Exxon and Sabic are planning a new cracker

The plant will have access to the vast network of gas pipelines and the primary NGL pipeline that crosses the Gulf Coast and connect to multiple gas-producing basins

The long-term viability of US shale gas got a strong vote of confidence last when ExxonMobil Chemical and Saudi Arabia Basic Industries Corp (Sabic) said they are considering the development of yet another world-scale steam cracker that could operate for as long as 40 to 50 years.

The project would convert ethane, the most common natural gas liquid (NGL), into ethylene, one of the petrochemical industry’s basic building blocks, in a complex plant fueled by natural gas. The venture also would include derivative plants for polypropylene and possibly other products.

What this also means is the shale gale that blew in a renaissance of the US petrochemical industry about five years ago may be propelling a second wave. This comes in the face of declarations by a slew of industry pundits at the recent S&P Platts Benposium Conference that the US petrochemical renaissance was over.

Exxon and Sabic have not yet selected a specific location, but they have narrowed their choice to four sites: Victoria and San Patricio Counties in Texas and St James and Ascension Parishes in Louisiana. It would be the 10th new US cracker, with all but one, the recently announced Royal Dutch Shell venture in Pennsylvania, located on the US Gulf Coast. The Exxon-Sabic plant’s output is targeted for the export market, while Shell aims to serve the domestic market.

Whether the Exxon-Sabic and Shell facilities represent the last in the five-year petrochemical renaissance or the first in a new wave of projects that will go into operation early in the next decade, when markets will need more product, is yet to be determined. What is more important is the ringing bell of confidence in the long-term supply, whether in the Marcellus and Utica Shales as Shell is betting, or the Midcontinent and Gulf Coast, as Exxon-Sabic will need.

ExxonMobil Chemical chief executive Neil Chapman is confident that the North American hydrocarbon base is very large and will be available for decades to come at a competitive price. "I’m sure those (production) rates will speed up and slow down, depending on the environment," he told Natural Gas Week in a recent interview. "Over the life of our investment, we remain very confident that they will remain sufficiently competitive."

Growth for chemical products is in the international market, Chapman explained, but the most competitive feedstocks are in the US. The industry had been building plants closer to the markets but, with modern logistics, that is no longer necessary.

"The renaissance was in building new capacity in North America. It wasn’t in any additional plants being built around the world. It was very surprising to us," Chapman says. "We didn’t expect this. Shale gas gave us an opportunity to reinvest in North America to continue to serve those markets around the world."

The new plant would have access to the vast network of natural gas pipelines and the primary NGL pipeline that crosses the Gulf Coast region and connect to multiple gas-producing basins within several hundred miles. The pipelines also could access Exxon equity production.The two companies say in statements that they are working with officials in both Texas and Louisiana on siting and permitting matters. Louisiana has been offering attractive incentives to companies proposing industrial developments such as petrochemical plants. Exxon, meanwhile, may still own property in San Patricio County, Texas, from a decade ago when it planned an LNG import project with state-owned Qatar Petroleum. Any of these locations would give the proposed project direct access to the Gulf of Mexico through existing deepwater channels.

Such projects don’t happen overnight. They often are three to five years in the planning phase and another three to four years in construction. The other eight plants already being built are due for completion before the end of the decade, with the first slated to go into operation next year.

The primary plant would produce 1.5 million tonnes/year of ethylene, a petrochemical intermediate that goes into the manufacture of a wide variety of consumer products.