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May 16, 2016 02:00 AM

Resin export facility planned for Forth Worth, Texas

Frank Esposito
Senior Staff Reporter
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    BNSF Railway Co.
    BNSF Railway Co. is part of a project to export resin from Fort Worth, Texas.

    Three Texas-based firms plan to build a massive resin export facility in Fort Worth.

    Real estate developer Hillwood Development Co. LLC, resin packager Packwell Inc. and BNSF Railway Co. are joining forces on the project, which will be part of AllianceTexas, an 18,000-acre mixed-use development.

    In a news release from Hillwood, officials said the facility will be part of a new global supply chain route that enables Packwell to ship resins in containers to end users through ocean steamship lines that work with BNSF. This route will connect Texas to Asia through ports in California.

    The project will benefit from the availability of empty containers from products imported into the Dallas-Fort Worth metro area. It's been prompted by major polyethylene resin supply expansions that are set to come online in North America in the next few years.

    Three major expansions — from Dow Chemical Co., ExxonMobil Chemical Co. and Chevron Phillips Chemical Co. — will come online next year on the Texas coast. Those projects alone will add around 6 billion pounds of capacity in the region.

    “From a logistics standpoint, we recognized huge growth in the production and supply of resin,” said Steve Boecking, Hillwood vice president, in a recent phone interview. Fort Worth-based Hillwood operates similar Alliance-style projects in California, Florida and other parts of the country.

    “We started thinking that it would be a good idea to run resins through Alliance Texas instead of the Port of Houston, which doesn't have empty [shipping] containers,” Boecking added. “Dallas-Fort Worth is a consumer market, so we do have empty containers that we need to pay to send back to Asia. It would make a lot more sense if those containers had resin in them.

    “We recognized this opportunity two or three years ago. Our shipping could be less expensive and faster than Houston. They ship through the Panama Canal, which is a longer route that takes five to seven days more than what we can do.”

    The proposed facility will cover 500,000 square feet and will employ 100. The $50 million site will be operated by Packwell, which will unload resins and repackage them for sale in Asia and other parts of the world, President Al Duran said in a recent phone interview.

    “The location has many advantages, including the large number of empty containers that BNSF has in the Dallas area,” he said. “As the resin companies start production, they require an export packaging source.”

    Growing resin export business

    Resin expansions also are allowing Packwell to add 550,000 square feet and 70 jobs to its 1.3 million square-foot facility in Houston, Duran added. LaPorte, Texas-based Packwell operates three sites in the Houston area as well as one in Shanghai. Its services include resin transfer from rail cars to bags, boxes, jumbo bags, bulk trucks and sea-bulk containers.

    BNSF — North America's second-largest freight railroad network — is involved with the project in order to meet the needs of its customers, according to Richard Miller, the firm's assistant vice president of chemicals and plastics.

    “First and foremost, we're listening and responding to our customers,” he said in a phone interview. “It became very apparent early on that this increased resin production needed outlets. The vision is around export markets such as Asia, South America and Europe.

    “There's increased demand for containers, and we feel we have natural, built-in solutions to what our customers need,” he added. “Some of the resin companies might not export as much as others — it's still too early to tell — but there's overall demand for this type of operation and service.”

    Fort Worth-based BNSF already has a major intermodal terminal at AllianceTexas that will be used by the resin export center.

    The partners don't yet have an exact date for completion of the project, but it's likely to open sometime during the fourth quarter of 2017.

    “Houston is still going to ship more of the new resin than we will, but doing the math shows that they can't handle it all,” Boecking said. “If the resin isn't shipped from AllianceTexas, they have to get empty containers to Houston, and that's 240 miles. That's a lot more traffic on Highway 45.”

    The three firms also aren't concerned about how the drop in global oil prices has lowered polyethylene profitability since mid-2014. Oil prices were above $100 when many of the expansion projects were announced, but were near $47.50 in late trading May 16.

    “What we've heard is that, generally speaking, resin producers are concerned about crude oil on a global basis,” said Miller at BNSF. “But they all expect those projects that have broken ground to continue to be built.”

    The project is the result of a complete turnaround in resin markets from several years ago, when market watchers believed North America was going to need to import PE to meet its needs. Now the challenge is finding a way to export enough.

    “Five or six years ago, we were looking to contract our business,” Packwell's Duran said. “Now, the stars seem to be aligning.”

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