ARCO RE-ENTERING PP, PLANS CALIF. PLANT

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Arco Products Co. said it will return to the commodity thermoplastics business, announcing Feb. 3 plans to build a polypropylene production plant in Carson, Calif.

Arco will spend $300 million to build a 400 million-pound-per-year PP plant at its Carson refinery. The plant is scheduled to be operational in early 1999.

Construction will include a propylene splitting unit supplied with fuel gas that now is flared off, said Walter Neil, manager of external affairs. The fuel gas now is considered a waste product from the facility, which Arco calls its Los Angeles Refinery.

Neil spoke in a telephone interview Feb. 5 from his office at the refinery. He said Arco has not decided what technology it will use, or whether to market PP on its own.

``We are talking to other people,'' he said, declining to be more specific.

In a prepared statement, Arco said it actively is pursuing both licensing and marketing commercial partnerships to give its venture a competitive position.

Arco initially intends to produce homopolymer PP resins for markets west of the Rocky Mountains, Neil said. Later, the facility may produce random copolymer and impact copolymer resins.

``We see this as a potentially good and growing business. There are no other producers of polypropylene on the West Coast, and processors here now buy their resins in the Gulf Coast region and have to pay transportation costs to move their resins here.

``We see a significant market here, and we see a significant advantage in transportation here,'' Neil said.

Besides California, he said, Arco will consider supplying markets in Mexico and around the Pacific Rim.

Arco previously made PP and polyethylene, but exited those businesses in the early 1980s. It stopped production of styrenic polymers last year. Arco continues to produce polyols used in the production of polyurethanes.

Arco's announcement followed Epsilon Products Co.'s announcement Jan. 30 that it intends to build a PP production facility in Louisiana by 1999, in a strategic alliance with Marathon Oil Co. of Houston. Epsilon is based in Marcus Hook, Pa.

Separately, Robert Wood, vice president for engineering thermoplastics for Dow Chemical Co., said his company expects to make an announcement about a North American facility soon.

Dow of Midland, Mich., announced two years ago it intended to be among the top five producers of PP worldwide by the year 2005.

The company since has announced plans to produce PP in Germany and in Tarragona, Spain.