Exxon, Saudi Firm Seek to Build Petrochemical Plant on U.S. Gulf Coast
July 25 2016 - 1:10PM
Dow Jones News
By Bradley Olson and Ahmed Al Omran
Exxon Mobil Corp. is considering a major new petrochemical
complex on the U.S. Gulf Coast that would be developed as a joint
venture with Saudi Basic Industries Corp., one of the biggest
chemical companies in the world.
Monday's announcement is another signal that energy companies
continue to find potential investment opportunities even as oil and
natural gas prices remain depressed.
The project, if developed, would be located in Texas or
Louisiana near abundant supplies of cheap natural gas, the
companies said. It would also include a stream cracker, which is
capable of producing the chemicals used to make plastic products
from football helmets to bulletproof vests.
No final investment decision has been made yet. The companies
plan to carry out further studies and consult with state and local
officials to help identify a potential site. Neither company
disclosed how much such a complex would cost.
A Gulf Coast chemical plant on this size and scale could compete
internationally with other similar projects around the world, said
Neil Chapman, president of ExxonMobil Chemical Co.
"That is vitally important as most of the chemical demand growth
in the next several decades is anticipated to come from developing
economies," he said.
Major energy and chemical companies have completed or are
planning about 250 such projects around the U.S. valued at a
collective $160 billon, according to the American Chemistry
Council.
Hydraulic fracturing of wells around the U.S. has unleashed new
natural gas reserves, making the country an ideal location for
petrochemical operations that use gas as a feedstock to make
plastics. U.S. oil and gas drilling has revitalized the American
chemical industry in recent years.
Royal Dutch Shell PLC last month said it would move forward with
a multibillion petrochemical complex near Pittsburgh, close to the
Marcellus and Utica shale gas fields. That plant is projected to
cost $6 billion.
Sabic is the state-run chemical company is Saudi Arabia. Exxon
and Sabic have worked together for 35 years in other chemical joint
ventures in the Middle East.
"We are focused on geographic diversification to supply new
markets," said Yousef Abdullah Al-Benyan, SABIC vice chairman and
chief executive officer.
Saudi Arabia is seeking to diversify its economy away from oil
and plans to hold an initial public offering for a portion of its
state-run oil-production company, Saudi Arabian Oil Co., also known
as Aramco. Over the last decade, that company has made significant
investments in refining as well as chemical operations around the
world.
Write to Bradley Olson at Bradley.Olson@wsj.com and Ahmed Al
Omran at Ahmed.AlOmran@wsj.com
(END) Dow Jones Newswires
July 25, 2016 12:55 ET (16:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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