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New natural gas supplies have LyondellBasell considering PE expansion

By: Frank Esposito

April 24, 2013

HOUSTON — LyondellBasell Industries' expansion plans for North America could include more than 1.2 billion pounds of new polyethylene capacity.

At the firm's recent Investor Day event, officials described a new PE line with around 1 billion pounds of annual capacity as "possible," and also listed a 220 million pound PE debottleneck as a new project.

The new line would cost around $200 million and would be operational in 2016, officials said. The debottleneck would cost about $20 million and would come online next year. The firm — based in Rotterdam, the Netherlands, with North American headquarters in Houston — already had increased its PE capacity by 100 million pounds last year via a debottleneck at its plant in Morris, Ill.

LyondellBasell — one of the world's largest makers of PE and polypropylene — also is in the process of adding 800 million pounds of capacity for ethylene feedstock in La Porte, Texas. It has additionally announced plans to add 800 million pounds of ethylene capacity in Corpus Christi, Texas, and 250 million pounds in Channelview, Texas. The combined cost of those three projects will be more than $900 million, but officials said they could create as much as $700 million in potential growth value per year.

The potential annual growth value of LyondellBasell's PE projects could be $160 million, officials added. As with other recently announced petrochemical expansions in North America, new supplies of natural gas are pointing the way for LyondellBasell.

"The availability of abundant supplies of natural gas and natural gas liquids from shale deposits is creating a tremendous advantage for U.S. manufacturers," CEO Jim Gallogly said in a news release. "And LyondellBasell is well-positioned to seize this opportunity at our Gulf Coast and Midwest facilities."

In an April 22 phone interview, company spokesman David Harpole said that the firm "is looking at adding polyethylene capacity" in North America, but hasn't yet made a decision as to location or on the technology it would use.

He added that the new ethylene capacity being brought on by LyondellBasell "is the equivalent of a new ethylene cracker," so adding new PE capacity "would be an opportunity to utilize some of (the new ethylene) internally, and the remainder would be a growth opportunity."

The firm now is at least the eighth PE maker to announce plans for new capacity in North America, joining Chevron Phillips Chemical Co. LP, Nova Chemicals Corp., Formosa Plastics Corp. USA, Sasol Ltd., Dow Chemical Co., ExxonMobil Chemical Co. and a joint venture between Braskem SA and Grupo Idesa. According to confirmed estimates, these expansions could add more than 11 billion pounds of new PE capacity in the region.

The ranks of companies adding ethylene feedstock capacity in North America now includes LyondellBasell and at least a dozen others. Those projects could add more than 25 billion pounds of annual ethylene capacity.

Outside of North America, LyondellBasell is increasing capacity for plastic feedstock butadiene by 40 percent at its plant in Wesseling, Germany. That project is expected to be completed later this year.

LyondellBasell posted record profit of more than $2.8 billion in 2012 on sales of almost $45.4 billion. Profit for 2012 was up 32 percent vs. 2011, while the sales number was down almost six percent.

The firm's olefins and polyolefins business in the Americas saw its 2012 pretax profit soar more than 38 percent vs. 2012, as the business benefited from geographically advantaged feedstocks.

On Wall Street, LyondellBasell's per-share stock price was near $45 in mid-November but had improved to almost $60.50 in late trading April 24.