins ExxonMobil implements its integrated business model
The Houston based Exxon Mobil Corp. is considering a multi-billion-dollar expansion of its giant petrochemical complex in Baytown, Texas, USA.
ExxonMobil, like Chevron, Dow Chemicals or Shell, is looking to take advantage of a surplus of natural gas that’s pushed Henry hub prices near 10-year lows in the USA.
With gas prices staying steadily below $3 per mmBTU, as a result of the mass production of shale gas, USA is running to become a net gas exporter as soon as 2012 or 2013.
In respect with US shale gas reserves, this situation is going to last on the next decades.
Shale gas restores the profitability of the petrochemical industry in USA with prices competitive and sustainable feedstock.
For the Major companies, shale gas opens the opportunity to reconsider their business model from upstream centric back to their original upstream-downstream integrated business model.
“We believe the North American natural gas resource is abundant and can support both domestic energy needs as well as exports to the global market,” spokeswoman Margaret Ross said Friday.
The proposed capital expenditure reflects Exxon Mobil‘s continued confidence in the natural gas-driven revitalization of the U.S. chemical industry.
In addition, Exxon has one key advantage: It can use its own gas.
Exxon became the North America’s largest natural gas producer when it acquired XTO Energy Inc. in 2010.
New ethylene cracker in Exxon Baytown giant complex
The ExxonMobil Baytown Area is the largest petroleum and petrochemical complex in the USA.
Exxon Mobil’s Baytown complex, covering five square miles, already is the largest in the nation and has been in operation since 1920.
Its refinery can process up to 584,000 barrels of crude oil per day.
Two chemical plants at the site, beginning in 1940, now count among their products chemicals used in manufacturing of tires and plastics for auto parts like bumpers.
ExxonMobil has filed applications for permits with the U.S. Environmental Protection Agency and the Texas Commission on Environmental Quality to build an ethane cracker at the Baytown complex and two high performance polyethylene lines at its nearby plastics plant in Mont Belvieu.
Exxon expects the review and approval process from government regulators should take about a year.
It would then make a decision on whether to move forward with the project.
The Baytown ethane steam cracker would handle up to:
– 1.5 million t/y Ethylene capacity
Then this ethylene would provide feedstock for two high performance polyethylene lines at its nearby plastics plant in Mont Belvieu, Texas, up to:
– 650,000 t/y polyethylene.
Exxon said the project could result in 3,700 jobs in the Baytown area besides the temporary construction jobs and permanent positions.
It also estimated the expansion could add some $870 million to the local economy and contribute $90 million in tax revenues.
The Exxon Mobil plastics operation at Mont Belvieu, about 13 miles from the main site, makes chemicals for use in products like grocery bags and packaging films.
It’s been operating since 1982.
ExxonMobil estimated the expansion at its Baytown complex about 30 miles east of Houston would provide about 10,000 construction jobs, then 350 permanent jobs once new facilities are up and running.
Exxon anticipates completion and start up in 2016.
With this Baytown ethylene expansion, ExxonMobil will leverage the pay back of the $41 billion capital expenditure in the acquisition in 2010 of the shale gas leader XTO Energy .
