Chicago — ExxonMobil Chemical Co. is taking a two-pronged approach to the new polyethylene capacity it's adding next year in Texas.
“This is an important addition for North America,” global PE marketing manager Thomas Deman said at Global Plastics Summit 2016, Sept. 28-30 in Chicago. “We're going to export quite a bit [of the new PE], but we're still going to participate in growth in this region.”
North America “is one of the most innovative regions in the world, and we want to continue to supply it with performance products,” he added.
Deman said that the two new lines that Houston-based ExxonMobil is building in Mont Belvieu, Texas — with total annual production capacities of almost 3 billion pounds — “are set up for export, but we can redirect some of that.”
“We're reinvesting in logistics to supply [North America] with the products it needs,” he said, adding that building large scale facilities such as the Mont Belvieu lines and a major new ethylene unit in Baytown, Texas, “takes a long term view — just to get skilled labor to build plants is a huge challenge.”
Globally, Deman said that plastics demand is growing because of population growth in cities, where lifestyles lend themselves to more plastics usage. The world's population is expected to be 60 percent urban by 2030 — up from 54 percent in 2015.
The ranks of the global middle class also “are expected to continue to swell,” according to Deman. “People want affordable, sustainable solutions,” he explained. “Customers are more educated and affluent. They want to reduce waste and minimize environmental impact.”
Global PE demand is expected to grow faster than both global GDP and population through 2025. Four percent PE growth creates the need for almost 9 billion pounds of new PE capacity per year — the equivalent of six to eight new world-scale lines.
Increased shale gas production in the U.S. has created a global cost advantage and led to a wave of new PE projects from ExxonMobil and other firms. North America is expected to add around 11 billion pounds of new PE capacity in 2016-17, with most of that located on the U.S. Gulf Coast. In addition to ExxonMobil in Mont Belvieu, Dow Chemical and Chevron Phillips Chemical each are bringing on major PE additions on the Gulf Coast in 2017 as well.
“Before shale, the U.S. was the high-cost producer,” Deman said. “But we've become very competitive in the last 10 years, and now we're second lowest in cost only to the Middle East.”
To meet the demand for better PE materials, ExxonMobil is introducing Exceed XP-brand PE resins for flexible packaging. The materials have improved flex crack resistance and dart impact, and already are being used in liquid packaging in China, Deman said. They're allowing up to 20 percent lower bag-in-box packaging costs and are attempting to replace large polycarbonate water bottles.
Deman added that the plastics industry needs to continue to work on its image problem. “We have to be more positive about how plastic helps us, and we all have to look at it together,” he said. “There's no infinity loop in recycling. Plastics are too valuable to put in a landfill. We can recover that energy.”